Importance of Customer Relationship Management

Importance of Customer Relationship Management

Every entrepreneur knows that customer relationship management is important to the success of their business. It's one of the first things most entrepreneurs think about and implement when starting a company, but it's also an area where they often neglect once they get busy with other aspects of running a business. This blog post will go over some ways you can keep up your customer relationship management efforts and maintain happy customers for life. 

If you're an entrepreneur, then you know the importance of customer relationship management. But what is it? How does it work? And why is it important for entrepreneurs to take care of their customers as if they were family?

It starts with understanding the nature of customers by acquiring information about them. After that customer is handled differently as per their behaviour, this will help satisfy the customer better. A business is successful if it can fulfil its customers properly.

For using customer relationship management techniques, businesses use several CRM software. This software collects all required data from different customers. The information collected is integrated & stored in a single CRM database

Businesses then use these databases for taking information. Customer Relationship management is the strongest and the most efficient approach in maintaining and creating relationships with customers. 

Customer relationship management is not only pure business but also ideates strong personal bonding within people. The development of this type of bonding drives the business to new levels of success.

Once this personal and emotional linkage is built, it is very easy for any organization to identify the customer's actual needs and help them serve them in a better way. It is a belief that more the sophisticated strategies involved in implementing customer relationship management, the more strong and fruitful the business. Most organizations have dedicated world-class tools for maintaining CRM systems in their workplace.

Why CRM?

In the commercial world, the importance of retaining existing customers and expanding business is paramount. The costs associated with finding new customers mean that every existing customer could be important.

The more opportunities that a customer has to conduct business with your company, the better. One way to achieve this is by opening up channels such as direct sales, online sales, franchises, agents, etc. However, the more channels you have, the greater the need to manage your interaction with your customer base.

Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. In essence, CRM helps a business recognize the value of its customers and capitalize on improved customer relations. The better you understand your customers, the more responsive you can be to their needs.

CRM can be achieved by:

  • finding out about your customers' purchasing habits, opinions and preferences
  • profiling individuals and groups to market more effectively and increase sales
  • changing the way you operate to improve customer service and marketing

Benefiting from CRM is not just a question of buying the right software. You must also adapt your business to the needs of your customers.

Types of CRM Solutions

Customer relationship management (CRM) is important in running a successful business. The better the relationship, the easier it is to conduct business and generate revenue. Therefore using technology to improve CRM makes good business sense.

CRM solutions fall into the following four broad categories.

Outsourced Solutions

Application service providers can provide web-based CRM solutions for your business. 

This approach is ideal if you need to implement a solution quickly and your company does not have the in-house skills necessary to tackle the job from scratch. 

It is also a good solution if you are already geared towards online e-commerce.

Off-the-shelf Solutions

Several software companies offer CRM applications that integrate with existing packages. Cut-down versions of such software may be suitable for smaller businesses. This approach is generally the cheapest option as you are investing in standard software components. The downside is that the software may not always do precisely what you want, and you may have to trade off functionality for convenience and price. The key to success is to be flexible without compromising too much.

Custom Software

Consultants and software engineers will customize or create a CRM system and integrate it with your existing software for the ultimate in tailored CRM solutions.

However, this can be expensive and time-consuming. Therefore, if you choose this option, make sure you carefully specify exactly what you want. This will usually be the most expensive option, and costs will vary depending on what your software designer quotes.

Managed Solutions

A halfway house between custom and outsourced solutions involves renting a customized suite of CRM applications as a tailored package. This can be cost-effective, but it may mean that you have to compromise in terms of functionality.

What to Look For in a Small Business CRM

As we just covered (but in case you skipped it), the various small business CRMs available on the market today all come with their features and functionalities. When choosing one for your business, remember that price isn't everything. 

The right CRM for your business helps you carry out your marketing strategy more seamlessly and gain insights along the way to adjust and refine it—ultimately helping you win more customers (and revenue) while also saving time and money in the long run. 

Here are the core features of a CRM designed to help you achieve that:

Ease of Use

It's hard to avoid complexity in any CRM since its very nature is rather complex—it is housing every interaction and piece of information each of your team members and campaigns gathers on each of your contacts in one place. 

But complexity doesn't have to equate to difficulty with navigating the platform. A good CRM is intuitive and keeps things as simplified as possible. 

You're looking for a CRM that is not a constant uphill battle but that has a learning curve that settles out somewhat (not entirely, since there will hopefully be updates and new features to learn).

Advanced Campaign Tracking

Rather than just seeing how you're doing overall, it's important to be able to view your marketing performance at the campaign level. 

This way, you can see which methods are most effective in attracting customers and leads to your business, as well as which channels and devices within those campaigns are performing best.

Analytics

So you can see which channels or devices are performing best in a campaign, but how well is the campaign doing overall? With analytics, you can identify benchmarks and see if the numbers you are seeing are increasing or decreasing from a previous time frame or condition. This is crucial in a CRM because it empowers you to make data-driven decisions and know exactly how much you're getting out of your marketing investments.

Real-time Data

You shouldn't have to wait until the end of the month or the end of a campaign to see results. A good CRM will have real-time data capabilities, so you can get insights on-demand. 

This allows you to identify and make optimizations during campaigns, seize opportunities when they arise, and ensure you're on track with your goals.

Customized Reporting

Having advanced campaign tracking, solid analytics, and real-time data are all key considerations for a CRM. But also make sure that you can customize your reports by time frame and other criteria. 

This way, you can keep your marketing strategies the way you intended them rather than moulding them around what your CRM can report on. Plus, comparing campaigns to previous years, channels, and more will allow you to learn, improve, and refine your marketing strategy into a finely tuned lead generating machine.

Integration

Are you using other marketing automation tools, or is there any chance you may implement some in the future? Make sure the CRM is compatible with these technologies and how complex the integration would be.

Support

Numbers don't lie, but data can be deceiving (unintentionally, of course). For example, you may become concerned about a decline in your website traffic. But suppose this occurs concurrently with an increase in conversions. 

In that case, this means that while fewer people overall may be visiting your site, more qualified visitors who are interested in your business are arriving there. 

In this case, that decrease doesn't mean anything bad, but more likely that your SEO strategies are working well and probably can be scaled up. 

All this is to say that having access to an individual or team of individuals who specialize in small and/or local business marketing can mean the difference between having a CRM to merely keep track of things and leveraging a CRM to grow your revenue.

Scalability

If your CRM does its job and your client database and sales team expand, can the CRM's capabilities and pricing plans easily scale with your business? Conversely, if you need to dial things back for a period of time or are going through a slow period, are there flexible downgrade or resource-saving options?

Communication Tools

Last but not least (and perhaps most important) in the list of CRM features to look for is communication tools. With email integration, you can get notified about new leads and important activity and communicate with your contacts directly from the CRM. This could be an automated email that gets triggered when a contact completes a specified action, a prompt response to a form submission, or a personalized outreach or follow-up email to an individual.

How to Implement CRM

Implementing a customer relationship management (CRM) solution is best treated as a six-stage process, moving from collecting information about your customers and processing it to improving your marketing and the customer experience.

Stage 1 - Collecting Information

The priority should be to capture the information you need to identify your customers and categorize their behaviour. Businesses with a website and online customer service have an advantage as customers can enter and maintain their own details when they buy.

Stage 2 - Storing Information

The most effective way to store and manage your customer information is in a relational database. This centralized customer database will allow you to run all your systems from the same source, ensuring that everyone uses up-to-date information.

Stage 3 - Accessing Information

With the information collected and stored centrally, the next stage is to make this information available to staff in the most useful format.

Stage 4 - Analyzing Customer Behaviour

Using data mining tools in spreadsheet programs, which analyze data to identify patterns or relationships, you can profile customers and develop sales strategies.

Stage 5 - Marketing More Effectively

Many businesses find that a small percentage of their customers generate a high percentage of their profits. Using CRM to better understand your customers' needs, desires, and self-perception, you can reward and target your most valuable customers.

Stage 6 - Enhancing the Customer Experience

Just as a small group of customers are the most profitable, a small number of complaining customers often take up a disproportionate amount of staff time. If their problems can be identified and resolved quickly, your staff will have more time for other customers.

How Does a CRM Platform Work?

As a company generates qualified leads, a CRM tracks a potential customer's actions through social media, email, and website channels. The system absorbs as much information as possible on leads before guiding them—or helping you guide them—through a planned journey that hits all the hot spots.

For example: Suppose a local resident is looking for someone to paint their house. They contact a remodel and repair business, which asks about the reasons for the paint job, the planned budget, and the location of the work. All of this information goes into the company's CRM.

If the potential client indicates a specific reason or timeline for the paint job and mentions their house needs more repairs, the business sees the full opportunity for a sale. This may trigger a series of events, from an automated email with a video showcasing the company's work to a follow-up call scheduled for 48 hours later. If the CRM shows that the person revisited the company's website, another chain of sales steps may be triggered.

Conversely, if this lead offers information that suggests they're now looking for paint at local stores to do the work themselves, this lead might fall out of the funnel. In that case, the CRM will downplay the lead and direct the sales team's time toward more likely prospects.

In the end, that's one of the biggest benefits of a CRM system: it aims a company's time and efforts in the most profitable directions, rather than in a scattershot "talk to everyone and hope for the best" approach.

Benefits of CRM

The benefits of a CRM system are available to salespeople, marketing teams, customer support specialists, and anyone who comes in contact with customers at large companies and small businesses.

Organization

Perhaps the biggest benefit is organization. You'll enter basic contact information as you transition to the system such as phone numbers, email addresses, and preferred contact information. 

Then, once your CRM system is up and running, users can follow and track basic information and advanced data about every single customer.

A CRM system is a central place to store and manage all information, and that makes life easier for everyone. And "everyone" includes your customers, who get better service and more detailed attention as you begin to understand them more deeply.

Task Tracking

The right software integrates a company's typical workflow and saves time spent on daily tasks. In addition, automation can boost customer engagement and provide consistency. The truth is, consistency is one of the unsung benefits of a CRM system: When customers get mixed messages, they quickly grow confused instead of enthused.

More Sales Opportunities

Nobody wants to stop at 1,000 customers. But sometimes, companies struggle to come up with great ideas to grow that customer base. One way is to learn more about the people who are already customers; a CRM system can track purchasing patterns and provide insight into themes and trends. That kind of analytics can help develop micro-targeted plans and strategies for encouraging more sales at specific times.

Tracking Sales Progress Across Your Organization

Sales management. In addition to managing the customer base, a good CRM is robust enough to track sales progress for your whole organization. If you're a one-person shop, you get the help you need to track leads and follow up. If you have a large sales team, each new set of leads is assigned to a sales rep, and their journey is tracked from that point on. As the journey progresses, the CRM platform provides a starting point to act on sales trends and close gaps. It's also an easy way to track the performance of your sales team itself.

Personalize Communication

In addition to more efficient use of sales resources, your customers can benefit from the personalization features many CRM tools offer — a huge advantage when 86% of consumers say personalization played a role in their purchasing decision, according to a study by Infosys

Furthermore, all of that data in your CRM database can be used to build deeper customer relationships through personalized communications. A way to do this is by addressing customers by their first name in emails or creating nurture campaigns based on industry.

Increased Retention

Another way CRM can benefit sales is that it exposes who your highest revenue-generating or most engaged customers are. For example, you may be able to identify a subset of customers who attend webinars or open all of their emails through a CRM. Why not reach out to them to advocate on your brand's behalf? 

A CRM can also increase retention among your existing customers. Through a CRM and its ability to aggregate customer behaviour, you may be able to spot patterns like when a customer is about to churn. Having insight into customer behaviour can help you develop a plan or program to retain at-risk customers.

Frequently Asked Questions

CRM stands for Customer Relationship Management. It's a technology used to manage interactions with customers and potential customers. A CRM system helps organisations build customer relationships and streamline processes so they can increase sales, improve customer service, and increase profitability.

Customer relationship management (CRM) marketing is a term referring to the strategies and tactics, as well as to the technologies supporting the execution of said strategies and tactics, marketers use in order to manage the relationship with their customers throughout the customer lifecycle.

Microsoft Outlook Customer Manager is a customer relationship management service that is integrated into Microsoft Outlook for Business. It offers customer information management, team sharing, and client communication tools.

Scroll to Top