Business Background
IKEA, which opens stores worldwide through a franchise system, entered into a business partnership in Turkey with MAPA Mobilya ve Aksesuar Pazarlama A.Ş., whose main shareholder is Maya Holding A.Ş.
With a vision of better everyday life for the many, aiming to reach as many people as possible by offering thousands of well-designed, high-quality, and functional furniture and home accessory items at low prices, IKEA Turkey opened its first store on May 5, 2005, in Ümraniye, Istanbul.
Following the great success of its first store, IKEA Turkey opened its second store on April 6, 2006, in Bornova, Izmir.
Turkey’s third and Istanbul’s second IKEA store opened in Bayrampaşa on November 8, 2007. IKEA Turkey increased interest in home decoration, and its fourth store opened in Osmangazi, Bursa, on November 13, 2008. IKEA, a brand that shows how home life can become more enjoyable through creative decoration solutions even in small spaces, opened its largest store in Turkey, the IKEA Ankara Store, on June 23, 2011.
With the IKEA Family Card program, the company aimed to offer more value to its loyal customers by providing rewards and privileges. To roll out this program, IKEA implemented a solution with Microsoft Dynamics CRM that would integrate easily with its existing systems, would not cost customers extra time when registering or shopping, and would allow for evaluation from different perspectives.
IKEA, the Sweden-based international furniture company that began serving customers in Turkey with the store it opened in Ümraniye, Istanbul, in May 2005, decided to launch a loyalty program as part of its strategy to sell more products to the same customer.
Ayşe Gedikli, CRM and Research Manager in the Marketing Department, stated that IKEA aims for all customers visiting its stores to instantly and free of charge become IKEA Family Card holders and enjoy shopping full of opportunities at IKEA stores, offering them the chance to benefit from periodic campaigns in addition to reward points earned with every purchase and special product discounts.
The IKEA Family Card Wedding Campaign, designed specifically for couples about to get married, is a good example of this. On the other hand, the IKEA Family Card also takes into account the shared needs of families, consolidating the purchases made by all members of a family onto a single card and rolling out different promotions targeted at these families.
How Did the Collaboration Begin?
Regarding the search for a solution that would implement this program quickly and smoothly without extending checkout time, IT Manager Bülent Erkmen said they evaluated different alternatives, and that the most important criterion was a solution that would integrate easily with the existing ERP system, would not extend checkout time, and would have the capabilities to meet the marketing department’s needs. Erkmen said, “Of course, one of the important issues in the long term is how the system will perform in terms of analysis and reporting as the data accumulated in the system grows.” After reviewing all alternatives, Microsoft Dynamics CRM stood out as the most suitable solution. In addition to the ease of application development and an infrastructure highly conducive to integration, the analysis options made easier and faster by SQL Reporting Services and Business Intelligence applications reinforced the belief that CRM would also be the best solution in the medium and long term.
After the pilot implementation began at the Ümraniye store in November 2009, all stores went live in December. All processes, such as instantly issuing cards to applicants, tracking cardholders’ purchases, identifying promotional products, and transferring the relevant prices to POS devices, began to run smoothly through the system. In the first months of the launch period, the targeted number of cards was far exceeded. Currently, 150,000 cards are in use. Since the targeted number of members has been reached, efforts are already being accelerated to use the data accumulated in the system to increase both the number of members and their average purchase amount going forward.
What Benefits Were Achieved with Dynamics?
Savings in Indirect Labor. In a loyalty card program, identifying members, entering their relevant information into the system, later collecting points from their purchases on the card, and using these points for various discounts and promotions all create additional labor. However, to avoid creating additional labor and to ensure customers don’t experience extra waiting time either when registering or shopping, IKEA takes advantage of the flexible structure of Microsoft Dynamics CRM. The card application form, filled out by customers and containing minimal information, is entered into the CRM. The CRM generates the card number and status and immediately transfers it to the POS application, so the systems are ready the moment the form is filled out. As purchases are made through the POS, the purchase details first go to Microsoft Dynamics NAV, where they are checked against promotion rules, after which the earned points are sent to the CRM. As a result, both the ERP systems and the CRM contain all the necessary information. Reports can be generated from different perspectives, allowing employees with different responsibilities to perform comprehensive analyses.
Customer Profiling
The biggest expectation from the IKEA Family Card program is to get to know customers. Once customers are understood, the goal is to design different campaigns that will encourage them to visit the store more often. IKEA uses life stage internally for customer profiling. Supported by the data accumulated in Microsoft Dynamics CRM, IKEA determines which life stage its customers are in. Campaign content tailored to the needs of that stage is then created for the customer. This generates greater response from the campaigns conducted, increasing the number of customer visits while also raising the average basket value.
With all information residing in a single system, IKEA can also measure the effectiveness of the campaigns it runs. When designing a campaign, they can see which customers will be targeted, the size of the target audience, and that audience’s average basket value. Once the campaign begins, they can report on which members of that target audience visited the store and made a purchase. For each campaign, the change in average purchase amount and the campaign’s overall impact within that change can be observed. They can also enter discounts individually for constantly changing products. In such product-specific campaigns, the effects can also be easily observed at the product level.
Because the systems are integrated, the expected increase in sales of products included in a campaign can be transferred to supply chain planning, making it possible to arrange the necessary product supply in advance. Looking ahead, the goal is to design more detailed campaign models — for example, recommending lighting products to a group of customers who purchased living room furniture in previous months, and by increasing the number of such campaigns, measuring demand elasticity through similar future campaigns.
