A beginner's guide to customer relationship management, Accounting Technician, Nov/Dec 2010
Customers are key to business success. Iwona Tokc-Wilde explores the benefits and drawbacks of a strategy encouraging business growth through improved customer loyalty
What is CRM? Customer Relationship Management (CRM) helps businesses learn about the behaviour and needs of their customers, and modify their operations to serve these needs in the best possible way. Although nowadays CRM is virtually synonymous with software that supports this strategy, the concepts of good customer care and capitalising on improved customer relations are as old as business itself.
It is acknowledged that it costs much more to recruit a customer than to retain an existing one. This cost varies by industry, but the figure most commonly cited is six times as much. What is more, when it comes to poor service, 44% of customers adopt a “two strikes and you’re out” approach, according to a new survey by American Express. In the current economic climate, however, businesses must meet the needs of their customers every time. And, the better you understand your customers, the more likely you are to get it right.
How do I do that? CRM involves collection, storage and analysis of customer information in order to identify trends and relationships, and using this analysis to enhance marketing, sales, and the overall customer experience.
However, CRM is not simply about maintaining a customer database. ‘The database helps facilitate a CRM programme; it’s not the CRM programme itself,’ says Matt Baldwin, managing director of Coast Communications, a PR and communications consultancy. It is about getting to know your customers and improving your business offering based on this knowledge, and the right software is only a tool that can help you achieve this.
As for implementing a CRM programme, Baldwin advises to be selective. ‘Don’t try and capture everything. Often all that’s needed is correct contact details, who ‘owns’ the client, and the work undertaken,’ he says. This is then expanded by the addition of queries, complaints and any other information as long as it is relevant to that customer and to your dealings with them.
How can it benefit my business? You have all customer information available at the touch of a button and can improve complaints and query handling. You can also increase value from the existing customer base. Richard Ilsley, founder of the global consulting firm Synogis and a partner at The Sales & Marketing Consulting Group, suggests that, after not losing customers, selling more to them is the next easiest way to grow your business. ‘There are reasons why some customers continue to buy your services while others don’t. You need to find out what the barrier is and resolve it,’ he says.
As for finding new customers, it will be easier to identify new prospects based on the knowledge gained from your existing customer base. Ultimately, the data you have collected and analysed can also highlight which of your customers are profitable and which are not.
How else can I use this information? You can send out tailored communications. For example, many businesses nowadays email a regular newsletter to their customers, but it must be relevant to its readers and must have the capacity to both inform and entertain them. Similarly, your business website must be not only up-to-date, but user-friendly as well and, to achieve this, you need to know its users. Also, you can focus your marketing efforts at the right targets. ‘And ensure that your most important customers receive a Christmas card,’ adds Baldwin.
Do I need specific CRM software? No. A simple spreadsheet works well for small businesses. However, as the business grows, a software package will always be a better solution. Before deciding on the software, Ilsley advises to first clarify your needs. ‘It’s likely that you’ll need a customer/prospect database, relationship history and activity prompt along with the ability to produce progress and summary reports. And all these needs can be met with simple software,’ he says.
Online CRM tools are the simplest and most cost effective, because there are no associated enhancement and maintenance costs. ‘Many online vendors offer a free version and you may find it meets your needs,’ says Ilsley. ‘With the paid-for version, you can expect to pay between £10 and £50 per month per user, depending on the features you need.’
Off-the-shelf solutions are also cost effective and can integrate with your existing systems, but it is a trade-off between functionality and price. Bespoke software is always the most expensive, but rarely needed except by larger firms.
Does it go wrong? Yes, without staff buy-in. CRM may require a cultural change so that employees view the business from the customer’s perspective. Leading by example is equally important. ‘Senior management must use CRM in a way that demonstrates its value. They should also celebrate any attributable successes to encourage its use,’ says Baldwin.
Ilsley adds that the staff must understand your commercial objectives for implementing CRM. ‘This ensures that the users actually use the system. Otherwise, many see it as no more than an additional administrative burden.’
CRM will not work if employees do not receive proper training on what data to capture and how to use it. ‘Users need to understand that if rubbish goes in, rubbish comes out,’ warns Baldwin. Also, whilst processing and storing customer data, you mustn’t fall foul of the Data Protection Act.
Finally, ‘CRM isn’t the alternative to good customer service and won’t engender customer loyalty in itself,’ notes Baldwin. ‘This will stem only from the customer experience. If calls are not returned, emails left unanswered or complaints ignored, it doesn’t matter what CRM tool you use - the customer will simply go elsewhere.’
Find out more
What is CRM? Customer Relationship Management (CRM) helps businesses learn about the behaviour and needs of their customers, and modify their operations to serve these needs in the best possible way. Although nowadays CRM is virtually synonymous with software that supports this strategy, the concepts of good customer care and capitalising on improved customer relations are as old as business itself.
It is acknowledged that it costs much more to recruit a customer than to retain an existing one. This cost varies by industry, but the figure most commonly cited is six times as much. What is more, when it comes to poor service, 44% of customers adopt a “two strikes and you’re out” approach, according to a new survey by American Express. In the current economic climate, however, businesses must meet the needs of their customers every time. And, the better you understand your customers, the more likely you are to get it right.
How do I do that? CRM involves collection, storage and analysis of customer information in order to identify trends and relationships, and using this analysis to enhance marketing, sales, and the overall customer experience.
However, CRM is not simply about maintaining a customer database. ‘The database helps facilitate a CRM programme; it’s not the CRM programme itself,’ says Matt Baldwin, managing director of Coast Communications, a PR and communications consultancy. It is about getting to know your customers and improving your business offering based on this knowledge, and the right software is only a tool that can help you achieve this.
As for implementing a CRM programme, Baldwin advises to be selective. ‘Don’t try and capture everything. Often all that’s needed is correct contact details, who ‘owns’ the client, and the work undertaken,’ he says. This is then expanded by the addition of queries, complaints and any other information as long as it is relevant to that customer and to your dealings with them.
How can it benefit my business? You have all customer information available at the touch of a button and can improve complaints and query handling. You can also increase value from the existing customer base. Richard Ilsley, founder of the global consulting firm Synogis and a partner at The Sales & Marketing Consulting Group, suggests that, after not losing customers, selling more to them is the next easiest way to grow your business. ‘There are reasons why some customers continue to buy your services while others don’t. You need to find out what the barrier is and resolve it,’ he says.
As for finding new customers, it will be easier to identify new prospects based on the knowledge gained from your existing customer base. Ultimately, the data you have collected and analysed can also highlight which of your customers are profitable and which are not.
How else can I use this information? You can send out tailored communications. For example, many businesses nowadays email a regular newsletter to their customers, but it must be relevant to its readers and must have the capacity to both inform and entertain them. Similarly, your business website must be not only up-to-date, but user-friendly as well and, to achieve this, you need to know its users. Also, you can focus your marketing efforts at the right targets. ‘And ensure that your most important customers receive a Christmas card,’ adds Baldwin.
Do I need specific CRM software? No. A simple spreadsheet works well for small businesses. However, as the business grows, a software package will always be a better solution. Before deciding on the software, Ilsley advises to first clarify your needs. ‘It’s likely that you’ll need a customer/prospect database, relationship history and activity prompt along with the ability to produce progress and summary reports. And all these needs can be met with simple software,’ he says.
Online CRM tools are the simplest and most cost effective, because there are no associated enhancement and maintenance costs. ‘Many online vendors offer a free version and you may find it meets your needs,’ says Ilsley. ‘With the paid-for version, you can expect to pay between £10 and £50 per month per user, depending on the features you need.’
Off-the-shelf solutions are also cost effective and can integrate with your existing systems, but it is a trade-off between functionality and price. Bespoke software is always the most expensive, but rarely needed except by larger firms.
Does it go wrong? Yes, without staff buy-in. CRM may require a cultural change so that employees view the business from the customer’s perspective. Leading by example is equally important. ‘Senior management must use CRM in a way that demonstrates its value. They should also celebrate any attributable successes to encourage its use,’ says Baldwin.
Ilsley adds that the staff must understand your commercial objectives for implementing CRM. ‘This ensures that the users actually use the system. Otherwise, many see it as no more than an additional administrative burden.’
CRM will not work if employees do not receive proper training on what data to capture and how to use it. ‘Users need to understand that if rubbish goes in, rubbish comes out,’ warns Baldwin. Also, whilst processing and storing customer data, you mustn’t fall foul of the Data Protection Act.
Finally, ‘CRM isn’t the alternative to good customer service and won’t engender customer loyalty in itself,’ notes Baldwin. ‘This will stem only from the customer experience. If calls are not returned, emails left unanswered or complaints ignored, it doesn’t matter what CRM tool you use - the customer will simply go elsewhere.’
Find out more
- The Business Link website has information on all aspects of Customer Relationship Management and Data Protection Act – www.businesslink.gov.uk
- The Knowledge Bank at www.synogis.com is a database of free, downloadable documents on all aspects of best business practice
- For source of email newsletter templates and a free trial, visit www.newsweaver.co.uk
© Iwona Tokc-Wilde