We’ve all heard the expression, “the customer is king.” After all, what is a business without customers? The question for marketers, then, is “What does it take to keep those customers happy?” From a marketing perspective, the more a business knows about its customers, the better it can meet their needs. That leads to customer loyalty, which can have a lot to do with profitability.
But it is not as simple as offering customers a buy-nine-get-one-free punch card. This is where CRM comes into play. CRM stands for customer relationship management. CRMs are systems that consolidate customer information into one database. This makes it easy for marketers to access the information they need to build those all-important, long-lasting customer relationships.
At Northwest Missouri State University, students in the Master of Business Administration (MBA) in Marketing program cover CRM in detail in Advanced Marketing Communication.
Why Is Customer Loyalty So Important?
An article in Entrepreneur explains: “About 20 percent of your customers produce 80 percent of your sales.” Author Perry Marshall’s advice? “Zero in on those 20 percent of customers who are essential for your business’ prosperity.”
Purchase something online? Chances are, at least one automated, but “personalized,” email will follow shortly. For a new customer, this might be a welcome email. While it may be automated (courtesy of that time-saving CRM), these relationship-building customer contacts can go a long way to promote customer retention.
The Forbes article “Don’t Get Lazy About Your Client Relationships” makes a case for showing some customer appreciation. One reason? Author Patrick Hull reports that the chances of selling to an existing customer are 60 to 70 percent, compared with 5 to 20 percent for new prospects.
The value of customer loyalty can also be understood by looking at poor customer service. As reported by Nicole Leinbach-Reyhle in “Customer Loyalty in Today’s Modern Retail World” (Forbes), nearly 80 percent of customers who experience a service issue will take their business elsewhere within a week.
How Can CRMs Improve Marketing?
A CRM database creates a centralized, automated system for storing and managing every interaction with a customer. CRMs give marketing professionals easy access to detailed information on their customers. This allows them to make more strategic marketing decisions.
Take retail as just one example. A CRM can aggregate information about customer behavior from every sales channel. Examples of sales channels include:
- Retail stores.
- Online marketplaces (such as eBay and Amazon).
- Phone transactions.
- Catalog sales.
CRMs can also segment customers, for example, by location or certain behaviors. Marketers might, for example, capture data on customers who have been inactive for a period of time. They can then solicit feedback and offer some kind of a promotion to drive engagement. All of this helps marketers get the right message to the right customer at the right time.
Douglas Burdett, host of “The Marketing Book Podcast,” reminded his audience of a piece of advice from Simon Sinek, bestselling author of Start With Why: How Great Leaders Inspire Everyone to Take Action: “Loyalty is when people are willing to turn down a better product or price to continue doing business with you.”
Customers have endless options when it comes to doing business. CRMs help businesses focus on the customers they have, providing information a business needs to keep those customers happy, and bring them back again and again.
Learn more about Northwest Missouri State’s online MBA in Marketing program.
Sources:
Entrepreneur: The 80/20 Rule of Sales: How to Find Your Best Customers
Forbes: Don’t Get Lazy About Your Client Relationships
Forbes: Customer Loyalty in Today’s Modern Retail World
LinkedIn: 7 Ways to Thrill Customers and Get Them to Buy More From You
