Kudler Fine Foods - Supporting Measures for Success

Team B Service Request SR-kf-013

Kudler Fine Foods (KFF) is a specialty food store chain that targets gourmet customers in the San Diego metropolitan area. With locations in Del Mar, Encinitas, and La Jolla, each store has about 8,000 square feet of retail space in high-end shopping districts. The objective of this project is to implement a system to track customer purchasing habits.

Scope and Goals

Kudler Fine Foods is planning to use a Frequency Shopper Program. At the individual customer level it will increase revenue and provide high value incentives using a loyalty points program instead of providing discounts to customers related to purchases that they have made. Kudler has found a loyalty point program that will reward customers with points redeemable for high-end gift items such as airline first-class upgrades and specialty food items. This program will allow Kudler to track purchase behavior at the individual customer level. Identifying customer purchasing patterns will help Kudler to refine processes and tailor product offerings to increase customer satisfaction of valued customers. It will also provide information that will show customer buying tendencies and ensure that the store has sufficient inventory based on customer buying trends.

Kudler has projected revenue lift as shown in the following chart.

Frequent Shopper Program

Quarter Description Projected Revenue Lift

Q1 Employee-wide training session

Frequent shopper program rollout .25%

Q2 Assessment and refinement of program

Frequent shopper promotion, increased customer satisfaction .50%

Q3 Frequent shopper promotion, increased customer satisfaction 1.75%

Q4 Frequent shopper promotion, increased customer satisfaction 2.25%

Total 4.75%

Figure 1.0 Quarterly Projected Revenue (Kudler Fine Foods, 2007)

Stakeholders

"A stakeholder is a person who is either actively involved in the project or is impacted by the project" (Heldman, 2004, p. 98). The stakeholders within Kudler Fine Foods include nearly every employee. The successful outcome is obviously important to Kathy Kudler, but the project impacts the entire organization. The store operations department and individual store departmental managers will use the customer buying trend data in the ordering process. Cashiers and clerks will handle the customer interface. The Finance and Accounting Department, which includes the computer support specialists will be reponsible for implementation and operation of the Information System itself. Arguably, the most important stakeholders are the customers; if customers do not buy into the program, it cannot succeed.

Supporting Measures for Success

Success is relative to the measuring stick used. The customers, company leadership, and the programmers of the rewards program will define the measuring sticks used. The company has concepts they want to see with the program. Analysts will interview customers for their opinions on what they want to see in a program of this kind. The programmers will follow these requests with what they can realistically do with a program of this nature.

The first, and most obvious, area of measurement is the value of the program; if the program provides value to customers and increases profit for Kudler. These two areas create the final validity of the program. Kudler is hoping to have at least 5000 members in the first two years. They also want to show an increase in profits of $100,000 in those same two years.

For the program itself the measurements are more readily measurable. Upon completion of the program, the following points must be met for the program to qualify as a success.

Figure 2: Requirements for Program Success

Project Feasibility

Analysts conducting the feasibility study for the rewards program must consider three key areas: operational, technical, and economic.

Operational Feasibility

Operationally, the Frequent Shopper Program should integrate into the existing workflow without any significant problems to operations or network performance. The functionality of the new system will require only a small amount of user training, so there is no issue with computer competency. There will also be no loss of control by the staff or management. In fact, the change will bring an added level of customer interaction that could enhance customer attitude at the point of sale. This change will also not negate, or change, any existing workflows critical to the mission success of operations.

Technical Feasibility

The Purchasing Department will use data collection by way of the new software. This new software program will forecast food orders. Sales and Marketing Department will train and will form the core of the customer program. The IT Department and its representatives will participate in the development of requirements and ascertaining the feasibility of the required software.

Data management is essential for the success of the program. A centralized management system will aid in establishing customer data and allow key infrastructures to verify data across stores. Servers will be in place for database use. A recordkeeping server will store information and accounts. Should hardware become disabled, a backup server will begin to facilitate transactions at the POS and point accumulation.

Economic Feasibility

An analysis was also performed to determine the total benefit that the new program would be to the organization. Analysts determined that if the development and implementation of the program were a success, the organization would bring in at least a 16% return on investment. The following table illustrates the cost benefits analysis based on quarter by multiplying the percentage against the net income of $676,795 per quarter (Kudler Fine Foods, 2003).

Projected Revenue lift

Q1 Employee wide training session

Frequent shopper program rollout .25% $1,691.98

Q2 Assessment and refinement of program Frequent shopper promotion, increased customer satisfaction .50% $3,386.97