Boohoo Digital & Social CRM Strategy: How Fast Fashion Brands Build Customer Loyalty Online

MARK3114 – Customer Management

Boohoo PLC

Andrew Hill

Notes

• Social CRM and Digital CRM are referred to collectively as “Modern CRM” throughout.

• Telephone and email are considered both traditional and digital contact methods in respect of customer relationship management.

Organisational Summary

Boohoo PLC (referred to Boohoo throughout) are an online fashion retailer trading via their websites Boohoo.com and other websites they own or use as part of their omnichannel sales strategy. Boohoo mostly target female consumers aged 16-40 years old with their largest consumer segment being 16-24 year olds (Heever, 2019). They focus on fast–fashion trends, aiming to be industry leaders (Boohoo, n.d.) and have established themselves as market leaders by stocking key seasonal products, doing so has allowed them to focus on the products their customers want and are looking for unlike ASOS, their largest competitor who stock expansive ranges; in doing so, Boohoo nearly doubled their revenues year end 2018 whilst ASOS had only achieved an 11% growth in revenue during the same period (Gasgoine, 2019).

Boohoo set themselves apart from their competitors in many areas, from the products they stock to how they engage with customers and interact with local press, social media and traditional media. For example, when compared to Missguided, a strong direct competitor, Boohoo have more than double the amount of positive press exposure and engage in 40x the amount of offline marketing actions, including outdoor advertising across billboards and bus banners and charity events (Smith, 2019).

Competitor Analysis
Brand	Customer segment	Product Strategy	Marketing Channels
Boohoo	• 16-40 year olds • Male and female • Fast fashion • Disposable • Students & Young adults	• In-trend items • Limited quantities to not overstock • Fast-fashion	• Online and offline ads • Social media • Email • Website
Missguided	• 16-35 year olds (Brighton University, 2018) • Women (men catered for via alternate brand) • Fast fashion • Students & Young adults	• In-trend items • Fast-fashion • Female ranges only	• Online and offline ads • Social media • Email • Website
ASOS	• Core customer 20-30 year olds (EcomAcademy, n.d.) • Disposable	• Vast range overstocked for mass market • Disposable fashion • Fashion marketplace	• Online and offline ads • Social media • Email • Website
Topshop	• 16-35 Year olds • Students & Adults	• Online and instore sales • Losing competitive edge due to missing key seasonal trends • Follows US trends (Brown, 2017)	• Online and offline ads • Social media • Email • In-store • Interactive (Moth, 2013) • Website
H&M	• Serves all ages • No single core key customer profile	• Online and instore sales	• Online and offline ads • Social media • Email • In-store • Website • Interactive (H&M, 2017)
Data sourced from each brand’s websites, annual reports, personal analysis and cited sources.

They create value for their customers by remaining on trend, providing affordable fast fashion solutions and engaging with customers regularly through email and social media marketing, they also engage heavily in content marketing as well as influencer marketing. Boohoo offer discounts (including a permanent NUS student discount) and credit facilities (facilitated by Klarna, a third-party credit provider), order tracking facilities and free returns (Boohoo, n.d.).

Boohoo use numerous digital marketing channels based on their target market’s preferences, trends and behaviours. They use SEO to rank highly in search results when customers are searching for fashion ideas and want to buy clothes. Boohoo also invests heavily in Content Marketing which benefits SEO activities (Patel, n.d.), evidenced by ‘The Fix’, their fashion guide/blog – ‘The Fix’ offers customers free value without them having to pay any money upfront, this builds loyalty and reciprocity between customer and brand (Saunderson, 2018). Content marketing is also complimented using video marketing, which is shared across social media and email marketing, delivering content directly to subscriber’s inboxes to entice them back to their website.

When evaluating Boohoo’s current digital channels, their marketing activities can be categorised as owned, earned and paid media. Each channel compliments one another and aims to drive engagement as part of their customer relationship management, Boohoo can used paid advertising (paid) to customers encouraging them to sign up to become an email newsletter subscriber (earned) to consumer content marketing (owned) via articles sent directly to their email address. The table below categorises each marketing activity:

Media Category	Activity
Paid	Affiliate referrals
	Paid ads
	Influencer marketing & sponsorships
Earned	Referrals from customers
	Good press
	Email Newsletter
Owned	SEO
	Content Marketing
	Video Marketing
	Website

When these marketing activities are integrated with one another, Boohoo can maximise their competitive advantage in relation to customer relationship management. In Section 2, strategies will be recommended to optimise Boohoo’s digital CRM strategy.

Section 1: Digital & CRM Literature Review

Boohoo’s CRM strategy differs from traditional fashion retailers, but it also differs significantly from other industries, including the banking sector. They use social and digital CRM very differently, in fact, the banking sector was very much against adopting modern CRM strategies including social media to engage directly with customers because the idea of customers talking openly and publicly about their banking and finance activities was taboo in British culture (Dalziel and Hontoir, 2013).

Whilst banks have adopted social and digital CRM and customer acquisition strategies, it is difficult to identify any direct benefits of engaging with customers using these channels. However, they have been able to collect data from these digital sources to generate models understanding the profitability and behaviours of individual consumer segments (Sharma, 2016). This same benefit can be realised by all organisations, including Boohoo who have focused on social/digital CRM since their inception in 2006 which has been fundamental in driving sales and customer acquisition and they find their success through test and repeat (Mazour, 2017) – by testing strategies and focusing on those that work, Boohoo have remained current with modern media trends and this has enabled them to capture their market and steal market share from their largest competitors (CX Marketing, n.d.).

The same can be seen in their product strategy (Gasgoine, 2019) – they’ll test what works and focus on that, their whole business model is focused on trial and error, by only implementing short product lines and expanding on those that perform best, revenues are maximised whilst warehousing costs are minimised as stock doesn’t sit around for long.

Banking, on the other hand, doesn’t have the luxury of test and repeat, due to regulations slowing down the introduction of new products and innovative banking products just doesn’t capture the imaginations of the average consumer, banking products are by nature “boring” (Lunman, 2018) so it is vital for banks to follow in Boohoo’s footsteps when it comes to social engagement. But how would Barclays, for example, recreate Boohoo’s social buzz? Looking at Appendix A, we can see how Boohoo engages customers by telling them to ‘double-tap’ if they’d wear “this” outfit, and Barclays can do the same with their custom-design debit/credit cards

What is Digital and Social CRM?

Digital and social CRM can be easily confused and whilst similar, there are key differences between them.

Digital CRM is conducted the use of the internet and other digital communication channels designed to enhance relationships with customers and the experiences they have with an organisation (Tech Target, n.d.). Digital CRM allows customers and businesses to communicate with each other on any channel, whether it’s over the phone or by text/SMS, email, etc. (Salesforce, n.d.)

Social CRM takes it a step further and whilst it is part of digital CRM, it expands the possibilities of engagement customers are exposed to, for example, whilst a customer may send a private email to a company airing a complaint and this communication remains between the customer and organisation, if the customer instead chose to publish their complaint as a comment in response to a social media video posted by an organisation, other customers can comment on the individual’s experience, amplifying the customer’s voice (Gingiss, 2018) for better or worse.

Digital CRM differs from social CRM in that it is a two-way communication channel, it isn’t designed to be open and transparent, whereas social CRM is. Digital CRM is formal whilst social CRM is often colloquial, using terms like “Hey!” instead of “Dear [Salutation]” (Carufel, 2018) which strengthens the relationship with customers by communicating with them on their level (Patel, n.d.).

Modern CRM differs from traditional CRM in several ways, primarily regarding the number of contact points (in person, over the phone, letter or email) available to the customer – modern CRM opens significantly more contact points and instead of two-way communication, the use of modern CRM enables collaboration (Careufel, 2018) using tools like Slack, where the customer’s first point of contact can liaise with other key individuals within an organisation to better resolve their query in a more timely manner which increases convenience (Eliadis, 2011) and allows customer service representatives to better empathise with customers across all levels of the organisation relative who is collaborating with the representative serving the customer serving as a benefit of modern CRM, it also enables the customer to feel assured and that they’re receiving reliable information which are important dimensions of the SERVQUAL model, the ‘tangibles’ dimension is supported through the numerous channels open to customers – whilst phone lines may close, social media will not (though customers should allow some time for replies which won’t be so prompt as a telephone call or in-person visit).

Section 2: Digital CRM Strategy Recommendations

Several recommendations can be made relating to Boohoo’s digital CRM strategy relevant to customer acquisition, retention and development paying consideration towards Boohoo’s primary target market (16-24 year olds). Recommendations are made for each perspective of CRM below.

Customer Acquisition

Customer acquisition strategies of the 21^st century opens up new opportunities for businesses like Boohoo who engage with customers across multiple channels as part of their CRM strategy. To acquire new customers doesn’t necessarily mean generating new sales, instead it involves introducing customers to the brand and content, providing value before requesting any form of monetary transaction (Brunson, 2015). The most effective way to do this is through the use of sales funnels which compliments content and email marketing initiatives whilst using paid ads to drive customers towards the funnels.

Sales funnels take numerous shapes, but the most common type starts with capturing email addresses, as Boohoo already does (Appendix B) but it could be made prominent across their content marketing, including links to sign up or sign up forms at the bottom of key content, including ‘The Fix’.

Another way of funnelling new customers to the brand is through gating content behind social walls demanding a ‘like’ or ‘share’ or other action to be taken before granting access to the content. This increases Boohoo’s exposure and can help grow Boohoo’s social audiences.

Boohoo already operate an affiliate scheme, but it is restricted to direct relationships with affiliates meaning affiliate marketers may be burdened with numerous individual affiliate accounts which can be confusing and detrimental to their efforts to market the brand. Sites like Affiliate Window allow organisations to operate their affiliate schemes and may enable Boohoo to expand their affiliate schemes to more marketers. The downside to using Affiliate Window (or similar) is that there’ll likely be competing brands also wanting affiliates to market their products, there could be conflicts of interest depending on which affiliate relationships marketers prefer.

Customer Retention

Retaining customers is equally as important as acquiring new ones, it’s proven to be cheaper (Gallo, 2014) to maintain the commitment, loyalty and satisfaction of established customers by continually adding customer value and developing customer relationships than it is to build commitment, loyalty and satisfaction for the first time.

Boohoo can retain customers by developing exclusivity in areas of their content marketing which adds value to customers who believe they’re being offered something unavailable to ‘regular’ customers (Levy, 2017). This gives customers a reason to commit to consuming the content which breeds loyalty and increases satisfaction (Goldstein, 2016).

Customer Development

Developing customer relationships is key to retention and acquisition, advancements in technology, especially relating to modern CRM, means organisations have to develop relationships with customers rather than expecting transactional relationships to be formed at the first encounter a customer has with an organisation (Hern, 2020). Engaging with customers via social media, for example, provides value to customers who feel they aren’t being neglected or ignored resulting from the convenience of being able to communicate with their favourite brands in their favourite places on the web (Corcione, 2019; Malthouse et al., 2013).

Another way to develop customer relationships is through the use of value ladders, progressing customers through each rung of the value ladder including offering credit facilities and loyalty discounts, rewards and exclusive memberships for product testing in exchange for video reviews which Boohoo could share on social media further increasing customer engagement and growing their audience, offering more and more value in exchange for purchase or brand advocacy depending on the strategy undertaken. Brand advocates can be offered affiliate marketer positions adding reciprocal value in monetary terms to the relationship and benefiting customer acquisition.

Customer Engagement

Increasing customer engagement is key to long-lasting relationships, by opening new methods of engagement, Boohoo can continue developing customer relationships by meeting customers in places which are convenient to them.

One way to increase engagement with the brand would be for Boohoo to implement augmented reality, using CGI catwalk models which could model any clothing in stock at a click of a button demonstrating the fit and style of garments, alternatively virtual rendering of clothing and accessories may also be an interested use of augmented reality, where customers can use Snapchat filters and share these styles with friends, increasing Boohoo’s exposure and reach and, even if the customer using the augmented reality snapchat filter doesn’t make a purchase, by sharing it with their friends, it increases the likelihood of people in their network purchasing.

Digital Strategies

Boohoo should invest in four key digital strategies taking reference from the above recommendations:

Strategy 1. Customer acquisition through paid advertising

The use of paid advertising will dramatically expand reach by exposing the brand to new customers and those who have previously interacted with content or other brand elements through retargeted advertising (Sentence, 2018). By attracting new customers through paid ads, acquisition rates will increase over other strategies including content marketing which is traditionally a slower form of customer acquisition, but content marketing is cheaper and more effective long-term in terms of relevance (Fractl, 2018).

Paid ads for fashion categories are also the cheapest and one of the most popular forms of ads that customers interact with (Sprout Social, 2019) which is beneficial for organisations like Boohoo who rely on customer engagement and exposure to maximise their sales.

Strategy 2. Customer retention through social media customer services

Suggestions have been made regarding customer services via social media, the reason it is so powerful is because of how efficient it is to engage with customers to solve their problems in places where their customers hang out (Weinberg, 2017), it increases convenience which is an important aspect of the SERVQUAL model.

Strategy 3. Customer development through funnels

Customer relationships can be developed through online marketing actions across social and digital channels, introducing customers to funnels that will maximise the value of each individual customer and generate multiple sales through cross/upsells as customers progress through the funnel, by using drip marketing to reintroduce customers to funnels they fall out of, Boohoo can continue reintroducing old and new customers to their brand and purchase opportunities creating a snowball effect in the number of sales achieved (Brunson, 2015).

Strategy 4. Customer engagement through content marketing

Content marketing is a cost-effective, reliable way of generating relevant, shareable content that will increase customer exposure to the brand and pay dividends in the way of SEO (Moz, n.d.). Boohoo already engage heavily in content marketing across social media and ‘The Fix’, their fashion blog. However, it isn’t utilised to its full potential in absence of lead capture devices.

This strategy can only work to maximum efficiency provided there are purchase opportunities presented to the customer along the way, otherwise customers are visiting content and leaving without necessarily offering benefit to Boohoo.

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