Most people in business are familiar with the phrase “It costs more to gain a new customer than to keep an existing one”. And, despite the advances in marketing technology, digital marketing and social media, it’s a phrase which is still true.
In a tight economy, with the results and return on investment of each marketing campaign more important than ever, it’s essential to use your CRM software to analyse and develop your existing customer base. What’s more, satisfied customers are one of your most powerful marketing tools: there’s still nothing stronger than genuine personal recommendation, and keeping your existing customers happy will in itself help you generate more business.
Customer retention is important, but account management is a specialist role which takes training, time and dedication. So, if you’re going to invest time and resources in keeping customers, it’s good practice to regularly use your CRM software to do a quick check on which customers you actually want to keep.
Not all customers are equal. In fact, there may even be some that you’re better off without. For example, the ones who are consistently late payers, frequently giving you ‘reasons’ why they haven’t paid and taking up resources in your admin, accounts or even legal departments.
Then there’s the terminally dissatisfied. No matter how hard you try, they’ll find a problem. No matter how much time, energy and resources you devote to them, the scenario will just keep repeating itself, and the cost of servicing particularly difficult customers can outweigh their value to you.
Modern CRM software products such as Microsoft Dynamics CRM or Sage CRM are incredibly powerful with a wide range of features and functions. You can use the tools within these applications to run in-depth analysis of your customers. But, to keep it simple, if you suspect a particular customers is using up more resources than their current or potential value, take a quick look at the communications, service calls, cases, activities and history logged against them. Comparing these with past and forecast spend will soon tell you whether you need to review their contracts or service agreements, or even consider gently dropping them.
At the other end of the scale are your key accounts or best customers; the top few per cent that deliver a significant part of your revenue. Those customers that are more profitable because they spend more than most, that are easy to service and generally pay on time. Typically the Pareto Principle or 80-20 rule is quoted (meaning 20% of your customer’s deliver 80% of your revenue) but there’s no hard-and-fast rule. It depends entirely on your business and sector.
Whatever the ratio, you can easily find out who those customers are using your CRM software. You can look at what they bought, how often they’ve bought, how much work went into each sale, the cost of each sale, and most things in between. You can either look at each account or customer ‘manually’, or run advanced searches or set up (or ask your business partner, or in-house CRM expert if you have one to set up) a report.
If you have a CRM system which links with your accounts or ERP system, you’ll be able to analyse this in even more depth, such as payments history or credit status. Microsoft Dynamics CRM, for example, provides 'out of the box' integration with Microsoft Dynamics NAV. This enables significant productivity improvements through the interaction between front and back office in any organisation, and helps you get a clear view of your best (and worst) customers. Similarly an integrated system, such as Sage 200, which includes a CRM module as a ‘foundation module’, links CRM functionality directly to your other key processes such as manufacturing, project accounting or a retail system. And if you have a business intelligence module or data visualisation tool, the results can be even more detailed.
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Posted by: [email protected] | 21 February 2012 at 01:41 PM