Filene Basement - Case Stolution

Filene’s Basement

Inside a Fired Customer’s Relationship

Introduction:-

This case discusses about the customer relationship management which is an approach to manage a company’s interaction with current and future customers. The CRM approach tries to analyze data about customers' history with a company, in order to better improve business relationships with customers, specifically focusing on retaining customers, in order to drive sales growth. In this case Norma was the regular customer of the company from past 19 years but the company fired her just because of excessive returns and frequent registered complaints. She was also threatened with legal action if she entered any of Filene’s basement retail stores.

Overview of Filene’s Basement:-

Edward A. Filene saw the unsold merchandise and come up with the better way to manage inventory. The idea was if the particular product stayed on the selling floor for 12 days, it will marked down by 25%, 6 days later then it was 50% off, and after 6 days it was 75% off. Initially the people thought that the Filene plan was wacky and after that people wait for the product until it goes under 75% discount zone, so the Filene explained that the people who would want to buy attractive products would have to come early.

They segregate their customer according to traffic light signals colors:-

• Green for Platinum & Gold customers
• Yellow for Silver & Bronze customers
• Red for Lead Customers

Norma Relationship with Filene’s Basement:-

In 1970’s Norma was the frequent customer and she used to visit the basement every week. She was being regarded as the one of “The Regulars”. Due to repeated visits she got familiar with all the employees of the store including the store manager. The employees working at Filene’s Basement use to give her a special treatment by giving huge discounts. Their relation was such that that the store manager would let her know about the sale in advance and she would keep herself free on that particular day. She got so friendly with the staff that she would also visit them outside the store whom she even considered as her friends. She use to give different suggestions to store manager for improvisations in the store. And to reciprocate the kind gestures of store manager and staff, she used to bring more and more customers. During all this time the agenda or the philosophy of the firms used to be customer centric wherein the customers were treated like kings. It was considered that the secret of successful retailing is giving customers what they want. Later on, When the department store was acquired by different groups, she didn’t get any extra discounts. With the changing trend and the changed ownership of the firm, the store now looked into the cost that the company incurred due to her. The store manager now realised the costs that firm bore because of her. This is when Norma was degraded from platinum tier to lead tier. The firm did not want Norma anymore, as the trend now shifted from customer appraisal to customer firing. Therefore, the store changed its attitude towards Norma and she eventually got fired. Norma felt disgraced at not being treated as the privileged customer anymore and reported the story to media.