Customers are the lifeblood of any business, whether it is a global corporation with thousands of employees or a sole trader with a handful of regular customers.
To make your business a success it is vital that you look at the relationships you have fostered with your customers, and examine how you can keep them happy and maintain a mutually satisfying relationship.
Many businesses achieve this by adapting a system of customer relationship management (CRM).
In the past, businesses have used 'transactional' marketing, which focused on winning new business and attracting new customers. However, it is estimated that it costs up to 10 times more to win a new customer than to keep an existing one.
From this came the concept of 'relationship' marketing, where the relationship between the business and the existing customer is maintained and developed. This is where CRM comes from.
So what does customer relationship management involve?
On a basic level, CRM involves implementing a customer service philosophy and the technology to support it.
It means that you learn more about your existing customers, gathering information about their opinions and behaviour. Then it involves implementing the technology that will help you get the optimum use from that data.
CRM is a term that covers the full spectrum of methodologies, software, and internet capabilities that can help a business manage customer relationships in an organised way.
CRM can help you keep customers, therefore boosting your business and increasing profits.
Used effectively, it means that satisfied customers will be less likely to move elsewhere and more inclined to recommend you to others. This can have a multiplying effect on your business: impress 10 customers and as well as retaining them, you'll gain another 50 who have heard great things about your services or products. Conversely, satisfied customers will have fewer bad experiences to recount.
Another element worth incorporating into your strategy is to focus your attention on the customers that have the biggest potential lifetime value - which will boost the long-term profitability of your business.
To introduce a CRM programme you need to take three main steps.
First, identify which of your customers are the most valuable. You can do this using the Pareto Principle.
This says that in any business 20% of your customers account for 80% of your turnover, 20% of your customers account for 80% of your profits, and then 20% of customers account for 80% of your service and supply problems. Once you work out which of your customers fit into which category then you can begin to manage them correctly.
It means that you can profile customers and prioritise the level of customer service you offer, targeting customers in more profitable groups.
Secondly, find out what level of service your customers want. Carry out surveys and ascertain what your customers think of the quality of your service, the accuracy, promptness of response, satisfaction with facilities, attitude of staff and complaint handling.
You need to find out about your customers' purchasing habits, their preferences and opinions on your service. Ask them what is important to them. Are they driven by quality, price, product, location or the customer service they receive? You should be able to then categorise customers and so market more effectively and increase sales.
Once you have gathered this information then you can implement the third part of the strategy: using technology to maximise the value of your research.
CRM solutions and software are crucial to building relationships with your customers. This technology makes it easier to find out even more about your customers and then exploit the information.
These systems will compile information like customer data, sales patterns, marketing data and future trends with the aim of identifying sales opportunities, delivering better customer service and offering personalised services and deals.
The technology will then help you plan and execute better targeted marketing campaigns.
When it comes to software, the first option is to outsource a solution for your business. Application service providers can supply a web-based solution, which is ideal if you need to implement a solution quickly and you do not have the skills to tackle it yourself.
Alternatively you could purchase a solution off the shelf. Some software companies offer CRM applications that integrate with what you already have. These are often the cheapest options, although be aware that you may have to trade functionality for price.
A further option is to invest in some bespoke software. You can hire a consultant or software engineer to create and customise a CRM system, and then integrate it with your existing software. It is more time-consuming and expensive, with costs varying depending on what you ask the software designer to do.
Finally, managed solutions are a compromise between bespoke and outsourced packages. It involves renting a customised suite of CRM applications as a package.
Another effective way of building relationships with your customers, and a tool that will work in tandem with a CRM software package, is establishing a website presence. This will provide a constant point of contact for your customers and be a useful way of collecting information about them for e-marketing strategies.
Answering queries via your website, either through an FAQ facility or email service, shows your customers that you are ready to help. And it may save you time and money in the long run by cutting down on phone queries.
When your customers have registered their details on your website you can then compile a customer database, and make it easier for you and your business to look after the customers you already have.
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