Traditional CRM vs Social CRM: Expanded

Brent Leary, widely recognized expert on Social CRM, does a great job of summarizing the difference between Traditional CRM and Social CRM in the Inc. magazine Article below. I’ve added some of my additional thoughts.

Traditional CRM vs. Social CRM

By Brent Leary

Traditional customer relationship management’s strong suit has been improved operational effectiveness, easier access to data, and improved collaboration. Social media adds the dimension of connecting with potential customers.

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Brian here. I would add the following to Brent’s statements:

The first being that many companies are now looking towards “Traditional CRM” solutions not only because they are interested in improving their customer acquisition efforts, but because they have realized that customer retention efforts are their best bet in an environment where there are fewer new and existing customers in the marketplace. This desire to improve customer retention is currently next to impossible because they don’t really even know who their customers are, and which ones would be the most beneficial to keep. CRM can help with that.

SaaS (Software as a Service) offerings have been steadily gaining traction over the past several years, but the argument that it saves cost, time, and effort has been a hotly debated topic. For some small businesses a SaaS solution certainly makes the most sense, but a good percentage of companies still choose an on-premise solution because of 1. Security/Privacy Concerns, 2. Ease of Integration with other applications 3. Lower long term TCO (Total Cost of Ownership).

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site — what they refer to as “member communities.” The integration of social media into CR strategy — called Social CRM — differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need — the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action — starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

In addition to supporting and enabling marketing, lead generation, and customer acquisition efforts, Social Media and therefore Social CRM are also being leveraged by companies for customer service, brand monitoring, and customer retention efforts. The content production that Brent mentions is a great way of attracting eyeballs and filling the lead funnel, but companies are also integrating “listening” into their Social CRM strategy. Companies like Comcast have used Twitter to monitor negative comments about their brand and take a proactive approach at solving problems for disgruntled customers. Social Media and its integration with traditional CRM efforts have opened up new ways to turn an unhappy customer into a raving fan. Other companies like HelpStream and Lithium are pioneering new ground, using Social Technologies to build communities where customers and prospects interact with each other to solve problems and discuss ways to best leverage companies products and services.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation — on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact — both internally and on the customer — social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary

via Traditional CRM vs. Social CRM

Have additional thoughts or ideas related to the differences? Please share them below!

A primer on Social Media: Listen, Build, Engage, Share

If you are just familiarizing yourself with social media and how to leverage it in your organization, Becky Carroll on the 1to1 media blog does a nice job of summarizing the benefits of Social Media, and how companies can leverage tools like Facebook, Twitter, and LinkedIn.  She does a nice job of separating the “cool factor” and hype from tangible benefits that can be reaped.

Has your company leveraged Social Media to deepen customer relationships?Do you have plans to? What question or concerns to you have?  Soundoff.

Guest Blogger Becky Carroll: Social Media Builds Customer Relationships

One of the most common questions being asked right now is this: “What should my company do about social media?” As more and more businesses are jumping in and creating corporate profiles on sites such as Facebook, Twitter, and flickr, marketers are feeling the pressure to jump on the bandwagon. Some of these marketers plan to use social media as a cool set of tools to build awareness about their company. However, it is much more than that. Social media can be an integral part of a strategy to build customer relationships.

Let’s look at how social media can be used to deepen customer interaction and increase customer loyalty.

Social media builds trust.
It allows companies to be perceived as more human. You aren’t just talking to Comcast; Frank Eliason is there for you. You want to know more about Zappos; Tony Hsieh tells it like it is. Customers don’t want relationships with faceless companies; they want relationships with other people. The use of social media hastens the trust-building process by putting people instantly in touch with other people–critical in these days of corporate bail-outs and public uneasiness. Trust is the main component of a strong customer strategy.

Social media builds community.
Customers can’t easily rally around a website, as there is little interaction there; but they can rally around a brand’s presence on social media. What makes these communities so powerful is that many of them have been built and sustained by a brand’s fans. Fiskars, which makes scissors, encouraged the formation of a scrapbooking community. However, it is their customer ambassadors, or Fiskateers, who are responsible for driving the conversation and inviting others to join in. National Instruments uses its community, powered by social media, to bring together business customers to share technical information with each other, which is then used in National Instruments marketing materials. These communities are examples of likeminded people coming together and interacting around a common purpose; in this case, a company’s products and services. Ongoing customer interaction and engagement such as these increase loyalty and ultimately rate of purchase.

Social media increases word of mouth.
It allows information to be shared peer-to-peer at light-speed around the globe. As a result, customers are turning to social media ratings and reviews to research an organization’s offerings before making a buying decision. This is especially true in the B2B environment, where a large number of B2B buyers are participating actively in social media for business–reading blogs, writing reviews, watching user-generated videos, and joining social networks (source: Forrester). All of this enables the rapid spread of company news and information, as well as the sharing of customer success stories. Organizations that enlist their customers to help evangelize their products and services via social media find those customers to be fiercely loyal and willing to share their experiences with others who are like them. This in turn builds trust, as well as the customer base.

Social media enables two-way conversations.
This is the gold in the equation. Where companies used to have to rely on one-way email blasts, advertisements, and direct mail pieces, they can now interact directly with customers via blogs, Twitter, Facebook, and a myriad of other social media tools. More is required than simply hanging out a corporate shingle on these sites, however. Companies need to fit these conversations into their overall customer strategy and marketing communications plan. In so doing, they will be able to gain deep customer insight from these new online interactions, including an understanding of customer behaviors and needs, as well as online reach and influence.

Getting Started
The best way to begin using social media is to stay quiet. Yes, social media enables great customer interactions, but first it is important to do some listening. Once a company has spent time monitoring conversations–about the company, competitors, the industry–only then is it truly equipped to begin participating in conversation. This is the best way to be relevant when stepping forward and inviting customers into your virtual lounge to get to know them, their likes and dislikes, as well as their personal side. The foundation will be laid, and rich customer relationships have every opportunity to blossom from these online engagements.

via Guest Blogger Becky Carroll: Social Media Builds Customer Relationships – Think customers: The 1to1 Blog.

1 to 1 Marketing’s 2009 Voice of the Customer Survey Results

1 to 1 was kind enough to share the results of their 2009 Customer Survey.  In this are some expected responses. Others are perhaps a little more surprising.  At the end of the day, the results reinforce what we all know to be true.  Over time, success in business  is ALL ABOUT CUSTOMER EXPERIENCE.

This Is No Surprise – Or Is It?

1to1 recently conducted its 2009 Voice of the Customer Survey. We asked the question: What is the most surprising thing you learned from customer feedback in the past year? I found some of the responses, well, surprising. What do you think?

Here’s what some respondents had to say:

Customers like to be heard
Given a chance, customers will be brutally honest about how a company treated them and ways to improve [the experience] for other customers.

People wanted to be communicated to more.

Customers desire information from us, other than our direct product and service areas, e.g. partner and community information.

Customers want to be part of the overall strategy of our company.

They were willing to spend time helping me refine my offering.

Their willingness to share their feedback and make suggestions for improvement.

Customers are willing to speak if we ask them.

How willing customers are to talk about their personal experiences, challenges, and problems.

How easy it is to really listen to client concerns.

Customers Like Us!
What a great job our customer care team is doing when handling customer inquiries.

We do better than we thought!

We do a better job of satisfying customers than we realized.

Most of our customers actually like what we are doing.

Or Not…
Our company is sometimes hard to work with.

How difficult we are to contact if you don’t know who the right person is.

Customers really didn’t like our hold music. We saw a 3 point improvement in voice CSAT by simply changing the music.

We had a lack of knowledge about customers and what they are looking for.

Often the things we think we do badly are often not even on the customer radar screen. The things we don’t really regard as important are!

That we overcomplicate our selling model–it is really about engagement versus selling, and leveraging that engagement has been powerful!

Listening Equals Learning
Price is not the determining factor when customer buy.

In an overzealous drive to deliver the best and greatest experiences it is often the basics that we don’t deliver on that crack the foundation of the customer relationship. Customer relationships are like a game of golf: The most amazingly played shot won’t win the round, but a horribly executed one can ruin all.

The same service was differently appreciated in Asia or in the Americas or in Europe.

They are close to the issue, good or bad, and bring a view that at times we do not consider.

The importance of knowing the customer by name.

Our customers were using our website to get more information about us.

How some competitors have caught up with us in replicating our “unique” product mix.

What some of our employees do to break our operational procedures.

“I didn’t know you did that!”

Listening Also Equals Results
There is an indisputable link between improvements in customer experience and its link to bottom-line results.

It’s great to stop and hear what [customer] are saying; this improves our product, which translates to higher prices and revenue.

Listening to customers is a simple way of cutting costs by fixing customers problems or issues.

via This Is No Surprise – Or Is It? – Think customers: The 1to1 Blog.

Customer Retention in Tough Times

As we collectively try to gain visibility to what is happening in the marketplace, the following contains some good basic reminders of necessary requirements to survive in the marketplace today. I’d love to hear about how your company has implemented some of the ideas below and how that has helped your organization succeed.

No doubt as the recession takes hold companies are at risk to lose more customers than new ones coming in.

The problem: If you don’t invest in keeping and developing your existing clients – especially in tough times – then it’s more than likely that your business will decline.

You’re no doubt familiar with the mantra that states that it costs about 5 times more to bring in a new customer than to sell to existing customers.

So the question is what are you doing to communicate with your customers? Do you have a structured customer development program to upsell, cross sell and above all manage your relationships in such a way to make sure these customers – whom you’ve already spent a long of money acquiring – from walking?

Here are some ideas you may want to focus on:

1. Establish a systematic, formal process to cultivate and grow high potential accounts

2. Create a schedule to “touch” key accounts regularly

o Build variable schedule based upon account potential not current value of the relationship

3. Develop a strategy to manage marginal accounts those that cannot be effectively managed by the sales force

o Outsource is one way to go

4. Raise awareness of new products and services

5. Under promise – over deliver

via B2B Sales and Marketing Blog

Just 100 Days away from Customer Lifecycle Management | Graham Hill, Customers & More

Graham Hill presents a great framework for rolling out a Customer Lifecycle Management initiative. In the sea of opportunity and moving parts, the ability to execute the delivery of a focused project plan is key if you are to realize the unlocked potential that exists within your existing and future customer base.

One other key point that could go unnoticed is that you’ll see after the 100 day plan, he points to Kaizen, a method of continuous improvement, which surprisingly goes unnoticed in many CRM implementations. The initial launch is only the beginning of the journey towards increasing profitablity.

Customer Lifecycle Management in 100 Days!

By Graham Hill, Customers & More

The recession is forcing companies to rethink how they do CRM. Gone are the ‘big-iron’ CRM projects of yesterday with multi-million budgets, inflexible two-year project plans and ROIs that were little better than inspired guesswork. In their place is a new approach to CRM, based upon running projects as internal corporate ventures that deliver tangible results, at low cost, within 100 days.

To make internal venturing work for CRM, it needs to be based upon three parts, each of which supports the others.

1. Proven CRM Theory – The first part is a thorough understanding of proven CRM theory. This provides a robust platform upon which to build an internal venture project. Without this platform, it is all too easy just to copy other companies’ CRM projects without understanding how they need changing to suit your company’s unique capabilities. Proven CRM theory provides the know what.
2. Detailed CRM Practice – The second part is detailed experience implementing CRM projects and operating them afterwards. This provides a practical framework for planning the CRM project, piloting it in stages, implementing it and then operating it afterwards. But experience by itself is not enough. You also need to understand enough CRM theory to know how to adapt experience with other companies to your own situation, particularly during planning and early piloting. Getting it right at the beginning will mean that you don’t have to significantly change the project later on, when it is much more disruptive and costly to do so. Detailed CRM Practice provides the know how.
3. A 100 Day Project Plan – The final part is a 100 day project plan, setting out how you will implement CRM and start delivering tangible results within 100 days. Obviously, you can’t deliver an enterprise-wide CRM programme, e.g. telco Billing & Collection, in 100 days. But you can break larger programmes down into smaller 100 day projects that you can more easily manage for results And by results I mean delivering project milestones, on-time, in-full, to-budget. Only by running projects as internal ventures can you ensure delivery of results, with whatever resources are available, at a minimum cost. A 100 day project plan provides the CRM blueprint to get started.

So how do 100 day projects work in practice?

Recently, I directed a small team that implemented Customer Lifecycle Management (CLM) for a national operating company of a major mobile telecoms provider, all within 100 days. The lifecycle of the 100-day project was broken down into five stages:

• First 10 Days – Feasibility – The first 10 days should be spent understanding the company’s current CRM capabilities, who the key resource holders are and planning the project milestones and costs in detail. The time should also be spend arranging for critical data required later in the project to be available just in time. One of the biggest problems in CLM projects is data not being available when required.
• Days 11-50 – Soft Pilot – The next 40 days should be spent developing and running a ‘soft pilot’ of CLM for the highest priority target customers. This includes gathering data, developing propensity models for e.g. customers likely to churn, creating attractive propositions, programming the campaign management system, developing marketing communications, arranging fulfilment for customers that respond and of course, reporting results. The idea of a soft pilot is that the CLM capabilities are tested manually to ensure that everything works as intended. Inevitably, some things don’t and soft piloting gives you the chance to fix them before they are automated in the next stage.
• Days 51-70 – Hard Pilot – The next 20 days should be spend automating the soft pilot once it is working smoothly and repeating the soft pilot process for next the highest priority target customers. Once the soft pilot from the previous stage has been run smoothly without any problems a number of times, it can be automated. This includes automating data feeds, customer scoring by the propensity models, offer selection for customers, the whole campaign delivery and fulfilment process and reporting. Early results should also be examined in detail and changes made to targeting, offers and communications to hopefully improve results. The soft pilot process should also be repeated for the next highest priority target customers. You may have decided that retaining customers likely to churn is the highest priority. These customers would have been soft piloted in the previous stage and hard piloted in this one. The next higest priority might be customers you think are likely to increase in value, or to take up a particular product. They would be soft piloted in this stage prior to being hard piloted in the next one.
• Days 71-100 – Implementation – The last 30 days should be spent hard piloting the next highest priority target customers from the previous stage and standardising the whole CLM process across the business. In the previous two stages, the CLM process has been systematically tested and automated across prioroty customers. In this stage, the process is standardised across the business so that it becomes daily business for all staff operating it in the future. This includes measuring, monitoring and managing the business by the results delivered. As this will form the basis for all future CLM activities, it is essential that this stage is carried out by the company staff who will operate CLM in the future. It can be challenging to get operational staff to change their emphasis from doing activities to delivering results, but it is essential if CLM is to deliver the results expected of it. Customers’ behaviour is continuously changing and CLM needs to continuously change with it.
• Post 100 Days – Kaizen – The post 100 day period should be spend further standardising the CLM process and in improving all aspects of CLM. This includes, improving the results of individual campaigns, improving underperforming propensity models and improving the operation of CLM. Although lean processes should be implemented automatically during CLM’s development, the pressures of managing internal ventures with a 100 day target mean that this is not always possible. Just applying lean thinking to business processes can reduce non-value-adding costs by up to 20-40% and process cycle-time by a similar amount.

This project delivered multi-million Euros of annual incremental revenue, on a total customer base of less than 5 million and a targeted customer base much smaller still. All for a total outlay of less than Euro 250,000. And all up and running by the telco’s own staff within 100 days. You can work out the ROI for yourself.

Find Out More, Get the Presentation

I have presented and run whole day workshops showing how ‘You Can Do CLM in 100 Days’ at a number of Telecoms CRM conferences over the past year. Send me an email to graham(dot)hill(at)web(dot)de if you would like me to send you the full presentation.

Why Bother with Customer Centricity?

CRM Magazine asked their subscribers “What is the number one concern that keeps you up at night?”.

I found it interesting that none of the responses resembled anything like: “My kid is failing out of school”, or “My spouse works too much”, or “I can’t make the mortgage payment”. Oddly enough, all of the responses were CRM related. Go figure.

Nonetheless, the results were as follows:

—————————————————————–
Creating and Maintaining Customer Satisfaction: 27%
Providing a Return on Investment: 27%
Maintaining User buy-in and enthusiasm 16%
Cementing Customer Loyalty 15%
Finding the right CRM Tool 6%
Keeping up with CRM Innovation 4%
Respondants who sleep soundly 5%
——————————————————————

Today, I’d like to focus on the number one reason that people are not sleeping at night, “Creating and Maintaining Customer Satisfaction”. We’ll talk about the other number one, ROI, in a few weeks. But, first, I’d like to take a step back and observe some findings from another study.

In a survey conducted by CRMGuru.com, it was discovered that having a Customer-Centric Strategy was the most important driver of success of any CRM implementation. In a future post, I’ll take the time to illustrate that Customer Loyalty has significant impacts on both the top and bottom lines.

So how do each of these pieces of the puzzle fit together? What is the relationship between Customer Satisfaction, Customer Loyalty, and implementing a Customer Centric Strategy?

Customer Satisfaction and Customer Loyalty are two golden keys to giving your company competitive advantage. Building and implementing a Customer-Centric Business Strategy is created with the intention of increasing both your customer satisfaction, and customer loyalty.

The first step in implementing a customer centric business strategy, (or any other initiative) is to take a snapshot of where you currently are. This makes it possible to measure your progress along the way. The two main benchmarks that can help measure the success of your initiative are:

1. WHAT ARE YOUR CUSTOMER SATISFACTION LEVELS?
How many of your customers are satisfied with the products and services you are providing to them?

2. WHAT IS YOUR CUSTOMER ATTRITION RATE?
In other words, how many of your customers are defecting and choosing your competitor’s products and services.

The second step is looking at 5 key areas in developing your customer centric strategy. I have listed a few things to consider in each area:

1. Overall Business Strategy

- What are your customer’s needs? Spend more time understanding this, as opposed to trying to get your customer to interact the way you want them to
- Focus new product development around customer feedback

Graham Hill just made a great post related to this How Harnessing Your Customers Doubles Your Innovation Success>/a>

2. Organizational Issues

- Senior management committed to leading company through organizational changes
- Sales, Customer Service, and Technical Support given incentives to work together to provide outstanding customer service
- Move majority of CRM technology selection authority from IT to “business” decision makers

3. Work Processes

- Build and modify work processes around servicing the customer better
- Work hard at increasing efficiencies, streamlining processes
- Seek to be the Low-Cost producer in your industry

4. Technology

- Consolidate all customer related data into one repository
- Integrate key front-office, back office, and web office systems to interact with each other
- Choose leading technology with capable vendors to assist in the process

5. Training and Support

- Provide your staff with excellent training
- Budget time and resources to make sure they are confident with the new system
- Adjust compensation incentives to encourage use of new systems, and transition sales focus from new customer acquisition to retention

“Being customer centric focuses your business decision-making processes on the impact that those decisions will have on your customers. The real trick is making the “right” decisions that result in a positive impact. In order to do that, the organization needs to understand who its customers are, where they are going and how can the customer’s needs be met. That type of understanding requires information, and information comes from data.” says Kevin Murtha of Greenbrier & Russel’s, in an article in the September, 2002 edition of DM Review. http://www.dmreview.com/

It is essential for your company to be able to have the systems in place to be able to capture, analyze, and share the information about your customers so that you can be more responsive to their needs, provide them with unparalleled service, and keep them as customers for life. But it all starts with strategy.

The Limits of Customer Analytics in a Recession | CustomerThink – CRM, CEM & Social Media

Customer segmentation is a big issue as companies look deeper at their existing customer base, and as Graham points out, not only are companies needing to readjust their strategic initiatives and sometimes entire operational models, the data that they have in their database may not mean what it meant just a few months ago:

The recession has resulted in a number of companies having to change their ‘business operating models’ and to switch their emphasis. Sometimes this can have unintended consequences . For example, talking to one telecoms executive, his company’s emphasis has changed from acquiring new customers, to retaining the ones it already has. This is quite a change for the telecoms industry, more used to spending huge sums of money acquiring new customers to replace the ones that it lost the previous year, than to keeping existing customers. This change applies to many other industries too.

As the recession evolves into something more frightening, I am sure that there will be many more of these ‘phase changes’, as businesses switch from their current operating model to a different one.

The difficulty with changing the emphasis from customer acquisition to retention, is that it requires very different business capabilities. Acquisition is generally done through mass marketing campaigns to the market as a whole. What is generally on offer is a bundle of product, service, even experiential components, that are almost identical to what competitors are offering. The emphasis is on competitive intelligence and mass marketing capabilities. Retention on the other hand is mainly done with a combination of mass-customised follow-on offers to individual customers based upon their recent behaviour. The emphasis here is on customer analytics and mass-customised marketing capabilities. Making the switch can be very difficult, as although most companies already have these new capabilities, they are not always there in the right quantities to deliver against management’s change in emphasis

via The Limits of Customer Analytics in a Recession | CustomerThink – CRM, CEM & Social Media – Think, Feel & Connect.

Getting Back to Segmentation Basics – Think customers: The 1to1 Blog

You’ve heard it a thousand times, but I’ll say it again anyway: Customers today expect you to know who they are i.e. understand their specific needs and treat them accordingly e.g. communicate with relevance.

During a session at the Gartner CRM Summit UK, Furkan Ocal, a manager with Peppers & Rogers Group, reminded attendees about some of the important basics of gaining that customer knowledge. He offered four fundamental steps for customer segmentation that can help business leaders to better understand and communicate with their customers: identify, differentiate, interact, customize IDIC. These principles may not be new, but they’re effectiveness have stood the test of time.

Read more at the 1 to 1 Media Blog

The Key To Turning Strangers Into Customers | Guerrilla Marketing Blog

As we collectively try and maintain and grow our customer base, some key strategies implemented against a backdrop of the basic rules of human relations can go a long way:

Keys To Remember:

Good marketing is about building relationships.

It’s always about listening to what the customer wants and needs.

It’s the small things like smiles and greetings.

The outrageously good service you give

And the close and personal follow-up with your clients and prospects.

Why Do Customers Choose One Business Over Another?

Consider the research done by the Forum research corporation. They have analyzed 14 major service companies in terms of customer satisfaction. Their results follow:

*15% of customers switched to another business because of quality problems.

*15% left because of price

*70% departed because they didn’t like the human side of doing business with the prior provider of the product or service!

Building the human bond means treating clients and prospects with the utmost respect, offering the most valuable information and always giving them the very the best service. If you do they will become customers for life and your very best sales force.

via The Key To Turning Strangers Into Customers | Guerrilla Marketing Blog: Low Cost Business Building Tips .

Customer Retention: The greatest opportunity to increase profitability in a recession

“The customer is the most important part of the production line”
- W. EDWARDS DEMING

In this newsletter, we will be talking about probably the biggest opportunity to increase your company’s value in a recession, or in any market, for that matter.

What is CRM? Most of you know that it stands for Customer Relationship Management.

CRM in its truest form has nothing to do with technology. Putting on a football helmet will not make you a football player. Buying a lot of books will not make you smart. Similarly, simply buying the latest technology will not make you money.

CRM is a mindset. It is the implementation of customer centric business strategies that are intended to make the customer feel like they are your first priority. Implementing these strategies will most liklely require the proper technology as an enabler to successfully deploy and implement the new systems and processes that will lead to higher customer retention in your organization.

If relationships with your customers are well managed, then, your customers will be happy. Right?

But why is this important? The simple thought goes:

If a customer is happy, they will remain a customer. If they remain a customer, they will spend more money over time. This is a basic idea that just about everyone can grasp.

But is that it? Is that all there is to it? Let’s look a little closer at the enormous value in properly managing relationships with your customers, which leads to higher customer retention.

1. NEW CUSTOMER ACQUISITION COSTS ARE HUGE

Depending on your industry, the costs associated with acquiring new customers can be huge. Marketing initiatives, salesperson’s salaries, collateral, and promotional materials, wining and dining the high profile potential clients are all costs associated with acquiring new customers. In addition, even once new customers decide to purchase your product and service, they may be responsible for the majority of your customer service or technical support calls. Industries vary, so it is hard to put a hard dollar amount on each of these, but if you were to add these costs up, I am sure you would be surprised by the results.

2. LONG TIME CUSTOMERS SPEND MORE MONEY THAN NEW ONES

Most new customers are already buying your product or service from someone else in some way, shape, or form. Something has inspired them to search for a new vendor. This may have been a referral, bad experience with their current vendor, or a compelling marketing promotion that you are running. In more cases than not, this search has led this new customer to purchase a “relatively small” initial purchase that will grow as you provide them with superior product quality, customer service, and technical support. Hopefully their business has grown over time, and this has increased their buying volume.

3. HAPPY CUSTOMERS REFER THEIR COLLEAGUES

A customer referral is the best way to acquire new leads. You have an ally in the marketplace evangelizing for you. Happy customers refer people who trust them, are like them, and who have already heard about the great products and customer service you offer. Customer referrals have a much higher percentage of close that your normal marketing driven lead. Higher customer retention generally leads to more referrals, which leads to more sales, which leads to more growth. In most industries, customer acquisition costs for referrals are significantly less than for a stranger off of the street. Not only do referrals increase your revenue, but generally they also reduce your acquisition costs, as well.

4. ORDER PROCESSING COSTS ARE HIGHER FOR NEW CUSTOMERS

With extra time being spent to educate new customers about your order process, credit checks and verification, new account setups, and other steps that need to be taken, it takes longer in almost any industry (and costs more money) to process orders from new customers instead of already existing customers. Your already existing customers know how things work with your company because they have done it before.

5. OLD CUSTOMERS PAY MORE FOR YOUR PRODUCTS

Most likely, many of your new customers have purchased your product because of some price break or promotion. They are taking advantage of a special marketing campaign that you have made available to “First Time Customers Only”. Existing customers generally pay the normal price, providing a higher margin on the products and services you provide.

According to the Harvard Business Review, an increase in customer retention by 5% could increase the value of your average customer by 25-100%.

That means that if you earn $50 million in profits each year, by increasing your customer retention rates by just 5%, you could increase your profit by $12-50 million.

1. Do you know what your company’s acquisition costs are?

2. Do you know what the rate of defection is among your current customers, and why they are defecting?

3. Do you have the systems in place to begin increasing your customer retention?
- Enabling your sales reps to sell more efficiently
- Enabling your customer service and technical support teams to quickly and proactively provide your customers with top notch service?

4. Do you know the top 5 reasons your customers call you after the sale?

5. Are you sharing critical information across your organization with all customer “touch point” departments?

6. What is the current financial impact to your company from your customers taking their business elsewhere?