ARTICLE TABLE OF CONTENTS
This is about customer management or in short CRM (Customer Relationship Management) or CX (Customer Experience).
Companies use CRM to manage, analyze, and improve their interactions with customers.
So if you want to know what CRM is, how CRM works, and why almost every company should use CRM, then this article is for you.
Let’s get started!
Understand Customer Management
Customer management is an integral component of any business today. It is the approach that companies use to view every aspect of their interactions with both current and potential customers from the customers’ perspective.
CRM makes it possible for companies to increase customer loyalty and customer retention, which is the key to profits and success.
Customer loyalty and retention lead to free marketing, sales growth, brand recognition, and greater profits because these customers will recommend your business to their friends and families and share their experiences on social media.
The Philosophy of Customer Management
The philosophy of CRM at its most basic level is that the customer comes first.
By focusing on improving customer relationships, customer loyalty will increase. As a result, customers are more likely to purchase more products and services, spend more money, and recommend your business to other businesses (Business-to-Business) or friends and family (Business-to-Customer).
One aspect of CRM is technology that is data-driven and allows you to see all of the information on each customer in one place. This includes previous and current orders, any past issues, and more, and it provides an effective means for positive and personal communication with each individual customer.
By focusing on the relationship, you can determine not just what customers have done in the past, but why they have done it.
The more you can learn and understand about your customers, the better you can manage the relationship and keep them happy.
What Type of Businesses Should Use CRM?
No matter what your business is, you’ll have clients, so every business should use customer relationship management.
When you use CRM, everyone in your company can improve customer relationships.
You can provide a consistent customer-focused approach for each customer.
No matter how large or small your business is, having access to customer data and behaviors is the key to customer satisfaction.
In addition, every person in the company will have access to customers’ preferences in terms of upselling, cross-selling, and personal likes and dislikes.
By arming your employees in sales, customer service, and marketing with information on each customer, they will be able to make informed decisions quickly to provide the best possible customer experience.
Why Is CRM Important to Your Business?
Most companies have already discovered the advantages of CRM for their businesses:
The most important aspect of CRM is that it will help you keep your current customers while gaining new ones.
The CRM market has become the biggest software market worldwide. It is forecasted that the CRM software market will have a revenue of 40.26 billion U.S. dollars worldwide by the year 2023.
CRM associates communications, purchases, and marketing with customers and leads, which allows you to learn how to give them what they are looking for.
The strategy of customer relationship management accomplishes this goal in the following ways:
Understanding Your Customer
You can learn more about each individual customer, including what they purchased, why they purchased, and what their purchasing trends are. By studying this information, you can predict future needs and be ready to meet them.
You can also target appropriate customers for future sales and promotions.
By having customer data in one file and providing access to any employee who has contact with the customer, your employees will not need to hunt down information or give inconsistent answers to the customer.
When a customer calls or comes into your business, every employee will have access to the same information, which creates consistency in the customer’s experience with your business.
Consistency leads to trust and loyalty.
Ability to Prioritize
Access to a customer’s complete history helps you to sort out customers who buy very little but use a great deal of resources in calls to customer service, versus a customer who makes large purchases. This allows you to differentiate your sales and marketing tactics to seek out customers who are more likely to make purchases and be satisfied.
What Does Customer Management Do for Your Business?
Customer management or CRM uses technology to create data on customers and prospective customers. This data can be very specific, including each customer’s email, address, phone number, social media data, purchases, customer service records, and survey responses, to name a few.
As this data is collected, it provides a more and more specific snapshot of each customer so that you can improve your company’s relationships on a customer-by-customer basis. If you use online billing, these records can also be linked. There is no limit to the information you can gather.
CRM supports a customer-focused approach. It ensures that every interaction with a customer or a lead is meaningful and leads you closer to retention and/or procurement.
It’s important to keep in mind that customers form opinions every single time they interact with a business. The summation of these experiences leads to the customer’s overall impression of your company.
How customers feel about your products and services is directly linked to how they feel about their experiences.
Providing customers with deliberate customer-focused experiences helps to instill a positive image of your brand.
How to Use Data to Improve Customer Relationships
There are so many options available to customers today that they are demanding more from businesses. It isn’t enough to offer a good product because they can find it somewhere else. The world is more connected than ever, and customers have many choices.
Customers want personal experiences, and they want to be heard. If they have complained in the past, they expect you to know about it and avoid making the same mistake.
The data you collect with CRM can help you to ensure that customers have positive experiences.
Take a look at five ways that you can use CRM data to improve your customer relationships:
Personalize Customer Experiences
Because you have every single interaction as well as personal information about each of your customers at your fingertips, you’ll be able to personalize customer experiences. This benefits your business in terms of sales, marketing, and customer service.
Your employees can address customers by name and reference past interactions to make the customer feel important. This tool is especially useful in marketing new products and promotions.
You can make recommendations based on past behaviors, which will make customers more likely to buy more products and services. By telling the customer that since their liked product X, you think that they might like to see product Y, the customer will feel acknowledged and important.
When you personalize your customers’ experiences, their perceptions of your company will improve and be positive. People gain confidence from personalization, and CRM data can provide you with this opportunity.
Identify VIP Customers
If you have all of your customer data organized, you’ll be able to identify your VIPs, or customers who are the most loyal. The Pareto Principle states that 80% of your profits come from 20% of your customers.
You can break it down further to say that your highest revenue transactions come from only 1% of your customers, large sales from 4%, and medium sales from 15%. That is your top 20%.
You can use CRM data to identify which category your customers fall in so that you can focus on the VIPs. It’s critical to do everything possible to improve and maintain these customer relationships because they account for most of your profits.
You’ll have all of the data you need in one location for each prospective customer. This gives you an opportunity to study the process of each sale. You can learn how many contacts it took to engage with the customer and how long it took to close the deal.
This strategy will allow you to identify sales approaches and marketing materials that are successful and eliminate those that are not.
By improving your sales approach, you can spend more time employing methods that work and successfully lead to growth and success.
Predict Future Customer Purchases
Another way that CRM data will help you is by enabling you to predict future customer purchases. You’ll have data available on past purchases and preferences for each customer, and by analyzing this data, you can predict what each customer is likely to do.
By targeting products within the customer’s known interest area, you are likely to increase sales.
Retain a Greater Number of Your Customers
According to a research conducted by Harvard Business Review, 58% of the respondents stated that their organization had seen a significant increase in customer retention/loyalty as a result of using customer analytics:
You can use the data to improve your customer relationships and increase customer satisfaction, but there is more that you can do.
You can use data from customers who have left your business to prevent your current customers from leaving. If you analyze the data, you’ll be able to pinpoint common trends of dissatisfaction so that you can improve your current relationships.
For example, if a number of customers are unsatisfied with a return policy, you’ll know that it needs to change.
How CRM Improves Your Customer Service
In addition to improving customer satisfaction in sales, CRM can also improve your customer service and provide tools to your agents to further promote the customer relationship.
When a customer calls in, the customer service agent will have the same information that your sales team has. Each agent will be able to treat each customer as an individual and personalize the experience. In addition, customer service agents will all have the same information, so if the customer calls a second or a third time, they will be met with consistency.
Consistency is the key to building trust, and even when a customer is calling about a negative experience, it can be turned into a positive experience through positive trust-building interactions.
Three Types of CRM
There are three primary types of CRM applications, and they can work together to improve overall customer experiences. It’s important to understand the differences between them.
This type of CRM focuses on the automation of sales, marketing, and customer service.
For each customer, all information from the first contact with the business to the most recent interaction is kept in one system, and the information is readily available across the company for any future interactions.
Analytical CRM analyzes customer data so that management can identify areas where they can improve customer relationships. This approach uses data from all customers to show the business methods that are working as well as those that are not.
Businesses can identify important patterns of behavior that give insight into how well a product is selling among various customer bases or how customers have responded to a recent change. This information can be a valuable tool to show management where they need to make changes before they lose customers to their competition.
A collaborative CRM is also called a Strategic CRM, and it allows companies to share customer information across departments.
In general, different departments such as sales, marketing, and technical support are separate departments. When these departments have access to the same customer file, customers walk away with the impression that the company is connected.
The most important aspect of the collaborative CRM is that it reinforces the philosophy of putting the customer first.
When everyone has the same goal and access to the same information, the company can deliver a unified customer-first experience.
Why Does Customer Relationship Management Matter?
Besides the fact that customers are the driving force that makes your business a success, customers today are demanding a more personalized approach to their buying experiences.
Customers have so many options available that they don’t need to stick with one company or one brand. In addition, customers are more willing to try new brands than they were in the past. This means that you have an opportunity to gain new customers because they are open to the possibility, and you have a challenge in retaining customers. To be successful and experience growth, you need to do both.
Take a look at the following reasons that customer relationship management matters:
- creating a more meaningful connection leads to higher customer retention rates,
- positive customer interactions lead to increased purchases,
- continuing to interact after the sale creates loyalty and trust,
- brand recognition, and
- happy customers will give referrals.
Can CRM Be Integrated With Tools?
Integrating customer relationship management with tools including email, social media, and more is incredibly helpful for generating leads, converting leads to customers, and retaining customers.
Take a look at the different tools that you can integrate with your CRM:
With email marketing, you can send marketing content that is personalized to both your customers and your leads. Email marketing also keeps the leads and the customers engaged with your business and reminds them that you are there for them.
According to a survey conducted by Salesforce Research, 76% of advertisers worldwide use e-mail addresses pulled out of available CRM-based data and use it for digital advertising:
You can track the success rate of your email campaigns by gathering data on how many times an email was opened or a link was clicked. This data will give insight into strategies for improvements that will increase customer responsiveness.
Integrating your social media presence with your CRM is almost essential in the world today.
Not only can you see firsthand interactions with your customers and leads, but you can reach customers and potential customers by tracking keyword activities that relate to your products or services. In addition, because of this valuable insight, your social media manager will be able to produce content that is targeted to your customer base and provide offers that are relevant to those who are engaged.
You gain brand recognition through your presence, and you can use the information to generate more engagements from prospective customers.
When you integrate messaging with your CRM, you can connect with customers about issues that are specifically their own. For example, you can automate reminders for upcoming events or offers.
You’ll have records added to each customer profile showing whether they engaged. If you send coupons, you’ll know how many people took advantage of your offer, which leads to further information on the value of the products offered.
When you integrate telephone with your CRM, your agents will have all of the information available on a customer when they make a call. In addition, agents will be able to add detailed notes to the file for future interactions.
If your customers are willing to complete a survey at the end or give feedback, this will give you further information that leads to improvements in the entire customer experience.
When you provide live chat, you can add entire conversations to the system. In the initial communication, the computer recognizes the IP location, name, email, phone number, and any other important information and provides it for the agent.
The chat history can be added to the customer’s file and will be beneficial in dealing with future issues with the same customer.
How to Develop the Right CRM Strategy
Putting your customers first is the philosophy behind customer relationship management, but you need to implement an effective strategy to get the most out of the data you are able to collect.
Take a look at the following ways that you can come up with the best strategy for your business:
Define Your Goals
Taking a customer-focused approach that is designed to improve the customer experience is not the end game of your business. The idea is that by focusing on the customer, you can provide better products and services so that your business will see an increase in sales and profits.
With that in mind, you can start by defining your specific goals. Once you know what they are, you should determine how you plan to accomplish these goals and what information you need.
All Customers Are Not Equal
In business, all customers are not equal. Some customers will use up a lot of your time and do very little in terms of sales, while others may be in and out while making a large purchase.
It’s important to identify customers who tend to make larger purchases and customers who are repeat buyers because they are most valuable to your business from a financial standpoint. This doesn’t mean that you should ignore customers that are lower down on the list, but it does mean that you should make special efforts to focus on returning customers and big spenders, as your business relies on profits to function.
Train Your Employees
No matter how much data you can collect and organize, if the people who need to use it, your employees, aren’t trained and are unaware of your goals, you’ll never realize the advantages that CRM provides.
Your employees should understand your company philosophy and how you want to manage your customer relationships. In addition, they should know how to use the data to improve the customer experience.
When you offer training to your employees so that they know how to access and make use of the data, your employees will be able to help you achieve your goals.
Make Changes Over Time
It can be very tempting to take your new strategy and implement it in full right away, but this can be overwhelming for both your customers and your employees. Start with the basics, and train your employees along the way. Make sure that they are comfortable with each step of the process. Your goal is a long-term solution, and you can implement it in phases.
Track Leads Before Contact
Social media provides a wealth of information about leads and what they are looking for.
By tracking social media trends related to your business, you can evaluate and predict what potential customers are looking for as well as their expectations. This information can be helpful for growth opportunities.
Integrate Everything with Your CRM
You really do want to integrate everything from your calendar to your social media presence to your email strategy with your CRM. There is no such thing as too much data because the more you have, the more in-depth analyses you can make.
Remain Flexible and Open to Improvement
You should revisit your strategy and make sure that It’s working efficiently to achieve your goals. This is important because the whole point in having all of this data is to identify ways to improve your customers’ experiences. Do not hesitate to make changes if you identify something that isn’t working effectively to advance your goals.
If you find that the results aren’t what you expected, you can learn from it and implement a better strategy.
Benefits of CRM
Often small business owners think that they do not need the extensive data that is available through customer relationship management. However, any business, large or small, can benefit from this information. Large businesses have volume, but small businesses need to enhance their customers’ experiences even more because they have fewer customers.
Take a look at the following benefits of CRM:
Customer Information in One Place
You’ll have every aspect of your interactions with each customer in a file designated specifically for that customer.
Even if you have a small business and think that you know everything firsthand, over time you may forget small but important bits of information. This can be the difference between keeping a customer or losing them.
In addition, you’ll be able to use the collective data on all of your customers to identify strengths and weaknesses in your approach as well as your products and services.
Below is the list of customers of Oracle’s NetSuite CRM for the year 2020. You can see that their customer base is made up of many different industries.
Customers from the professional services industry make up the largest customer share at 29.4%.
Having all of this data organized in one central location is extremely beneficial to any business.
You Can Predict What Sells
You’ll be able to analyze trends and data concerning your products and services so that you’ll know what sells and when.
If you have products that are popular during a specific time of the year, you can replace those products with others during their off-time. This kind of in-depth analysis and information will improve your business plan so that you are offering customers what they want, when they want it.
You Can Increase Conversions
Because your CRM will track and provide valuable information about leads, you’ll be able to identify your target customers and provide what they want. You’ll have an edge on your compsetition because you’ll be ahead of the game.
You’ll Retain Your Customers
Customer retention is key to the success of a business, and by knowing how to improve the customer experience for each individual customer, you’ll be able to consistently provide customer satisfaction. This increases trust and loyalty, which converts to future sales and profits.
You’ll Improve Your Brand Reputation
When you are able to satisfy customers in every department from sales to marketing to customer service, you’ll grow trust in your brand and improve your brand reputation.
The number one reason that customers return to a business is trust, and businesses that take a customer-focused approach are able to instill trust and keep customers coming back time and time again.
You’ll Increase Customer Referrals
Social media can make or break a business, and when you provide great customer relationships, they will share their experiences on social media. The effect is that you’ll reach a number of potential customers who are hearing glowing reviews of your company. This translates to more leads, conversions, and sales.
It Is Easier for Employees to Be Consistent
When you have a CRM strategy, your employees will have access to all of the information for every customer interaction. This way, they can be consistent in their interactions with customers.
When the business takes a customer-focused approach, the employees learn how to use the information to become more customer-oriented, and they become more efficient and provide better service.
You’ll Reduce Your Costs
Having a customer relationship management strategy will reduce your costs. You’ll be able to use the data to see and understand marketing campaigns and products or services that are not working and eliminate them quickly.
In addition, you’ll have data compiled automatically in one central location, and your departments will be able to work together toward the common goal of improving the customer experience.
You Can Save Time
You’ll be able to automate tasks such as email campaigns, reminders for customers, and creating reports. As a result, your employees can focus on developing customer relationships, and you can focus on providing the products and services that customers want.
You’ll Encourage Teamwork
When all departments have access to the same information, they can work together to enhance the customer experience for each customer. When they succeed, they will celebrate successes together. This creates a sense of teamwork as employees work toward a common goal.
Your Profits Will Rise
The ultimate goal of any business is to earn profits, and by focusing on the customer experience, you’ll increase your profits. The key is to provide what customers want and earn their trust so that they are loyal to your brand.
You’ll Convert Leads More Quickly
Converting sales is the process of taking a lead and turning it into a customer. It begins with the first contact and continues through the sale. What distinguishes a successful business from an unsuccessful one is the ability to convert leads.
The data from your CRM strategy allows you to convert sales more quickly, which leads to success.
Evidence That Customer Relationship Management Works
Numerous studies have been done to track and calculate the impact that CRM has on businesses. The results show that this strategy is effective, and as technology provides more solutions, businesses can further customize the customer experience.
Take a look at the following statistic-based facts:
Sales Force Automation Is the Number One Request
According to Software Advice, businesses are using CRM for sales force automations.
The top three services requested are:
- Contact management (88%)
- Tracking interactions (80%)
- Scheduling and reminders (75%)
The reason is that businesses implement CRM solutions gradually and sales force automation is the first step of the process. Once businesses are established, they incorporate other aspects of CRM to further improve the customer experience.
A study by Capterra called CRM User Research Infographic shows that when asked which aspects of their business were most significantly impacted by CRM, businesses responded:
This shows that businesses are seeing significant improvement in these areas after they implement CRM strategies.
Most Customers Leave Because Company Doesn’t Care
Businesses often mistakenly think that a customer left because they were dissatisfied with products or prices.
However, a study shows that in fact, customers leave when they think a company doesn’t care about them.
When asked why they left a company, customers responded as follows:
This shows how important It’s to embrace a customer-focused approach and make the customer feel valued.
Customers Share Bad Experiences
When customers have a bad experience or a negative interaction with a company, they tell people. This can harm a company’s reputation and hurt its ability to gain new customers.
In a study by ClickFox, customers who had a bad service experience did the following:
This study shows just how damaging negative customer interactions can be for a business.
Customer Satisfaction Creates Loyal Customers
When you take a customer-centric approach, it pays off.
Another survey by ClickFox asked customers what the best way is to build customer loyalty, and these are the results:
CRM Is Growing
Grand View Research found that CRM has experienced incredible growth. It was a $14 billion industry in 2010, and It’s projected to reach $80 billion by 2026. That is a 600% increase.
Businesses are catching on that It’s important to go all out to enhance the customer experience if they want to succeed.
Most Businesses Are Doing It
CRM Magazine found that 91% of businesses with 10 or more employees use CRM software.
Improving customer relationships is critical to all businesses today, and It’s necessary for survival.
CRM Improves Conversion Rates
Cloudswave found that a CRM can increase sales conversion rates by up to 300%. The reality is that salespeople are able to spend the majority of their time focusing on sales because CRM automates so many processes.
People are no longer limiting their transactions to their computers; today, more and more people are using smartphones, tablets, and other mobile devices to access the Internet. They expect to have the same services available on these devices as they do on their computers.
In fact, CRM SDKs (Software Development Kits) exist across Android apps, with Adobe Experience Manager as the most popular mobile CRM SDK having a 39% integration reach as of 2020:
In addition, employees no longer rely on desktop computers. Often, employees work from home or use mobile devices to provide convenience for customers in the store. Take a look at the benefits of mobile CRM for employees:
- calendar integration,
- call into virtual meetings,
- access to leads and opportunities,
- use of shared files,
- simple dashboard,
- manage customer service, and
- 24/7 data availability.
This information allows employees to focus on providing the best possible customer experience whether they are at work or away from their desks.
Are There Any Drawbacks with CRM?
The advantages far outweigh any drawbacks, but It’s important to consider them. It’s almost necessary to take a customer-focused approach today because customers expect it.
Take a look at the following potential drawbacks:
Often businesses do not keep a backup copy of their customers’ data, and in the case of an outage or system error, companies can lose valuable data.
However, if you back up to a cloud server, it should help to prevent this problem. It’s always a good idea to make sure that your data is backed up.
There is a cost associated with CRM, but studies have shown that the benefits far exceed the costs. In fact, in a study by Nucleus Research entitled CRM pays back $8.71 for every dollar spent, they found that returns from CRM have increased from $5.60 to $8.71 for every dollar spent.
Loss of Human Touch
If your business over-automates, there will be a loss of human interaction that makes the customer experience more impersonal.
It’s important to use CRM to improve the customer experience, but you must remember that customers want to interact with other human beings.
CRM makes it possible to automate almost any process, so make sure that you don’t over-automate.
It Requires Training
CRM will not effectively do what you need it to do without training your employees.
It’s important to make sure that all of your employees understand how to use CRM to work toward the common goal of improving every customer experience. This requires an initial investment in training.
When you have customers’ personal and confidential information, you always need to be mindful that a data breach or a lack of security with their information can have devastating consequences for your company.
Make sure that you take steps to ensure that your customers’ files are safe.
You’ll need to provide technical support to your employees for your CRM.
You’ll either need to hire someone or use the services of a company. As with anything, It’s part of the cost of doing business, and the benefits outweigh this cost.
Customer Relationship Management Is the Answer to Customer Expectations
Customer management is a growing trend, and It’s becoming more important every day.
Customers expect businesses to listen to them and find solutions. They also want to feel as though they matter.
Customers are coming to expect personalized service, and they do not have the patience for being transferred from one department to the next with no consistency.
Customer management allows you to access customer data whenever there is an interaction with the customer and provide meaningful communications, and in today’s world, customers want to work with businesses that care about their experiences.