Customer Relationship Management

Customer Relationship 
Management (CRM)

You may have heard of or read other books of customer relationship management

(CRM) it has become one of those phrases that keeps getting repeated in business today. The phrase seems to have different meanings to different people. In its most simplest form it is an attitude, a mindset, a value that you place on your business and its relationship with its customers.

There are three main elements to consider which aligning your business to the CRM format. The first is to do with retention. Consider that your business will not have any new customers – this fact itself highlights the importance of retaining existing customers. Most businesses lose 15-50% of customers – this costs the businesses are lot in terms of profits and also reduces motivation of staff.

The second stage of developing the customer potential is turning that one off infrequent casual customer into a higher spending, more frequent, referring advocate.

The third more controversial element of customer relationship management is the de-selection of customers. If a company were to put more effort into existing customers it follows that have the greatest potential. This means that at some point it has to lose the customers that are the ones that are not offering long term future value.

The lifetime value of a client is critical concept that should be well understood. Customer lifetime value is typically the revenue that one customer can spend with you directly or through referral or recommendation over a nominal period of 10 years. A customer that buys once is probably doing so on trial. The more frequently a client returns the more their loyalty builds. Loyal customers are less sensitive to discounted offers made by competitors and are more profitable than customers that come in for special promotional offers.

The four steps of relationship management

The four steps of moving your business to a relationship based management program are:

1.        Segmentation

2.        Analyzing current behaviour

3.        Developing strategy to achieve target behaviour

4.        Behavioral maintenance

By behaviour it is meant purchasing or other behaviours of a customer in relationship to the organization and its products and services

Customer relationship management requires are holistic approach so that the information that is held about customers across the organization is drawn together at one central resource or is at least cross accessible.

Important aspects of CRM are in the following articles

• Why do customers defect?

• Serving customers profitably

• Customer service excellence defined

• How to achieve service excellence

• Customer satisfaction management

• Customer focused selling and marketing skills

• Using new technologies for customer service

• The ten most important customer service factors