RFID: A CRM Secret Weapon

Updated: April 30, 2009

If you think that RFID (radio-frequency identification) is just an excuse for techies to toss about another acronym, Michael Dortch wants you to think again. A senior analyst with Aberdeen Group Inc., Dortch is on a mission to convince companies to view RFID technology as more than simply a humdrum warehouse tool. The author of the recent Aberdeen Group study "Real-World RFID in Retail," Dortch believes that, if used correctly, RFID can help deliver higher customer satisfaction.

In fact, in March 2008, Aberdeen Group surveyed some 150 retailers about their RFID plans and activities. The best-in-class retailers were 80 percent more likely than other respondents to use RFID to improve in-store asset-tracking efficiency. And those same retailers enjoyed average customer satisfaction increases of 12 percent over a two-year period.

"Look at what it does when a customer comes in looking for a laptop. You know it's in the store, but you can't find it. What kind of customer support and service is that?" asked Dortch. Ensuring that the products that customers want are on the shelves and being able to locate them quickly using RFID can translate directly into enhanced customer relations.

Making a Meaningful Connection

But walking around with an RFID-enabled device clipped to your belt isn't enough to earn customers' loyalty. Rather, the trick is to tie RFID-generated data to business-critical analysis, intelligence and operations applications. Aberdeen Group found that best-in-class retailers are 11 times more likely to let customers access current inventory levels and detailed product descriptions.

Said Dortch, "If you want to talk intelligently about RFID and business benefits, the very first thing you have to do is stop thinking about RFID as meaning radio-frequency identification. What RFID really means, and where its business value comes from, is real-time, fully integrated data."

Vendors Keen on Integration

Fortunately, many vendors are stepping up to help companies implement RFID initiatives. For example, NCR Corp . recently integrated its RFID software solution, NCR TransitionWorks for RFID and Mobility, with Oracle E-Business Suite . And Microsoft BizTalk RFID is designed to allow users to incorporate RFID information and data into a variety of applications and end-to-end business processes.

"The options for integrating RFID data with core business applications are increasing as the costs and complexities are falling," said Dortch.

Companies are also finally catching on to the business value of leveraging RFID to gain a greater understanding of customers' purchasing habits, needs and preferences. "Some companies are still sitting on the fence about RFID and saying the ROI [return on investment] isn't yet compelling," said Dortch. "But when they start to see what kinds of integration options are possible, that may push them off the fence. It's not just about more efficient supply-chain management . If I can collect RFID-generated data and feed it back to my CRM application, I've got access to all kinds of real-time, granular data."

Caveat Emptor

That's not to suggest, however, that RFID technology is a panacea for poor customer service. "Neither RFID nor any other technology can or should be viewed as a replacement for superior customer care," warned Dortch. What's more, the success of an RFID initiative often hinges on finding the right vendor to work with. As a result, Dortch recommended that companies partner with RFID solution providers that offer proven and application-appropriate readers and devices for data capture.

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