Transforming your one-time buyers into lifetime customers
Peter Drucker was an Austrian author of numerous economics and economics-related literature and a Professor of Management. He once said, “The purpose of a business is to create customers.”
Implied in his words and his work is the importance of keeping those same customers and of growing the depth of their relationship with you. After all, as research by Frederick Reichhold and Earl Sasser of the Harvard Business School shows, most customers are only profitable in the second time that they do business with you.
They are correct. Initially, new customers cost you money – money spent on advertising and marketing and money spent learning what they want and teaching them how your products/services would suit them.
Customer relationship management (CRM) can be the single strongest weapon you have as a manager to ensure that the customers become and remain loyal. It is the single strongest weapon you have, even before your people.
What is CRM?
Sounds like heresy? Let us explain what we mean. Great employees are and always will be the backbone of any business. But employee performance can be enhanced or hampered by the strategy you set and by the tools that you give employees to get the job done.
Done right, CRM is both a strategy and a tool. In your hands and in the hands of your team members, CRM comes to life, keeping you and your team on course and able to anticipate the changing landscape of the marketplace. With CRM, loyal customers aren’t a happy accident created when an exceptional customer service representative grasps and responds to a customer need.
Instead, you have at your fingertips the ultimate advantage – customer intelligence – data turned into information and information turned into a customer-satisfying action.
Implementing CRM is a non-negotiable in today’s business environment. Whether your customers are internal or external, consumers or businesses, whether they connect with you electronically or face to face, from across the globe or across town, CRM is your ticket to success.
Let us see what really CRM is. CRM is a comprehensive approach for creating, maintaining and expanding customer relationships. Let’s take a closer look at what this definition implies.
First, consider the word ‘comprehensive’. CRM does not belong just to sales and marketing. It is not the sole responsibility of the customer service group. Nor is it the brainchild of the information technology team. While any one of these areas may be the internal champion for CRM in your organisation, CRM must be a way of doing business that touches all areas. When CRM is delegated to one area of an organisation, such as IT, customer relationships will suffer.
Likewise, when an area is left out of CRM planning, the organisation puts at risk the very customer relationships it seeks to maintain.
The second key word in our definition is ‘approach’. An approach is “a way of treating or dealing with something”. CRM is a way of thinking about and dealing with customer relationships. We might also use the word strategy here because, done well, CRM involves a clear plan.
In fact, we believe that your CRM strategy can actually serve as a benchmark for every other strategy in your organisation. Any organisational strategy that doesn’t serve to create, maintain or expand relationships with your target customers doesn’t serve the organisation.
You can also consider this from a department or area level. Just as the larger organisation has strategies for shareholder management, logistics, marketing and the like, your department or area has its own set of strategies for employee retention, productivity, scheduling and the like. Each of these strategies must support managing customer relationships.
Now, let’s look at the words, “creating, maintaining and expanding”.
CRM is about the entire customer cycle. This is what we’ll discuss later as the customer service/ sales profile. When you implement your CRM strategy, you will capture and analyse data about your targeted customers and their targeted buying habits. From this wealth of information, you can understand and predict customer behaviour.
Marketing efforts, armed with this customer intelligence, are more successful at both finding brand-new customers and cultivating a deeper share of wallet from current customers. Customer contacts, informed by detailed information about customer preferences, are more satisfying.
You may be a manager whose area doesn’t deal with external customers. This part of the definition still applies. First, you and your team support and add value to the individuals in your organisation who do come into direct contact with customers. Again and again, the research has proven that external customer satisfaction is directly proportional to employee satisfaction.
That means that the quality of support given to internal customers predicts the quality of support that is given to external customers.
Second, consider your internal customers as advocates for your department or area. For you and your team, CRM is about growing advocates and finding new ways to add value.
Finally, what do we mean by ‘customer relationships’ in today’s economy, where we do business with individuals and organisations whom we may never meet, may never want to meet, much less know in a person-to-person sense? CRM is about creating the feel of high touch in a high-tech environment.
Consider the success of Amazon.com. If you are a customer of Amazon, you would not have ever spoken a single word to a human being during one of your service interactions. Yet, you have a sense of relationship with Amazon. Why? Because the CRM tools that support Amazon’s customer relationship strategy allow Amazon to:
- Add value to customer transactions by identifying related items with their “customers who bought this book also bought” feature, in much the same way that a retail clerk might suggest related items to complete a sale.
- Reinforce a sense of relationship by recognizing repeat shoppers and targeting them with thank you ranging from thermal coffee cups to stamps to ease the transition to new postal rates.
In short, customers want to do business with organisations that understand what they want and need. Wherever you are in your organisation, CRM is about managing relationships more effectively so you can drive down costs while at the same time increasing the viability of your product and service offerings.
Client tracking tool
CRM enables small business owners to tackle operational challenges, including sales decline, high client attrition, and misalignment between corporate revenue targets and salespeople’s commission policies.
There are several ways a client tracking tool can positively affect your bottom line.
- Client Management - You can use a CRM tool to get more visibility into your client base, ponder the tactics needed for long-term profitability and formulate better plans that impel your staff to break new operational ground
- Profitability tracking - This tool can also ease up the work of your accountant. They no longer need to worry about tracking every cent of revenue and focusing on shipping costs, product discounts and client returns. The software helps give a business a speedy bookkeeping system and more accurate financial reporting
- Sales strategy - As a business owner, the last thing you want is to lose income by targeting the wrong customer segment. Client administration programmes can provide you valuable intelligence about long-term sales trends, helping you adjust the existing corporate sales strategy and results tactics.
(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance journalist and could be contacted on email@example.com)