3 Critical Things that Companies are Missing in Their CRM Strategy

/ November 6, 2020 | 6 Mins Read

3 Critical Things that Companies are Missing in Their CRM Strategy

/ November 6, 2020 | 6 Mins Read

3 Critical Things that Companies are Missing in Their CRM Strategy

The promise of customer relationship management is captivating, but in practice, it can be risky. Know the important concepts that should be included in your CRM strategy to help you gain new customers.

Building robust and long-lasting customer relationships are gaining momentum over the past few years. But companies that depend solely on a CRM implementation strategy rarely achieve them.

Maintaining excellent customer relationships has become an essential factor in determining a company’s profitability. Research shows that acquiring new customers is five times more expensive than retaining existing ones. 

Moreover, when you design campaign strategies that satisfy your customers’ needs, wants, and aspirations, you cultivate customer loyalty that pays back in more than one sense. One of them is cross-selling and upselling ancillary products and services that your customers will happily purchase. 

But you don’t get such kind of benefits if you solely depend on your CRM implementation strategy. The problem is not with the executives — frontline or C-suite — who deal with the CRM software daily. Instead, it’s with the very belief that you implement the CRM software in the first place.

Most companies use it to drive sales, so they only care about the sales metrics. But building relationships isn’t about adding and multiplying. It’s about faith, belief, and loyalty. 

If you want to check an increase in your customer base or monitor your inventory level, you should use accounting or supply chain management software. But if you’re going to bond with your clients and develop long-lasting relationships, then CRM software is the best fit for you. Remember that CRM is a relationship management tool. And not just another software to optimize your processes. 

This article sheds light on three critical things that companies are missing in their CRM strategy and what they can do about it:

1. Setting a relationship vision for your company

Companies create a well-defined strategy before executing any process. It applies to everything — from finance and marketing to sales and customer support. But when it comes to relationship building, companies fall flat. The biggest reason is that they measure subjective qualities such as loyalty, perception, values, and belief through numbers. 

Another reason is that senior management finds it hard to conduct purpose-setting exercise when it comes to relationships. In both cases, the CEO should set a vision and implant it within the organization.

The best examples are those of Amazon, Airbnb, and Patagonia. The Amazon marketplace allows customers to search for products and vendors at the click of a button. Airbnb provides a platform for providers and consumers to interact and build a deep connection. 

And Patagonia has successfully created a stage that allows environmental stewards and like-minded explorers to socialize and exchange their ideas. In all the three above-stated examples, the vision is clearly stated and universally understood. If you lack such clarity, then your CRM system will only be a sales conversion tracking software.

You will be surprised to know that Airbnb was not the first company to build a peer-to-peer lodging service. Companies like VRBO and HomeAway were the first ones to create an online marketplace for providing lodging services. 

Then how did Airbnb surpass them? 

Setting a relationship vision for your company
Source Link

It’s because Airbnb’s main focus was on building profound relationships between the hosts and guests. The company does this by urging hosts to provide background information and property photos and by offering greater visibility to those who contribute to online city guidebooks. These factors help create a community that emphasizes genuine relationships over transactional interactions. 

The above example indicates how CRM software can help in building strong customer ties. But it will only happen when the company’s management takes an interest in finding the relationships that are critical to their success and focuses on nurturing those into a community.

2. Focus on building the right relationships

The company’s management must understand the importance of nurturing the right relationships. Building deep relationships with every customer is time-consuming and also not financially viable. Customer loyalty is a rare attribute that only a handful of people show, and you should spend your time, money, and resources only upon them. Here are a few things you should keep in mind about identifying the right customer. 

  • They engage with the company’s products and share the word with their families and colleagues.
  • They share the same enthusiasm about the company’s offerings and provide constructive feedback.
  • They are well-connected and can help you in increasing your customer base.

The best example to prove this point is that of eBay. eBay uses a highly targeted buyer and seller system that rewards positive engagements. This metric is better than rating the members based on the transactional value. The system’s algorithms put sellers with higher ratings at the forefront that encourages other people to follow suit, and provide a top-notch customer experience

eBay’s back-end technology creates a system of checks and balances that gives less importance to transactional relationships and more to the bond between the hosts and the guests. 

Another example is that of Patagonia. In 2011, it launched an odd advertisement, which read, “Don’t buy this jacket.” The ad encouraged consumers to purchase used Patagonia clothing instead of its best-selling sweaters. Surprisingly, the company saw its revenue rise by 30% that year. 

Similarly, in 2015, the company launched a mobile repair shop, Worn Wear Wagon, to repair everything literally — from rusty zippers to tears and pulls — for free. The program also educated customers on how to fix their gears on their own. 

Ikea, one of the world’s largest furniture manufacturers, launched a program wherein customers could exchange their gently used furniture for store credits. The program received global attention as it helped reduce the waste that goes into landfills. 

Focus on building the right relationships
Source link

Thus, if you develop the knack for building the right relationships, you will profit more by investing less. Devise your CRM tool to accommodate such changes so that you go beyond making transactions and develop a deeper connection based on trust, values, and loyalty. 

3. Develop metrics that measure relationship activity

Continuing from where we finished in the last point, companies must judge a relationship based on intrinsic merits instead of transactional value. The good thing is that most CRM systems possess the ability to form relationships based on metrics other than the dollars spent. But in most cases, the management fails to use them effectively. 

The following metrics can help you ascertain essential metrics to measure relationship activity:

  • How many and for how long do customers spend time on your website?
  • Are they contributing content to your website?
  • Are they discussing your brand on social media platforms?
  • Are they spreading good word of mouth and referring new customers?
  • Are they responding to questions posted on support forums?

By getting a 360-degree perspective of the metrics mentioned above, you will understand who is (or can become) a part of your community and how active they support your decisions. It will also provide an insight into whether the community is thriving and, if not, then what corrective actions you can take.

Your first and foremost priority should be to find metrics that measure the bonding between you and your customers without judging their paying capacity. For example, eBay’s seller levels and performance standards monitor your seller level based on the quality of service you provide to your customers and your sales history. 

The algorithms then keep you in any of the following three categories — Top-rated, Above Standard, and Below Standard. The “Top rated” sellers are displayed in the listing description and search results, and they also get a 10% discount on standard final value fees.

Another example is that of Airbnb, which gives a “Superhost” status to those hosts that provide remarkable experiences to their guests. Superhost profiles have a badge enshrined in them, rendering a unique appeal. It acts as a seal of trust and testifies the exceptional hospitality offered by the host.

CRM tool is more than a data churning machine. There is no doubt that it can collate, analyze, and test large volumes of data, but it can perform many other subtle operations. A healthy combination of the correct business strategies and management intention can help build robust and long-lasting relationships. These attributes will also reveal what impact your organization makes in your customers’ lives. 

Develop metrics that measure relationship activity
Source Link

Conclusion

In the age of the Internet of Things (IoT), measuring customer metrics is not a big task. CRM software can generate monthly/quarterly/yearly reports in a few seconds. What matters most is the information that hides behind the data. And that requires building durable relationships with your customers.

Apart from tracking numbers and crunching data, CRM software can also help managers understand the subjective attributes that drive customer decisions. In the current scenario, if you want to rise to the top of the ladder, you should focus more on your “relationship numbers” because they will allow you to thrive and beat the competition. 

The process begins from the CEO’s desk who sets a relationship vision for the company, halts at building the right relationships and ends at developing the right metrics to measure the relationship activity.

Sam Makad is a business consultant. He helps small & medium enterprises to grow their businesses and overall ROI. You can follow Sam on Twitter, Facebook, and Linkedin.

mail-icon

Be part of our lovely 12000+ readers, subscribe now

close-icon