Customer Retention using CRM

20/11/2020 0 By indiafreenotes

The business scenario is in constant evolution with the empowered customer accessing unlimited information through the media and internet. The digital revolution has marked a shift in power from the hands of business heads to the customers are highly aware of the competitive scenario and hence are entitled to freedom of choice amongst their products.

It is essential to maintain a healthy on-going relationship with client. For that, the objective should shift to developing a customer centric framework, which inculcates insights that cater to customer’s needs and requirements. Therefore, the business leaders have to start thinking more on the thought-processes of marketers to boost up the revenue scale. One needs to engage buyers into latest trends in the market to offer maximum benefit and here is where CRM is of great value.

The basic objective of a CRM solution is to improve customer retention. Its secondary objective is to increase customer acquisition at a low cost, without jeopardizing existing customer relations and ensuring the smooth transition of a new customer to a loyal, long-term client.

Here are a few ways in which CRM aid in customer retention:

  1. Builds up a comprehensive viewing of “customer journey” map.

Gathering data on customer is essential, as it helps keep tabs on the impacts of the marketing strategy, in regards to consumer interaction. Also, needs and demands of the target audience can be tracked. The raw data is not enough to communicate the experiences of customers. Mapping the customer journey helps in jotting down focal points of customer’s experience: from initial contact(awareness), through the process of engagement (urging the customer to purchase) and into a long-term relationship (post purchase involvement).Customer relationship management tools helps in providing an insight into the touch points of consumer interaction and post-purchase engagement, in collation with data of the journey map. This will help you asses the strengths and weaknesses of your marketing strategy and also provide guidelines to re-engage the customer, if the rate of engagement has been less.

  1. Targets customers through tailor-made offers.

Every customer has a purchase/ consumption pattern, through which one can extract the point of interaction suitable to engage for further loyalty. CRM software gathers customer’s media consumption and purchase history to plot what kind of offers will be appealing to each individual and in turn add relevancy, which will keep the brand recognition value high. Identifying ways to convert customer interest into an actual purchase is the main onus here, which can be achieved through providing discounts and offers to add value to the experience. This helps in building a proactive customer relationship, where repeat purchase would be possible due to smart target centric offerings to enhance the value.

  1. Helps create Loyalty programs.

Every brand has its share of loyal customers, whose experience urges them to revert back on frequent basis. Information gathered in CRM software can bring out the varied levels of engagement by the customers, revealing which of the accounts are responsible for the most revenue. This information helps you create loyalty programs for those valued customers. This ensures a proactive relationship with these profitable customers, creating a memorable experience for them and also referrals from these loyal customers, to extend target reach. You can create a list of your most profitable customer, through CRM software. After which, you can start to follow up by letting them know about the rewards and incentives, so that they continue to stay as your most profitable customers.

  1. Personalizing the interactions.

A relationship is something that is established between people. CRM software helps you see your customer beyond the rotes of revenue. The effects of personalization is of great impact to not only purchase but post-purchase relationship, where it is equally essential to reach out to the customers on a frequent basis, to increase the value of your service. As recent research in the UK found that personalization, user preferences and other relevant information found in CRM software delivers a high impact ROI, with a greater extension in outreach and new target-base covered. This often happens as the optimized experience urges satisfied customers to refer the services on various platform, hence increasing the point of interest in untapped sections.When finalising the information fields for registering a contact, use personal details such as birthday, hometown so onto personalize your outreach. Armed with this information, you can adjust your follow-up strategies accordingly.

  1. Helps assess performances

Feedbacks are essential for conceiving and executing a successful marketing campaign. One needs to be aware of the success rate and the shortcomings of his strategy to proceed in making it more effective. There’s no better place to obtain it from than the customers themselves. CRM can be utilized here through dashboards to review service execution and pinpoint areas for improvement. Also, metrics to identify repeated support problems examine the percentage of issues are being resolved in a single call. Use this insight to develop incentive schemes that reward staff for outstanding performance in key metrics.

Strategies

Following are some of the important strategies that should be implemented for increasing customer retention:

  • Changing Retention rates: There are two basic strategies for changing retention rates:
  • Fixed response higher spending: Retention rates can be substantially increased by spending more on creating new business strategies or remolding existing strategies to increase retention rates.
  • Fixed spending higher response: The retention rates graph can also be hiked by implementing changes in business processes without spending anything. However, it’s a tough task for organizations to achieve this because it’s difficult to increase retention without incurring any cost. Though this approach is preferred but it’s not always feasible.
  • By taking an example of organizational customer service we can easily compare the above two strategies. The organization could endow their customer service executives and allow them to take quick actions with regards to customer queries and problems. This may lead to increase retention rates without incurring any cost. But if the organization enhances retention spending by rather adding more customer service executives, queries and problems could be more quickly materialized and hence increase retention rate vastly.
  • Short term loss and long-term gain: It is not desirable for organization to retain all the customers. But high valued and profitable customers must be retained. Loyal customers who are high valued and are in relationship with supplier for a longer period of time, tend to produce higher profit. They normally require low service cost and are most likely ready to take premium services. They also act like brand ambassadors for the supplier to advocate other prospects to become potential customers. Hence it is essential for the organization to nurture their customers to create a strong bonding with them in short run and then focusing on higher profits in the long run over the whole life cycle of customers.
  • Pricing best customers: Retention rate also depends on how the pricing of products are managed among the best valued customers. All the customers are always cost sensitive and concentrate basically to buy products on cheap rates. However, cost sensitivity of a customer substantially depends on condition of the market. For example, if a product becomes extraordinarily famous and demanding in market and every customer is tending towards capturing this product then it becomes necessary to focus on technological aspects rather than focusing on the cost. If they do so then the cost sensitivity of these customers is least. Similarly, if a product becomes common in market due to emerging competitors coming up with similar but more prominent products, then in this competition the value of the product decreases and the companies become rarely bothered for them. In this scenario the customers have the right to become highly cost sensitive as they know that they can negotiate with the suppliers to a greater extent.
  • Retention and acquisition link: Retention and acquisition are interdependent approaches. Take an example of a Gym that provides a very low introductory offer to all the customers to attract them. Many customers are very price sensitive and have the tendency to defect if the Gym increases future membership price. If the Gym also provides the renewal cost to be as low as introductory price then they have a better chance to retain these price sensitive customers. But by doing so they are in risk of loosing high valued customers who prefer best services and less surrounding crowd. In this case the Gym must implement the strategy to continue taking high membership renewal cost. This process may lead to most of the low value customers to defect but the total profit in retaining the high value customers will be always more. This also helps to uplift the image and status of the Gym by providing best services to its customers which results in acquiring and retaining more high valued customers and generate good profit.