The vast majority of companies have at least billing system, or even an integrated resource management system (Enterprise Resource Planning – ERP) nowadays.
These systems are product focused. They record, monitor and analyze handy information about the products, their revenues and costs of logistic. However, plenty of information and data is out there and received on the daily basis about customers, what companies just not put to use at all or most of the time, the customer related data is not held in a unified system, but the company’s various divisions store them in various documents, tables, file cabinets, maybe some will be stored on sticky notes or the information takes on a never-ending trip in the office.
The billing software certainly will not tell the company what happened before the sale. Who is the procurement manager, decision maker or influencer of the purchasing choices of the customer? It is not clear what arguments could convince them that our product or service the right choice. Billing systems do not show either customer satisfaction with our service or product or indicate that if there was any complaint and how it was treated.
Without this information, businesses can only see how much their income and expenses. The executives are not informed about the issues that greatly affect the company’s success and effectiveness of the operation.
One of the minimum expectation from a Customer Relationship Management (CRM) system is to allow the distinct customer related information to function as a single entity and not to be isolated. It maintains a shared database so that employees from different departments can access the needed information. The system must enable multiple users to simultaneously access the database and the made changes to take effect immediately for that data. In that, the customer data will need only one place, where it is modified and continuously maintained (information updates on the customers).
Marketing Database: Marketing purposes?
You may notice that the unprecedented flood of goods and services fell upon the British public in recent years due to the globalised markets, whether corporations or households. As the supply exceeds the volume of solvent demand, the competition highly increased among similar products and services. In order to improve competitiveness, a growing effort from businesses could be observed in recent years. Firms have a clear need to increase understanding of each segment of the market, as well as have an effective marketing communication.
Marketing which built on traditional media lesser and lesser can take care of this task:
- Increasingly harder for the consumer to distinguish between similar products and their suitability for their needs.
- Businesses struggle to selectively communicate with each consumer layers and segments
- Advertising commitments of companies are increasing in the rallying marketplace and the marketing costs with them.
The wish for a cost-effective marketing and more impressive communication have cleared the space for Direct Marketing. Direct marketing uses a communication channel which initiates a personal (direct) contact and connection with the (potential) customer through a chosen and preferred media. Development of a marketing database (customer information database) is essential for this type of marketing communication. In other words, a customer database must support the pre-sale stage and the marketing activities and communications.
An effective CRM system features a marketing and customer-centric approach. It includes data on market condition, competitor information and any other stakeholders of your target market. Also, it enhances the companies’ abilities by incorporating historical records of the pre-sale activities, sales projections (Field Sales Management Process – FSMP), support of marketing campaigns and by providing aid to approach market segmentation from various possible aspects.
Why should you be paying more attention to existing customers?
Surveys have shown that acquiring new customers is multiply more cost than retaining existing ones. 20% of the company’s existing clients bring 80% of the revenue. The customers who contribute the remaining 20% of the company’s revenue, usually uses up between 60-80% of the resources.
These universally acknowledged facts confirm that we must devote more attention to the existing customers.
A good CRM system must incorporate and aid customers with after-care services. After the sale, the business must strive to obtain feedback from the customers (customer satisfaction surveys), skilfully manage any complaints and ensure customers’ maximum satisfaction.
With such approach, we can gain:
- Retention of customers
- Recovery of lost customers
- Sales of new products to existing clients (cross-selling)
- Acquiring new customers
So, what is the CRM?
Most importantly, CRM is not a magic word. The definition is surprisingly short: CRM is the coordinated management of all internal business process in the conscious and organised way with a focus on the customers.
If we want to approach it from a slightly wider perspective, then it is rather a kind of philosophy to be followed by the company to handle customer relations.
Furthermore, CRM is a customer-oriented guiding principle, which unites the company’s activities from the first contact with the customer until the customer becomes a “returning/remaining customer”.
What is the CRM system?
Accordingly, the CRM system is defined as an integrated IT system, which supports the ones above mentioned with a database in the background, which is not a product, but customer-focused, and appropriately fits into the company’s organisational and internal structure, primarily into marketing and sales processes.
Who should use a CRM system?
For those businesses, which:
- Deals with customers/clients
- More than one employee contacts the customer
- Would like to eliminate employee(s)’ absent time or perhaps emerging information-flow problems by termination of employee(s)
- Want to see more precisely the projected revenues
- Would like to see up to date information on activities and performance of sales department
- Important to maintain long-term satisfaction and loyalty of their customers
- Want to prevent loss of existing customers
- Would like to effectively conduct marketing campaigns
- Would like to understand and stay on top of market and consumer trends
“Side Effects” of CRM systems
You must understand that CRM systems can have side effects just like anything else, namely:
- The introduction of a CRM system always streamline the internal business processes and change them.
- Employees do not always like to have their activities monitored and their effectiveness being measured.
- The customer data must be recorded and maintained, they will not appear by themselves in the CRM system.
The main modules of CRM systems
- Register of Customer Data
Most system functionalities are based on the customer data records. This sub-system will record the customers’ basic details, such as ‘Name’, ‘Address’, ‘Contact information’, ‘related contacts/people’, as well as typical customer related marketing data, such as the scope of interests, number of employees, annual income, and so on.
This information could be gained from different data providers (e.g. Hoppenstedt Bonnier, Dun & Bradstreet), or just be recorded manually by the business.
- Sales Activity Data
Here we can keep the record of sales activities or projects. Furthermore, the process of the customer interest in the product/service until the order being made. It is also widely called as “Lead Management”.
During this process, many digital and non-digital communication and interaction will be done between the business and the customer. Generally, maintaining and updating sales register will be completed by a number of employees.
The executives of the business can see at any time the sales projections and their current stage. It allows the estimation of the sales success and through that revenues become more predictable. In the case of a lost sale, the causes of the failure can be explored and analysed, which should give the firm an understanding of how to avoid the repetition of the mistakes in the future.
- Order Data
This component allows the company to see the exact customer spending and what they spend on. Savvy firms will pay a little more attention to those customers who have spent the most and they will receive the well-deserved special attention as they are essential to the business’ financial liquidity. We can monitor the customer spending, quantity of purchased products, time periods and so on, so forth. Also, it provides an opportunity to promote cross-selling.
It can serve as a basis for the calculation of Yield to Average Life (all profits during the customer’s life cycle).
- Campaign Management
Campaign management side of a CRM system supports a variety of direct marketing campaigns (direct mail, event, email, phone etc.). It enables the business to define the exact target group of the campaign and recording the feedback received during and after the campaign.
This information can be processed, filtered, sorted, organised and analysed. Also, it will help to provide a personalised service and product to customers and could drive customer initiated product development.
It should be mentioned that; a well-built CRM system should give an accurate analysis and understanding of the resources and type of management/approach required to cover a specific market or market segment. However, this topic comes under the scope of data mining, which I will not discuss in this article.
- Customer Satisfaction
In order to maintain and reduce the number of lost customers, it is important to understand and measure the customers’ satisfaction with our products or/and services.
Like an English proverb says “Customers do not complain. They just leave.”.
That is why it is crucial to proactively track the level of customer satisfaction and where appropriate, shed light on the fact of dissatisfaction before the customers leave and find another solution to their problem.
The results of customer satisfaction surveys can basically continue in two directions:
- Proactive exploration and application of a well-timed specific remedy to a particular client complaint. Here, it is essential to see the exact cause of the dissatisfaction and record the exact nature of solutions and the deadline. Also, it is important to identify the person responsible for the execution. Ensure to ask feedback from the customer.
- The second most common cause of dissatisfaction is the internal business processes and resources and the interfaces between them. So, the source of discontent is within the organisation. A long-term thinking management task is to analyse the results and approach it as an outsider to rationalise and if needed change the internal business processes. Thus, we can create a beneficial ripple effect across the company and its long-term plans by streamlining work processes.
So, How to choose one?
As many businesses, as many CRM systems. the Customer Relationship Management within the organisation and its supporting CRM system could have more opportunities and features. I tried to focus on the basics in this article. CRM systems are coming in different shape and size to suit any business types, budget, use case and infrastructure. The options are limitless. If you are ready to invest in a CRM software, then I do recommend the following steps to identify the right type of software and vendor:
- Stage 1 – Filter the choices by the following 3 overall questions:
- How much are you willing to pay?
- Why does your business need a CRM software?
- What features does your business require in a CRM software?
The answers to these questions will aid you to pick potential solutions.
- Stage 2 – After you have selected some potential systems, ask the following questions of the vendors:
- Is it built for small or large business?
- How easy is it to use? Can I easily train employees?
- How customizable is the software?
- What features are available to help me with sales, marketing and other aspects of my business?
- How easy is it to integrate with other solutions I already use?
- What limitations are there to using the software?
- What is the total cost of the software? Is there any setup or additional fees? What if I need to add more users?
- What type of security features does it have to protect my business’s and customers’ data? What happens if there is an outage? How is my data backed up in the cloud, and can I access it immediately?
If I need help, what type of customer service do you offer? Can I reach you anytime, or is there a long turnaround period?