Managing customer relationships

Managing customer relationships

Peter Drucker said, “The purpose of business is to create and keep a customer.” Every business is there to serve its customers. Failure to do so is a sure way to failure. It costs five times more to acquire a customer than to retain one. This shows why businesses should be concerned with retaining customers once they have acquired them.
Most companies that are concerned about their customers have adopted a customer relationship management (CRM) philosophy. CRM is defined as a strategy for managing an organisation’s relationships and interactions with its customers, potential customers, service users, suppliers and other stakeholders.

Customer relationship management deals with the acquisition, retention and maintaining a long term relationship with customers. CRM can be viewed in three ways: firstly as a technology which sales teams use to record, report and analyse interactions between an organisation and its customers and stakeholders or secondly as a strategy about how relationships with customers and potential customers and stakeholders are managed or lastly as a process or system which a business adopts to nurture those relationships.

Bob Thompson of Customer Think Corporation commented on the importance of a good CRM, “Successful CRM is about competing in the relationship dimension. Not as an alternative to having a competitive product or reasonable price – but as a differentiator. If your competitors are doing the same thing you are doing (as they generally are), product and price won’t give you a long-term, sustainable competitive advantage. But if you can get an edge based on how customers feel about your company, it’s a much stickier–sustainable–relationship over the long haul.”

Although CRM has been there before computers the use of IT in CRM has greatly enhanced the customer relationship management process because the key to a good CRM is uncovering and storing information about customers. With the use of IT a company is able to manage effectively its relationship with customers as it knows more about them.
A computerised CRM system enables sales teams to track their performance and also the performance of different products they sell and the impact of marketing campaigns. Sales managers and other senior executives have access to this information and can therefore track whether they are achieving their sales goals.

A CRM system makes it easier to track down a customer from the first contact to the point of its first sale and throughout its life. With the advent of social media it’s possible to view a customers’ social media activity with regards to what a customer’s needs are. It’s possible for a business to gauge a customer’s sentiments.
A CRM software helps in storing customer’s information in a database which is easily accessible to the sales personnel. From this information the sales team is able to design CRM strategies that are custom-tailored to a segment of the market and they can then also analyse the impact of such strategies.

Customised communication is made possible with the use of CRM software. It’s possible to automatically send out emails or messages tailored for each individual customer. A salesperson can program the CRM to send out a birthday wish on a customer’s birthday or a thank you message whenever a customer reaches his/her one or more years’ anniversary of purchases.
It’s important that sales staff leverage on the CRM system and the information collected by a CRM system to keep the customer relationship strong. This will help in retaining customers. This continuous communication helps in building trust and cementing the bond between the salesperson and the customer. Customers prefer to deal with someone they have a relationship with.

A strong relationship with a customer through the use of a good CRM is the key to future sales. Customers are much more likely to make more purchases from a salesperson that they trust and are bonded to. They will also likely refer their friends and family members to that salesperson as well.

Having a CRM system ensures that customers are well served on a daily basis thus enhancing customer satisfaction. The individualised or custom-tailored marketing messages or campaigns make customers feel the service is personal and therefore this will increase customer loyalty.

An effective CRM strategy will help a business increase revenues because with the right information about customers a company is able to provide the services or products that are wanted by customers. A business is also able to cross sell products to the current customers more effectively. For instance a financial institution can track a customers’ life stages in order to market appropriate banking products like mortgages at the right time when the customer can afford it. CRM systems also help in providing excellent customer service and also in retaining existing customers and discovering new ones through leads generated by the CRM.

Many businesses have found that by using CRM as part of their marketing strategies they are able to learn a lot about their customers, who they are and why they purchase your products, and the trends in customers’ purchasing histories. This helps businesses to better anticipate their customers’ needs. An effective customer relationship management strategy provides a strategic competitive advantage. A CRM system enables a business to optimize its customer interactions and therefore increases customer satisfaction. The absolute fundamental aim of each CRM system should be to make money out of satisfied customers. That should be the goal of every organisation.

l Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy (ACCA P3), advanced performance management (P5) and entrepreneurship. He can be reached at: sjakarasi@gmail.com, call on +266 58881062 or WhatsApp +266 62110062.

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