Create a Winning CRM Strategy
Customer relationship management helps you manage your company’s interactions with customers, clients, and sales prospects. And, a well-managed process helps guarantee customer loyalty.
The software you use is important. But unless you understand the strategies underlying the organization, automation, and synchronization of your sales and marketing processes, you may find your
CRM program dead in the water – particularly if you failed to weave in appropriate customer-service and technical support. If you want to win clients, improve your efficiencies and reduce costs – generally make your life easier and your enterprise more profitable – you’ve got to think through your CRM strategy.
Worldwide spending on customer experience and relationship management (CRM) software grew 15.6% to reach $48.2 billion in 2018, according to research from Gartner, Inc. CRM remains both the largest and the fastest growing enterprise application software category.
Worldwide enterprise application software revenue totaled more than $193.6 billion in 2018, a 12.5% increase from 2017 revenue of $172.1 billion. CRM made up almost a quarter of that revenue. Approximately 72.9% of CRM spending was on software as a service (SaaS) in 2018, which is expected to grow to 75% of total CRM software spending in 2019, with agility and flexibility being big drivers, along with the requirement for remote and mobile users.
The adoption of CRM has been aided by businesses increasingly adopting cloud-based CRM solutions, allowing their employees to access the software anywhere they go on the smart device of their choice. “Cloud growth has dropped slightly in 2018 but remains strong at 20% and significantly above the overall growth rate of 15.6% for CRM,” said Julian Poulter, senior director analyst at Gartner.
What’s the ROI of CRM?
Forrester culled data from several companies that employed more than 2,000 employees and that were using Microsoft Dynamics CRM to quantify the impact of CRM. The study concluded that a 2,000-employee composite organization with an initial deployment of 50 users would experience a three-year, risk-adjusted ROI of 243 percent over a payback period of 4.1 months.
According to the Forrester study:
- 50% of teams improved productivity
- Sales productivity and uplift was 5%
- Consultation time was reduced by 10%
- Revenue increased by 2%
- Customer service labor cost was reduced by 40%
- Labor costs overall decreased by 20%
- Marketing budgets saved at least $75,000
Customer Relationship Management Strategy
Compare your CRM approach with this list of five best practices to uncover weak points and opportunities to improve the odds of your CRM success.
#1 Be Customer-Focused
Don’t let the data get trapped in marketing. Create a customer-inspired culture by having a systematic approach to sharing customer insight. Develop an internal communication strategy and plan to articulate customer learning’s across the enterprise.
In developing the plan, recognize internal department goals, objectives and the decision-making process, and provide customer data to improve business decisions. In addition, keep management knowledgeable about CRM programs and their contribution to company goals – especially financial – this will help you bolster future budget needs.
#2 Be Relevant
Build a customer relevant relationship by using customer insight to tailor your message to address individual customer’s needs, preferences and interests. The result of treating different customers differently is an increase in the amount of customer trust and affinity with the company over the long term.
A study conducted by Pepper and Rogers Group found that the extent to which the content of a message is customized to the customer’s needs increases the customer’s relationship strength by 37 percent.
#3 Keep It Fresh
Continuously refresh and refine your strategy to stay in tune with the market and your customers. In business, change is the only constant; there is change in market conditions, demographics, and psychographics, customer requirements, employee needs, company ownership, geographic span, store formats, competition, channels of communication and more.
The same goes for change in consumers’ expectations, shifting away from a desire for possessions to a desire for experiences. Overall, consumers are looking for the meaningful (which includes value and relevance). Monitor the change and the rising tide of your customer’s expectations and recognize when it’s time to re-engineer your loyalty program’s value proposition and communication strategy to be more relevant to your customers.
#4 Create a Dialogue
Starting a conversation with your customers gives you the opportunity to understand their lifestyle, life stage, needs, wants, aspirations and expectations.
There are myriad ways to gather customer feedback: focus groups, in-store intercepts, web-based surveys, customer panels, and telephone surveys, as well as internal customer-oriented indicators (e.g., repeat purchase rates, customer acquisition rates, sales and profitability by target customer segment, etc.). Each technique has its strengths and weaknesses in helping you build the total picture of the spoken and non-spoken messages from your customer.
Every arm of the company, from your management team to merchandising and planning to allocation, operations staff, and marketing will have a clear advantage over the competition when they are armed with a holistic view of your customer.
#5 Measure Success
Measure the company’s success from the customer’s point of view. Balance your internal measures of success with how your customer perceives your performance.
For most companies, existing internal performance metrics need to be enhanced to include not only traditional financial measures (e.g., year-over-year sales comparison, conversion rates, market share, margin, etc.) but also metrics that facilitate management from a customer-centric perspective (customer acquisition and retention rates, customer satisfaction, brand health, lifetime customer value, customer segment performance, customer response, performance of your loyalty program, etc.).
Communicate customer metrics as a foundation of the company’s growth and as a point of differentiation. Use CRM metrics in corporate communications, including the annual report and press releases to promote the health of the business.
Updated February 28, 2020
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Filed under: CRM