Customer Relationship Management

The term Customer Relationship Management (CRM) has been around for a while but there is a lack of awareness about what CRM is.  There is a common misconception that CRM is a technology, but it is much more than that.  CRM is a business-wide strategy which integrates organisational culture, people, processes and technology, to acquire and retain high value customers.

Although CRM is not a technology, CRM software plays a vital part in the implementation of the strategy.  CRM software brings together all data sources within an organisation, to give one 360° view of customers and prospects.  This allows all your employees to effectively manage, service and target customers and prospects.  

Knowing your customers, in particular, your most valuable customers, has become vital to business success.  Studies have shown that it costs 6-10 times more to acquire a customer than to retain one.  On top of this, most organisations follow the 80/20 rule, in that 80% of their revenue comes from 20% of their customer base.  In fact according to recent studies published, about 30% of your customer base delivers the majority of your profits. 50% add absolutely nothing and the remaining 20% of customers are costing you money!

Therefore your business needs to service your most valuable customers effectively to prevent customer defection.  On top of this you also need to know which prospects you want to acquire, and target them effectively.

Business Benefits of CRM

There are several business benefits to implementing CRM.  Some of the main benefits include:

• Maximise opportunities to up and cross-sell.
• Increase loyalty and build long-lasting relationships with high-value customers.
• Increased loyalty lowers chances of defection to competitors. 
• Reduction in costs through improved efficiency and automation of key processes.
• Reduction in costs by improved targeting.  Concentrating sales and marketing only on high-value prospects reduces wasted spend on the wrong types of customer.

Customer Empowerment

So why is CRM so important?  Over the years there has been a shift in power from companies, to customers.  Customers have more power now than ever before through several drivers: market, customer, economic and technological.  Product convergence and oversupply have seen customers with greater choice of brand/supplier.  Customers are also more demanding than ever and want products/services faster, cheaper, and of higher quality.  The internet has knocked down geographical barriers meaning customers can choose a supplier from anywhere in the world, not just their local store.   These changes have meant that customers have become, and are continuing to be more demanding.

Customers are no longer as receptive to traditional marketing methods such as advertising and these methods are becoming less effective.  On top of this they are easy to copy; if a competitor lowers their price, what’s to stop you doing it?  Therefore, in order to differentiate yourself, you need to build effective, long-lasting relationships with your customers, by implementing CRM.   Unlike the traditional methods, an effective CRM strategy is difficult to copy and is the best way to create long-lasting competitive advantage.

Understand Your Customers

When we say you need to “know” your customers, we don’t mean knowing them personally, we mean really know them; what their needs, wants and behaviours are.  What products and services do they have?  How often do they purchase?  When are they most likely to be susceptible to marketing messages?  Knowing and understanding these aspects about your customers is a key ingredient to creating a successful CRM strategy.  On top of this, learning about and understanding your own customers makes it easier to acquire high value customers in the future.

CRM is a continuous process of collecting information and understanding customers needs and wants to create targeted, customised offerings.  Through this constant process of learning and analysis we are better able to serve our existing customers, improving customer retention, as well as improve our ability to acquire high value prospects for our business.

In order to create and build long-term relationships organisations need to create an outstanding customer experience, no matter the touch point.  In your organisation today there will be a number of customer 'touch points' and each needs to be managed effectively to ensure an outstanding customer experience.  Consider how your customers can interact with your business.  This may include phone, email, website, social media, advertising, meetings and many more.  Each time they interact you need to ensure that the experience meets or even exceeds their expectations.  Positive experiences help build customer loyalty, negative ones lead to defection.

CRM Software

A good CRM system is essential to CRM success.  The more a company can learn about a customer and their needs, wants and behaviours, the better they can deliver personalised products, services, marketing messages to them, to help create and sustain loyalty.  In order to store, access and segment this customer information, you need an effective CRM system.  From the information that is collected and stored over time, you are able to derive insight and suggest pro-active action as a result.  CRM systems also help streamline processes and assist in providing an excellent customer experience.

For more information on CRM and how our CRM software can benefit your business please contact us to speak to one of our consultants.