CRM Strategy 101
June 8, 2010 2 Comments
By: Josh Druck
Customer Relationship Management (CRM) systems have attracted wide attention in businesses because of several benefits they offer. There are a number of major advantages created by improving service received by customers but most particularly in building and leveraging powerful and insightful databases of customer information.
CRM offers businesses the opportunity to gather customer information rapidly, to identify the most valuable customers over a period of time, and to increase customer loyalty by providing customized products and services. CRM can facilitate ‘cross selling’ by attracting loyal customers to additional products and services, and make it easier to capture similar customers in the future.
CRM delivers and supports a “Customer Responsive Strategy” which provides a competitive advantage to a business when it is able to:
- Deliver superior customer value by personalizing the interaction between the customer and the company.
- Demonstrate the company’s trustworthiness and reliability to the customer.
- Tighten connections with the consumer.
- Achieve coordination of complex organizational capabilities around the customer. (George Day, “Tying in an Asset”, in Understanding CRM (London: Financial Times, 2000)
CRM systems strategically focus on customer loyalty and retention, with a goal of winning a large share of the total lifetime value of each profitable customer.
Many hold that CRM consists of these 3 Main Elements:
1) Identifying, satisfying, retaining, and maximizing the value of a firm’s best customers.
2) Wrapping the business around the customer to ensure that each contact with the customer is appropriate and based upon extensive knowledge of both the customer’s needs and profitability.
3) Creating a full picture (avatar) of the customer.
The database created through CRM technology should contain information about the following:
- Transactions: this should include a complete purchase history for each customer, along with details (date, price paid, products purchased).
- Customer Contacts: record all customer contacts with the business and its distributors, including sales calls, service requests, complaints, and inquiries.
- Descriptive Information: relevant descriptive data that provide the basis for market segmentation and targeted communications.
- Response to Marketing Stimuli: whether the customer responded to specific advertising, price offer, direct marketing initiative, or any other direct contact.
What are some of your CRM stories/strategies ? Do you find it beneficial ?
Stay tuned for “CRM Strategy 102″ in the next coming weeks….