Tips for Cost-Effective Customer Retention Management

Customers today are much more demanding in their expectations of how they are serviced and the levels of service they will get. More often than not, a level playing field between many businesses means the only real differentiation and competitive advantages we can develop and sustain will be the relationships we forge with our customers. Many good businesses have made the mistake of assuming that they don’t have the advantages of knowing their clientele personally because of the rapid pace at which we do business today and the driving force to sell sell sell.
The truth of the matter is that with the right tools and business processes in place, it becomes quite easy to gather the customer details needed to easily develop and maintain those precious relationships with our clients that ultimately translate into key differentiation and competitive advantage. It’s been highly documented over the years that it costs between 6 and 10 times more to acquire a new customer than it is to retain an existing one, and by implementing a solid CRM solution and work processes that leverage it, your business can continue to grow from within.
Today we have an abundance of CRM solutions to choose from. Some are relatively inexpensive and lack some key functionality, while others require huge investments in time, planning, resources and money. These larger solutions are often overkill for all but the largest of enterprises and so it becomes a challenge to strike the right balance between a cost effective solution that delivers the desired results and throwing away time, money and resources.
A truly cost effective CRM solution that will serve a large majority of businesses does not need to include sophisticated telephony functionality, screen pops, and call management. Unless your organization is a major call center and your business is that of telephone support, these features would be an unnecessary investment. There are many other components to large CRM systems that add costs yet will go unused by most organizations, and knowing which features to trim and which to keep will allow you to deploy a cost effective solution that will serve all of your customers needs. This white paper examines the details of how to gain improved customer retention and acquisition for a lower overall investment by defining basic CRM functionality needed by most organizations to achieve their customer goals and objectives.

Introduction
Some companies with high customer churn rates or a more transactional sales style focus primarily on bringing new customers in the door, while those with longer business cycles or more relationship-building sales processes concentrate on retention. Both acquisition and retention are crucial to long-term business success and growth, but the majority of businesses regardless of sales approach can gain significant benefits by focusing on retention and selling back into their existing customer base. This is the primary objective of a CRM solution. Attracting, nurturing and capturing new customers is a secondary function of a CRM solution and fortunately most of today’s solutions handle these tasks equally well for little or no additional cost.
Acquisition is generally more expensive than retention, and effective acquisition promotions such as offering generous incentives to new customers can backfire with existing clients. Marketing campaigns and prospecting done in a hap-hazard and uncontrolled manner can cost much more than their incremental benefit. It is within these areas that a CRM solution will lower your cost of acquisition by providing the tools that your sales and marketing teams can leverage to acquire new customers while expending the least effort and cost.
Additional key components of customer acquisition are the metrics needed to make cost effective decisions. Having the data readily available to analyze marketing campaigns and expenditures over time vs. actual new client adds is vital to an organization. The CRM solution will handle these reports and indicators easily while retaining the relationship building history and data throughout the life of your new client. This makes the job of transitioning from new client to valued customer a seamless affair. Retention and loyalty usually cost less, and effective retention can actually enhance acquisition, because existing customers who feel valued will spend more and are generous with word of mouth recommendations.