Customer Relationship Management (CRM) refers to using various marketing activities for the purpose of establishing successful relationships with customer.
It is crucial for service-oriented businesses to build good relationships and trust with their customers.
By having good relationships with its customers, the business will be able to maintain customer loyalty – keep the customer coming back to the business to buy again.
Why is Customer Relationship Management (CRM) important?
The main aim of Customer Relationship Management (CRM) in a business organization is to keep existing customers rather than winning new ones. It is because gaining new customers is a few times more expensive than keeping the current customers.
Hotels, airlines, banks and retailers rely on their staff to deliver a first-rate customer experience in order to maintain their market share. For every single customer whose loyalty is gained over time, this means that there is one less customer buying from competitors. Excellent news for your business!
Example 1: IKEA typically offers a 10-year guarantee covering defects in materials and workmanship. Some of IKEA products are also guaranteed for as long as 25 years. In addition, IKEA also allows its customers to return the product in good condition within 60 days or within 365 days for members of the company’s loyalty program IKEA Family.
Managing relationships with customers in the exceptional way can build a competitive advantage for companies in the service sector where the level of customer care is very important. This includes hotels, airlines, private schools, banks, high-end retailers, etc. which highly rely on their staff to deliver a first-class customer experience.
How to build relationship with customers?
Developing effective long-term relationships with customers can be achieved using the following ways:
- Targeted marketing. Information about customers gathered from market research as well as from past purchases, can help the company to offer each customer the goods and services which desire the most. This will help to fulfill their needs and wants providing maximum customer satisfaction. For instance, Capital One Shopping gathers data about consumer spending habits and trends in their market research reports, e.g. Best-Selling Products of All Time. The company analyzes how people shop, how retailers sell and how prices change.
- As much information for customers as possible. Customers will appreciate sufficient amount of information about the product including the type of raw materials used, quality of raw materials, unique features of the product, service levels, etc. Important information that can stimulate sale can be informing customer about availability of purchase terms and after-sale services. This may encourage customers to establish the relationship with the business.
- Attractive purchase terms. Some businesses offer special purchase terms in order to attract customers by making it more convenient for them to buy the product right away. These may include possibility of pre-ordering, 0% financing (or a zero-interest loan), payment in installments, hire purchase, additional insurance options, ‘buy now, pay later’ trade credit plans, order tracking, etc.
- Convenient payment methods. Your firm should provide customers with many convenient payment options available. These days many businesses offer customers some of the most convenient methods of payment including cash, debit card or credit card, mobile payments, cheque, PayPal, bank transfer, trade credit with payment after 30, 60 or 90 days, etc.
- Timely distribution. When it comes to Customer Relationship Management (CRM), the purpose of distribution is not to aim for lowest cost, but to make it convenient for many potential customers. Make your products available for busy consumer both through local shops and on the Internet with home delivery. While it may not be the most cost effective for the business, the customers will be grateful for convenience.
- Excellent customer service and support. Providing customers with exceptional customer service builds loyalty. Everyone wants to deal with helpful people in the future based on the positive experience from the past. Do not let your customers down but always offer support. For example, restaurants, cinemas, theaters, sports stadiums, concerts, airports, etc. often have additional staff to assist customers to show courtesy. If your customer service was bad in the past, are focusing now on improving it.
- After-sale care. Customers who made the purchase tend to receive some after-sales services from the business to better satisfy their needs and wants. For instance, assembly services, installation, technical support, regular maintenance, guaranties (an assurance from the company that the product is of specific quality and will perform satisfactory for a given period of time), warranties (a written promise from the company to repair or replace the product that develops a fault within a particular period of time), replacement of broken parts, additional subscriptions, attractive return policies, etc. Businesses that offer generous after-sales care are much more likely to better satisfy their customers, thereby gaining customer loyalty.
- Staying in touch with customers. These days most of communication with customers happens via the electronic means. Additionally, many Customer Relationship Management (CRM) systems integrate online chats and social media sites to stay in touch with customers and track their comments. Companies can even access market research data and recent trends allowing businesses to make more accurate decisions regarding which products to produce and supply.
Clearly, Customer Relationship Management (CRM) is at the heart of the customer-focus concept which is called Market Orientation. Market Orientation is one of the three modern approaches to marketing whilst another two include Product Orientation and Asset-Led Marketing.
