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What Really Matters in Customer Relationship Management (Hint - It's Not Technology)

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Alex Loach
Alex Loach
02/06/2013

Before getting into depth with this subject, it’s important from the go that anyone who believes that ‘Customer Relationship Management’ is simply a system or piece of software is already wrong. In reality, CRM is about experiences. It’s how you manage them, interact with them and guide them potentially through a process in order to maximize their value to you, and maximise their experience for them.

Acquiring customers or look after the ones you have?

There is no getting away from the fact that both of these are essential to every organization, but in this uncertain climate, if a choice has to be made, or it’s not an option to do both effectively, that resource should be spent on maximizing the value you can get from your current customer base. We know this is easier and more cost effective to do, and it is also something that your competitors can’t do with your customers because only you know their history. Only you know what they have bought, what they have returned and what experiences they have had.

Your competitors will not know this information about your customers, and you will not know it about newly acquired customers. Data on new customers can be acquired, but not to the extent that you probably have (or at least should have) about your customer base. Put this data to work, and the long term benefits compared to the cost of new customer acquisition will soon be evident.

Data is key, but only if you use it properly

While I do not want to get into the subject of treating customers like numbers (because you certainly should not), the data about them is, and this is where you can either treat the data like you might basic math, or you can treat it to the degree of advanced science. If you choose the latter, the work and analysis involved will be greater, but the benefits will be considerably higher. It’s one thing to know what a customer has bought and when, but its another to look further into what they liked, what they didn’t, what they needed help on, and what trends or influences were involved on just that single occasion.

Managing Decisions through Analytics

However much you analyze the data though, things change, and this is where treating that data like a basic math problem will not reap the full benefits. As an analogy, when it comes to managing customers, treating customer five to the added experience number five may have equalled result ten (C5+E5=R10), and the next time may have the same result next time. However do not get surprised when C5+E5=R6 one day, because customers change, and how they feel about an experience changes, and in turn it creates a different result.

Automate this process of analysing the data best you can, but do not just prepare for one result, prepare for many, and then use that result to prepare the data again i.e. does C5+E5 =R10 60% of the time, R5 30% of the time and R0 10% of the time, or maybe it equals R10 the first two times it’s experienced, and then most likely R5 the time after? Already you’re gaining information that will help form better decisions each time, and while the algorithm gets more complicated each time, the benefit of creating the desired result does too. This can then be applied to not just new customers, but customers you may feel are at risk of leaving you and may just need that little bit of extra attention or a special offer to keep them.

In the end, this will simply become a complex algorithm that leads to a simple set of rules to follow in order to personalize towards a type of customer dependant on their interactions, experiences and habits up to this point. This will in turn not only help to increase revenue, but from a marketing perspective may help reduce costs on customers who do not need added attention and divert more to those who do.

Don’t forget to bring the human aspects into CRM though

Keep in mind though that when we are talking about experiences and interactions, a system cannot analyze on or even report on some of the most important and intricate pieces of information: that concerning how a customer really felt. Only a front line agent can bring this into the equation, and even after all this complex data and analysis, only a real person can decide how best to use it. The system may know what a good decision is but only from the information it was first given.

Better CRM this doesn’t always need new technology, just a new way of thinking

Obtaining new customers takes more money. Purchasing new technology takes more money. Using the data that you already have to a much higher degree in order to maximize their value to you--and to focus on making sure they do not move to a competitor--isn’t even a comparable cost.


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