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Introduction
In today’s competitive business environment, successful businesses understand that focusing on the customer is absolutely crucial. Implementing a (CRM) system is a smart investment that helps companies manage relationships with customers by compiling, storing, and analyzing customer data. Finding the right CRM software and applications can help grow revenues and streamline operations. CRM is a company-wide strategy focused on increasing customer loyalty and growing profits.
Building Loyalty
Loyal customers can help promote business, drive demand for products, and bring in more customers. “Quite likely the only possible source of sustainable competitive advantage in the new economy will be the bonds of loyalty you generate. If this strategy seems like an uphill battle in today’s environment, remember that sustainable advantage means outperforming your competitors,” says Frederick F. Reichheld in Loyalty Rules! (2001). “Although defection rates across your industry may be climbing, you need to build relationships that are stronger and more enduring than your competitors.’” It is less expensive for a business to invest in retaining existing customers than work to find new ones. According to Reichheld, increasing customer retention by 5% can yield a 75% increase in customer net present value (2001). CRMGuru founder Bob Thompson says, “A Walker International survey of more than 4,000 people in September 2004 found that IT vendors with high customer loyalty generated an average operating margin of 12 percent, while laggards experienced negative 11 percent margin” (2005).
While initial interactions determine whether customers will do business with a company, subsequent interactions determine whether they will stay. For some businesses, customers may have more contact with technical, service, and support people than with the sales person from whom they bought a product or service. Companies, whether large or small, must make the most of all interactions and give them as much importance as initial sales.
How Customers Rate Service
For many firms, there also is a dichotomy between how they view the caliber of their customer service and how their customers see it. A Bain & Company survey of 362 firms found that 80% believed they delivered “superior service” to customers, but these firms’ customers said only 8% of them actually provided that level of service (2006). In fact, although many business leaders pay lip service to the importance of loyalty, a CRMGuru survey found that when it comes to investing money in this area, 40% prioritized acquiring new customers, while only 22% placed priority on retaining old ones (Thompson, 2005). Still, smart executives make retention a company-wide priority.
If employees throughout a firm understand their role in building good customer relations, they’ll be more likely to support CRM strategies. Consequently, a successful CRM strategy should be accessible to employees throughout a company. New employees should be able to get up to speed with CRM technology in a reasonable amount of time and have specific procedures to follow. All employees should feel that the CRM solution helps the company, makes their job easier, and improves their performance. When employees “buy into” and feel that they own a CRM solution they are more likely to push rather than resist its implementation.
Basic Elements to Look for in a CRM System
As organizations turn more attention to offering quality customer service in a cost-effective way to grow revenues, more resources will be invested in customer service and support applications. AMR Research predicts the CRM market will reach $18 billion by 2010. More conservatively, Forrester Research expects about $10.9 billion in sales in the same time period (SearchCRM, 2006). Despite differing expectations for the market, experts are in agreement that CRM will continue to be an important piece of the equation for attracting and retaining customers.
An effective CRM strategy can:
- Create a consistent system of tracking customer contacts
- Automate marketing and allow multichannel marketing campaigns
- Allow corporate reporting features accessible to top managers and employees
- Improve call center applications and support
- Integrate various systems, allowing more comprehensive analysis of data
1. Contact and Data Tracking
Sales software can help track contacts at every stage of the sales cycle. Sales force automation software from vendors such as Pivotal can help businesses:
- Analyze sales forecasts in real time
- Accelerate sales cycles by improving communication with sales representatives
- Reduce administrative work
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