CRM
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
