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The Misunderstandings about Customer Relationship Management

Customer relationship management is a crucial part of any business.  It's not just about collecting data but also utilizing that data to make informed decisions. Today, there are many misconceptions surrounding customer relationship management and how it should be utilized in the workplace. 

In this post, we will explore some common misconceptions about customer relationship management and shed light on their real meanings.  It can be difficult for entrepreneurs to find reliable information on this topic; hopefully this blog post will help you better understand what customer relationship management really means!

Though marketing managers have traditionally been trained to acquire new customers with established marketing instruments such as price, promotions and mass advertising, they are now shifting their attention to customer retention and customer relationship development. 

The aim is to maximize customer lifetime value instead of maximizing profits from discrete transactions with customers. To do this, they have turned to customer relationship management.

CRM is not a new concept in marketing. It is based on three aspects of marketing management: customer orientation, relationship marketing, and database marketing. 

CRM is a managerial process that focuses on the development and maintenance of relationships with individual customers so that value is created for both the customer and the firm using customer databases, statistical decision-support tools and interactive communication techniques.

Despite its roots in marketing, CRM is often associated with the use of the software. Survey results show 65 percent of large companies in the U.S. and Europe are aware of CRM technology, 28 per cent are developing it, and 12 per cent are now using CRM applications. Despite the increasing use of CRM software, however, there is an ongoing debate about the effectiveness of CRM. The success rate of CRM projects reportedly varies between 30 per cent and 70 per cent. Not surprisingly, a majority of managers are dissatisfied with their CRM performance.

Much of this dissatisfaction is, in fact, the result of managerial misconceptions about the use of CRM software, the premises underlying CRM and customer behaviour.

7 Common Misconceptions about Customer Relationships Management

You're bursting at the seams with CRM data, you've invested in a killer CRM database, and you have a CRM manager who hails from a fancy, famous brand. You're ready to go, right?!? Well, maybe. Some common misconceptions might be lurking around the corner, ready to thwart your efforts. So read on to make sure you're keeping the "relationship" front and centre in your CRM!

Misconception #1: Algorithms Are Smarter Than People

People develop algorithms, so how could they be superior? Algorithms are written for one goal or another – and up to now, most marketing algorithms have been written based on economic data. This means many are not optimized to capture relationship data or signals to inform a marketing strategy. Result? Marketers might miss an important signal on how a customer or prospect wants to be treated – and may not have the opportunity to pick up that signal a second time.

Misconception #2: Customers All Want the Same Things

Is your relationship a "secret affair," is it more "love-hate," or are you "old friends?" Each relationship type has different rules of engagement, and it's up to us marketers to know what they are. Technology has enabled one to one engagement, so now it's time to make personalized marketing a reality!

Misconception #3: Marketing Owns All Aspects of the Customer Relationship

When a customer reaches out to a call centre for support, chances are a marketer doesn't answer the phone! What if you offer a highly technical product with configurable product features and G.U.I.s? Most likely, marketing had some input but certainly didn't build the product. If relationships truly are a focus for a company, there must be training across the board to educate and instil those relationship-building considerations in everyone at the company. After all, we're all client-facing in some form!

Misconception #4: The Customer Dictates All the Rules of the Relationship

How one-sided would that be! Just like with people, customer/brand relationships change and evolve with time and experience. As a company, are there certain types of relationships we want to cultivate with our customers? If so, what actions do we need to take to make that happen? Likewise, as a consumer, how do we feel when brands don't engage with us in a way we find valuable? (can you say "unsubscribe?")

Misconception #5: Offering Money to Repair a Broken Relationship Works Wonders

If we acknowledge that there are different types of customer/brand relationships, then it stands to reason that there are different goals for each of those. This means the free product or a gift card isn't always the answer. When there's a problem, what causes it? Is there a process that needs to be fixed or an internal group that needs to be trained? Some customers will appreciate that much more than money back.

Misconception #6: Long-Term, Loyal Customers Are Always the Most Profitable

Premise: there's no question that long-term, loyal customers are the lifeblood for many companies. There's also no question that every company wants more of them! But let's step back a moment – when was the last time you let a friend go hungry at lunch because they forgot their wallet? Or you charged your best friend high interest on a loan? Every industry is unique and every company even more, so it's important to understand when you can charge a premium and what types of relationships are simply keeping the lights on. Loyalty doesn't always equal profit.

Misconception #7: Brands Only Need to Focus On the Positive Relationships They Have with Customers

Wrapping marketing's arms around customer relationships means starting with your current customers to uncover the relationship profiles already present. Once you've done that, you might discover some customers don't love you as much as you'd like. (shocking!) Here's the good news – that doesn't mean you have to write off all opportunities with them. What actions can you take to move them in a more positive place? It can be done!

9 Myths about CRM

Customer Relationship Management (CRM) is often painted as the stuff of legends -- or an epic ruse destined to waste your time and money.

Let's look at some of the wild claims floating around the internet of things to make some sense of the issues and get to the truth. Below are nine myths about CRM debunked.

Myth 1: CRM Doesn’t Work

Customer relationship management (CRM) is the process and system you choose to manage customer relationships. In short, CRMs like Keep organize contact information, customer preferences and interactions to help you create a unique experience for each customer—even when you have hundreds.

Whether you choose to use a CRM to organize and manage a little or a lot, CRM is a valuable way to improve your customers' experience. The only way CRM won't work is if you don't use it!

Myth 2: CRM Will Solve All Your Problems

CRM is one of the most powerful tools in your 'toolbox' of business management strategy—but it's just one of many that you have. While it will help you create a delightful and productive experience for your customers, it doesn't clean windows or empty the trash. 

Here are just some of the things it will do. CRM can be a simple way to streamline and improve customer communications. It can also manage lead scoring, customized email automation, track marketing and sales

CRM will help you enhance customer relationships by keeping unique information and improving your customers' experience at scale. CRM unites customer relations, marketing and sales by creating a single source of information.

CRM is your tool to revolutionize the customer experience and increase sales—you'll still have to find someone to take out the garbage.

Myth 3: You Have to Spend a Lot of Money on CRM

You probably could spend a lot of money investing in CRM—but you don't have to. A variety of CRM systems and tools are available at a range of price points. As a small or even midsize business, look for a system that is simple to use and offers the full functionality needed to grow with you at a competitive price.

Myth 4: CRM Isn’t Worth the Cost

Let's be objective about this one. Whether software or hardware, any system requires a resource investment, either people or money and often both. CRM includes the cost of the system and the person (or people) to manage the system. Consider this a critical investment in a key resource to growing your business.

And if you're not using a CRM, think about the cost of sales you don't make because of lost contact information, diverted leads and lagging follow-up. So here's the real question to ask yourself: What's the cost of not doing CRM?

Myth 5: Implementing CRM Is Really Hard

You may have heard horror stories about implementing a new system or process. Change is challenging for most people, and introducing a new CRM means change. Take it one step at a time, set goals for the team. Communicate early and often and provide clear, consistent training and support to help your team manage change.

Myth 6: Maintaining a CRM Takes a Whole Team of People

The beauty of CRM is that it provides a process and system for managing a large volume of customer information—whether you're one person or a team of people. Adding CRM makes it possible for a smaller team to wrangle a lot more data effectively.

Myth 7: Bad Data Kills CRM

Data quality is essential to the success of CRM. Well-trained, experienced people are the key to that success. Establish clear data quality standards and consider dedicated resources (people) to manage the data entry of your CRM.

Myth 8: Over-Engineering Kills CRM

The old K.I.S.S. (Keep it Simple, Silly) acronym applies here. The objective of CRM is to help you streamline a large volume of information into a simple, consistent process. Choose a system that is easy to understand, then use the system consistently. Avoid the temptation to add unnecessary steps or over-complicate the way your team interacts with CRM.

Myth 9: You Can’t Survive without CRM

The reality is that you were probably surviving before CRM. Still, to provide excellent customer service as you grow, a system for managing your growing volume of data is critical. You can survive, but it may be difficult to thrive without CRM. CRM will position your business for maximum sales growth and delighted customers!

5 Ways CRM Can Improve Customer Experience

Nurturing lasting relationships with customers and offering them enjoyable buying experiences is key. A CRM tool can help you to:

Interact with Your Customers

A way to keep healthy interactions with your customers is via automated, relevant and timely communications enabled through your CRM and Marketing Automation. For example, by sending them discounts and promotions, remembering them on their special days would engage higher personal connectivity. 

Personalize Customer Communication

A report from Accenture found 41% of consumers churn due to a lack of trust and poor personalization, costing brands £576 billion per year. CRMs enable your marketing automation strategy, allowing for better personalization, segmentation, and tailored customer journeys. 

Better Understand Your Customer 

CRMs are flooded with customer data, making it a goldmine where you can learn their buying habits, products they are into, emails that they usually engage with, and other information that you can use to understand them better. This way, you can formulate personalized marketing offers based on their preferences and purchase history. As a result, you can identify your most profitable customers, pay them more attention and build from your success.

Respond Quickly

Built with automated responses, CRM could provide immediate answers to frequently asked questions, could respond to queries, complaints, and requests with ample time, providing them with relief that their concerns are to be addressed. This way, your customers will feel that they are a priority and valuable to your brand. True multi-channel support that provides, for example, self-services capabilities via a portal can support the process too so that customers are serviced the way they want to be serviced.

Increase Revenue

Customers have a strong desire for a better customer experience. So much so that they're willing to pay for it. A PwC study reveals that many buyers are willing to pay more for a better brand experience. As a result, CRM software is a critical component of your company's ability to meet customer demand.

Frequently Asked Questions

Customer relationship marketing is a technique that is centred around client relationships and customer loyalty. Utilising customer data and feedback, businesses develop strong bonds with their customers to gain their trust. ... It focuses on the development of an emotional relationship between customer and business.

Positive customer relations help you connect with your customers on a much more personal level. When you connect with the target audience deeply, you are much more likely to understand their requirements, resolve their problems, and create a sense of mutual understanding with them.

With customer relationship marketing campaigns, companies save time and money by focusing on customers that will not be as costly in terms of maintaining relationships with them; they also make better decisions about which customers have underdeveloped potential.

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