Types, Stages of Customer Relationship Management24/09/2022 0 By indiafreenotes
Customer Relationship Management (CRM) is a strategy of the organization to manage the current and potential customers. CRM usually refers to a system power tool that is used for contact management sales management and much more. The aim of CRM is to improve business relationships and get better results. Businesses today have become customer focused rather than product focused which is why CRM has gained increasing importance.
Advantages of CRM
- The primary advantage of CRM using enhanced and improved management of contacts. Since there are multiple contacts CRM helps to have managed them in an efficient way.
- Since CRM is an automated process more often than not it helps in collaboration of multiple teams which helps in team management for the higher management.
- CRM is known to enhance the productivity of the teams.
- CRM helps to empower sales management buy accurately helping in sales forecasting.
- CRM is one of the best tools which is known for reliable reporting.
- It is seen that CRM improves the Sales Metrics of the company, which in turn helps in customer satisfaction.
- CRM also helps in enhancing the marketing ROI by acting as a support system of the Sales team.
1) Operational CRM:
Operational CRM is the one that streamlines the business processes and also includes sales and marketing automation along with service automation. The primary purpose of operational CRM is to generate leads and then convert them to contact while capturing all the required details and also to provide service throughout the customer lifecycle.
Operational CRM also provides support to the front office and which involves direct communication with customers via any communication method. There is an operational CRM database which stores all the details about customers including the interactions, requirements, preferences, discussion topics etc.
Sales Force Automation
SFA is the application of technology to manage selling activities. It standardizes a sales cycle and common terminology for sales issues among all the sales employees of a business. It includes the following modules:
- Product Configuration: It enables salespersons or customers themselves to automatically design the product and decide the price for a customized product. It is based on if-then-else structure.
- Quotation and Proposal Management: The salesperson can generate a quotation of the product prices and proposal for the customer by entering details such as customer name, delivery requirements, product code, number of pieces, etc.
- Accounts Management: It manages inward entries, credit and debit amounts for various transactions, and stores transaction details as records.
- Lead Management: It lets the users qualify leads and assigns them to appropriate salespersons.
- Contact Management: It is enabled with the features such as customers’ contact details, salespersons’ calendar, and automatic dialling numbers. These all are stored in the form of computerized records. Using this application, a user can communicate effectively with the customers.
- Opportunity Management: It lets the users identify and follow leads from lead status to closure and beyond closure.
The primary purpose of marketing automation is to find the best alternatives for offering products to potential customers. It also includes the best way to offer products to potential clients. Campaign management is the main module in the marketing automation which enables the businesses to decide on effective channels to reach the customers.
With many channels available like emails phone calls a face to face meeting campaign management helps to decide the best approach for the same. This is social media is also used as an important channel for customer participation. Salesforce is also used for marketing automation.
Event-based (trigger) marketing is all about messaging and presenting offers at a particular time. For example, a customer calls the customer care number and asks about the rate of interest for credit card payment. This event is read by CRM as the customer is comparing interest rates and can be diverted to another business for a better deal. In such cases, a customized offer is triggered to retain the customer.
It allows easier collaboration with customers, suppliers, and business partners and, thus, enhances sales and customer services across all the marketing channels. The major goal of collaborative customer relationship management applications is to improve the quality of services provided to the customers, thereby increasing the customer’s loyalty. Examples of collaborative CRM applications are partner relationship management (PRM), customer self-service and feedback, etc.
Analytical CRM is based on capturing, interpreting, segregating, storing, modifying, processing, and reporting customer-related data. It also contains internal business-wide data such as Sales Data (products, volume, purchasing history), Finance Data (purchase history, credit score) and Marketing Data (response to campaign figures, customer loyalty schemes data). Base CRM is an example of analytical CRM. It provides detailed analytics and customized reports.
Business intelligence organizations that provide customers’ demographics and lifestyle data over a large area pay a lot of attention to internal data to get more detail information such as, “Who are most valuable customers?”, “Which consumers responded positively to the last campaign and converted?”, etc.
Analytical CRM can set different selling approaches to different customer segments. In addition, different content and styling can be offered to different customer segments. For the customers, analytical CRM gives customized and timely solutions to the problems. For the business, it gives more prospects for sales, and customer acquisition and retention.
Stages of Customer Relationship Management
- Reaching a potential customer
The first step in acquiring new customers is to introduce them to your business. The Marketing team generally takes on this task using a number of measures:
- Learning about your target audience: Marketers will conduct research to identify their audience’s target demographics, interests, preferred channels of communication, what messaging they respond most to and what they care about.
- Segmenting your target audience: Audience personas are created to segment a brand’s target audience into similar groups based on similar interests or demographics. This helps marketers identify which types of people are most likely to become customers and who their campaigns should target.
- Creating marketing campaigns that speak to the target demographics: A/B tests and marketing automation can be used to identify what works and what does not, to create unique campaigns for unique customer segments such as on social media or email and to create strategies for lead acquisition.
- Customer acquisition
Customer acquisition refers to bringing in new customers – or convincing people to buy your products. It is a process used to bring consumers down the marketing funnel from brand awareness to purchase decision.
The cost of acquiring a new customer is referred to as customer acquisition cost (or CAC for short). Once the customer acquisition process is complete, it then hands itself to customer retention & re-acquisition.
You can acquire customers through a variety of marketing tactics, digital channels, and strategies (both on or offline). It often involves a mix of cross-channel marketing campaigns, which could include:
- Display Advertising
- Social Media Marketing
- Search Marketing
- Content Marketing
- Affiliate Marketing
- Email Marketing
- Or any mix of marketing initiatives
Customer conversion rate is the percentage of potential customers who take a specific desired action. In e-commerce or online marketing, it refers to the percentage of website visitors that perform a specific desired action on the website or landing page.
The conversion action is usually a quantifiable action capable of turning a prospective customer into a paying customer. Depending on the business goals, the conversion action can be registering on the website, providing contact details for lead generation, making a purchase, submitting a form, calling the business, downloading a document or template, signing up for a subscription, etc.
The customer conversion rate is a metric that measures the effectiveness of marketing campaigns, website designs, salespeople, and other sales tools. An improved customer conversion rate can significantly impact lead generation and, consequently, sales and revenue. The metric focuses on making the most of a website’s visitors rather than trying to get more traffic.
- Customer retention
Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business, or to non-use entirely. Selling organizations generally attempt to reduce customer defections. Customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship and successful retention efforts take this entire lifecycle into account. A company’s ability to attract and retain new customers is related not only to its product or services, but also to the way it services its existing customers, the value the customers actually perceive as a result of utilizing the solutions, and the reputation it creates within and across the marketplace.
Successful customer retention involves more than giving the customer what they expect. Generating loyal advocates of the brand might mean exceeding customer expectations. Creating customer loyalty puts ‘customer value rather than maximizing profits and shareholder value at the centre of business strategy’. The key differentiation in a competitive environment is often the delivery of a consistently high standard of customer service. Furthermore, in the emerging world of Customer Success, retention is a major objective.
Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers return a revenue gain of 3.4 times the norm.
- Customer loyalty
Customer loyalty is a customer’s willingness to repeatedly return to a company to conduct business. This is typically due to the delightful and remarkable experiences they have with that brand.
One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are several other reasons why customer loyalty is critical to your success.