Customer relationship management helps companies retain customers and boost the effectiveness of their marketing strategies. Watch this video to see how customer relationship management is guided by technology to provide the most appropriate level of customer service.
Customer Relationship Management
An important guideline for marketing is knowing that it’s almost always cheaper to keep a customer than to win a new one.
To the savvy marketers who understand this, their job becomes a lot like a nurturing gardener who’s just sown a fresh crop of seeds for spring. For the marketers, the seeds are the customers they’ve won. They do the work to make sure each seed or customer has everything they need to flourish.Gardeners water and fertilize their young seedlings and give them sunlight to grow.
Marketers create a personalized relationship with customers, providing customized service, anticipating and satisfying needs, and going above and beyond whenever possible to delight customers. In the marketer’s case, growth is measured by the strength of the relationship between brand or product and customer rather than inches up the lattice.Now, while it would be great for everyone to receive this kind of lavish and elaborate one-on-one treatment as a customer, from a business standpoint it can be inefficient to devote so much care and specialized attention to everyone every time. Granted, good customer service is always essential; it’s more likely marketers will try to strike a balance between nurturing customer needs and the cost of doing so.One tool marketers use to achieve this balance is customer relationship management, or CRM for short. With customer relationship management, marketers grow relationships with existing customers through personalized service and identify the most valuable customer relationships to target more direct marketing strategies.
In essence, customer relationship management ensures that all customers feel like they’re receiving quality customer service while identifying the best customers on which to concentrate marketing efforts. The overall goal of customer relationship management is to increase customer retention and maximize the effectiveness of marketing strategies.Since it’s crucial to strike a balance between delighting customers and the costs that might come along with that task, marketers often use technology to pinpoint the best customers to apply more elaborate marketing techniques on.
Identifying the Best Customers
So, you may be wondering what makes a customer the ‘best’ customer to apply marketing techniques on. While there’s no one right answer, generally the ‘best’ customer is the one that’s thought of as the most receptive to your marketing tactic. Many times they are frequent, loyal customers who’ve shown their devotion to the product or brand.
For example, let’s say Sally, the owner of Serenity Spa, wants to thank her best customers for their loyalty. She goes through her appointment tracker to identify the customers who’ve visited the spa three or more times for two consecutive quarters. She invites these spa junkies to a special private yoga session with a popular instructor as a treat.
This is CRM in action. Sally used technology (in the form of her appointment-tracking software) to identify what she designated as her most loyal customers and created a special event to reach out to them and thank them for their patronage. At the event, Sally might even consider handing out percent-off coupons or gift cards to encourage even more repeat business.Again, CRM is all about understanding that the cost of putting on a private yoga session and printing up a few coupons is probably cheaper than starting an entirely new marketing campaign to attract brand-new clients.
CRM and Technology
The technology used to aid CRM can be as simple as Sally’s appointment tracker to very complex, multifaceted software programs that can develop customer profiles, design marketing programs, and even help marketers identify profitable segments.
You may have heard of investment bankers or insurance producers referring to a ‘book of business.’ Way back in the day, this literally was a book, listing all of the person’s clients with key notes identifying the most valuable customers as well as the ones they were looking to strengthen their relationship with. This is very similar to CRM software today, only CRM is more advanced. In fact, a ‘book of business’ today is most likely referring to some sort of CRM program.
Essential features of customer relationship management software are:
- to create an efficient way for a firm to track all customer interactions
- identify preferences for customers or groups of customers
- create marketing strategies to help companies satisfy needs and better manage relationships with their customers
A good CRM program can tell Sally that when Susan comes in for her pedicure, she’ll most likely go for the cuticle-remover upgrade since it’s been six weeks since she’s been in rather than her usual four. It may also have a note that Susan prefers the water tepid to lukewarm and that she always asks for a cup of green tea while her feet soak.CRM technology can compile information on customer characteristics, historical transaction data, preferences, and more – all to paint a better picture of customer intentions and perceptions so companies and marketers can anticipate and meet the needs for their customers.
To review, the main goal of customer relationship management, or CRM, is to increase customer retention and maximize the effectiveness of marketing strategies.
Using technology as a tool, CRM helps marketers grow relationships with existing customers through personalized service and identify the most valuable customer relationships to target more direct marketing strategies.Returning to our opening example, with CRM, marketers know when they need to act like the nurturing gardener, taking extra care and time with a customer, and when they can get by with a good watering and the occasional weeding, or good basic customer service and need satisfaction.
You will be able to describe the purpose behind customer relationship management, or CRM, after watching this video.