Customer Relationship Management:  Creating Win-Wins

February 28, 2020
Posted in: Uncategorized

Table of Contents

 

It’s no surprise that a top-notch product or service is vital to business success but did you know that customer satisfaction is even more vital? The experience that customers have with a brand and how the brand makes them feel can make or break a business.  

“People will forget what you said.  People will forget what you did. But people will never forget how you made them feel.”  – Maya Angelou

Making customers feel good about your business has far-reaching benefits. Satisfied customers can potentially become that unpaid segment of your marketing department known as brand evangelists. If their experience with your brand is positive, they’ll sing your praises to family and friends both directly and via social media. They may even share the experience on online review sites.  (If their experience is not-so-positive, there’s a greater chance of the experience being shared). Since establishing a connection with customers is an essential part of customer satisfaction, managing interactions with them is key to enhancing the customer experience.  

In this article, we’ll discuss the concept of customer relationship management and ways to assess and improve the customer experience.

 

customer relationship

 

What is Customer Relationship Management?

 

Customer relationship management (CRM) refers to the principles, practices, and guidelines that a company implements when interacting with its customers. From the company’s perspective, this entire relationship includes direct interactions with customers, such as sales and service-related processes, and forecasting and analysis of customer trends and behaviors. The ultimate goal of CRM is to enhance the customer’s overall experience. 

 

Understanding Customer Relationship Management 

 

CRM is comprised of everything from a company’s website and emails to surveys and phone calls. Interacting with customers via social media is another way that companies adapt to trends in an effort to engage customers and ultimately benefit their bottom line. The focus of CRM is to build positive experiences with customers so they’ll keep coming back, allowing the company to build a steady customer base.  

The term CRM is increasingly being used to refer to the technology systems companies employ to manage their interactions with customers at all points throughout the customer lifecycle, from discovery to education, purchase and post-purchase. The global CRM market is forecast to grow to 40.26 billion U.S. dollars in 2023. This is a projected increase of more than five billion U.S. dollars from 2018, at a compound annual growth rate (CAGR) of 2.8 percent.  CRM technology is widely cited as the fastest-growing enterprise-software category, which encompasses the broader software-as-a-service (SaaS) market.  Five of the largest players in the CRM market today include Salesforce, SAP, Oracle, Adobe, and Microsoft.

 

 

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Types of CRM Technology 

 

CRM Software 

CRM software compiles customer information in one place to give companies easy access to customer data, such as contact information, purchase history, and any previous contact with the company’s customer service representatives. This data helps the sales team interact with clients, anticipate customer needs, recognize customer updates and track performance goals.

The main purpose of CRM software is to make interactions with customers more efficient and productive. The automated procedures within a CRM module include sending marketing materials based on a product or service that a customer has shown interest in. Software programs also anticipate and assess a customer’s needs in order to reduce the time it takes to fulfill a request.

 

CRM Cloud Solutions 

Cloud-based CRM systems allow sales team members to access real-time data at the office and in the field as long as they have a computer, smartphone, laptop, or tablet with internet access. These systems offer greater accessibility to customer information and allow companies to avoid the complex installation process sometimes associated with other CRM products or software. 

There are, however, downsides to cloud-based CRM systems. If a company goes out of business or is acquired, the security of customer information may be compromised. If a company decides to switch to a different CRM software vendor, it may experience compatibility issues. Also, cloud-based CRM programs typically cost more than internal programs.

 

CRM Human Management & Artificial Intelligence 

CRM software can help companies efficiently and effectively manage customer interactions but it’s useless if it isn’t properly managed by humans. The best CRM programs organize data in a way that humans can readily interpret and use to make decisions. To successfully manage customer relationships, companies must learn to distinguish between useful data and data that’s redundant. The duplicate data along with incomplete records must be extracted so employees aren’t given inaccurate customer information.

Despite the need for human involvement, industry experts continue to discuss the role that artificial intelligence (AI) applications may soon play in CRM management and the CRM market. AI is predicted to bolster CRM activities by expediting sales cycles, improving pricing and distribution logistics, reducing costs of support calls, increasing resolution rates, and using fraud detection to prevent loss.

Although cloud-based CRM suppliers like Salesforce and Microsoft have already begun to incorporate AI components into their CRM systems, tangible CRM applications using AI are in the early stages of development. 

 

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Acing the Customer Satisfaction Game

 

If you’re acing the customer satisfaction game, you should be enjoying the following benefits as well as those mentioned above. If you’re not acing it, missing out on these benefits should motivate you to step up your game:

  • Satisfied customers are willing to spend more – According to a study by Walker Consulting, 86% of customers surveyed are willing to pay more with a company that gives them a better experience. Walker also predicts that by the end of 2020, customer satisfaction will be the key differentiator between companies.  
  • Customer retention is less expensive – Depending on the industry, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing customer.  
  • Profits increase exponentially – Research by Bain & Company’s Frederick Reichheld, inventor of the Net Promoter Score, shows that increasing customer retention by as little as 5% can increase profits by as much as 25% to 95%.  Mind blown.  
  • Better conversion rates – Trust and confidence have already been established, so if the customer had a good experience they’ll buy from you again.
  • In their 2018 Digital Trends Report, Econsultancy shared that “customer experience” is the business opportunity that companies are most excited about for the coming year. Companies are becoming more interested in reaping the benefits above and are devoting more resources to measuring and managing customer satisfaction.

 

To ensure that customers have a positive experience with your business and stay with you, let’s first look at why customers sever ties with a company. 

 

team

 

Why Do Customers Leave a Company?

 

You may not like it, but it can happen. Your customers may abandon you at some point in search of greener pastures.  In a report by McKinsey & Company,  it was revealed that only 13% of the customers surveyed said they were loyal to a single brand. 87% said they shopped around, and 58% had switched to a new brand altogether.

Why do customers shop around? What drives them to abandon the businesses they’ve patronized for years and shop with competitors? If your business is losing customers, it’s critical that you take the time to determine what’s causing it – and what you can do to fix it.

Here are seven common reasons why customers leave a business:

 

You Don’t Care About Your Customers’ Needs

Is your company customer-centric – are customers the primary focus of your company? If so, you should constantly be asking “How can I help my customers?” The focus shouldn’t be on what you can sell to them. If it weren’t for your customers, you wouldn’t have a business. Unfortunately, a lot of companies forget about this. If you only focus on profit and don’t put your customers at the core of your business, you’re doomed to fail. 

 

You Provide a Poor Customer Service Experience

There are few things that can sully a customer experience more than poor customer service. To a customer, your support staff is a representation of your business. It’s unfortunate that the majority of dissatisfied customers won’t tell you about their negative experience and how you can make it right – they’ll just stop doing business with you.  So, you’ve got to pay close attention to your customer service policies and how your support staff is performing.

 

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Your Product or Service Failed to Meet Expectations

If your product or service doesn’t live up to your claims, dissatisfied customers will not only stop doing business with you but they’re also likely to share their disappointment with their social media friends and followers. These angry customers may also post negative reviews and discourage prospective customers from patronizing your business. 

 

You Didn’t Show Customers the Value of Your Offering

Customers don’t necessarily choose a business because it offers the lowest price. Customers want to feel they’re getting value for what they pay. As a business owner, you must convey to customers the value that they would get if they shop with you. Price is what the customer pays. Value is what the customer gets (or what they perceive as valuable).

 

Your Business is Inconsistent

For customers to trust you, they need to see consistency – in everything from your branding, to the quality of your products, to your customer service policies. Inconsistency in any of these areas has the potential to make customers sever ties with your company. In business and in life, things that are consistent can be relied upon. 

 

Your Sales Techniques are Outdated

Today’s customers don’t respond positively to the aggressive sales techniques used years ago. They’re more likely to be turned off by them. The strong-arm tactics only worked in previous years because customers didn’t have the multitude of choices they have today. So, if you’re using manipulation or coercion to close the deal, it’s time to stop.

 

You Haven’t Given Them a Reason to Return

Do you take care of your loyal customers? Once customer loyalty is earned, it needs to be maintained and sufficiently rewarded. Show your long-term customers that you really appreciate them and that they’re important to you. There are many ways to do this, from exclusive offers to special perks. Think of the number of new customers you could attract if your loyal customers spread the word about how you treat and appreciate loyalty. 

 

customer

 

Get Customers to Stay With You by Showing You Care  

 

It’s imperative that you create an emotional connection with your customers.  To do so, you must surprise and delight them. Doing things out of the ordinary or above and beyond is a sure way to make that connection. 

Some ideas for making an emotional connection:

  •  Say “Thank You” – As a business owner, take the time to send a personal note to regular customers or clients, thanking them for their business and offering personal support. Show that you care about their success (in the case of B2B business models).    
  • Show up and help – Routinely select a customer from your database and offer to provide a day of free on-the-job training in the use of your product or service. Help them with their most pressing challenges. Document the experience and the value that you or a member of your team were able to provide to the customer in a single day. 
  •  Get personal – Celebrate the successes of your customers.  Re-tweet when they receive an award or debut a new product.

In the age of social media, these random acts of kindness are sure to be shared, establishing you as a truly customer-focused organization. 

 

For Costco, Satisfied Employees = Satisfied Customers

 

As you placed the ginourmous box of Frosted Flakes in your cart, did you realize that you were shopping with a winner in the customer satisfaction game?  Costco’s claim to fame: generosity to employees and devotion to customers.  

In order to rank America’s Best Large Employers for 2019, Statista and Forbes asked 30,000 employees at U.S. companies and nonprofits, “How likely would you be to recommend your employer to a friend or family member?”  Costco placed in the top five. Describing working conditions, atmosphere and remuneration (with health insurance for part-timers) as favorable, Costco employees were shown to be satisfied and highly motivated.  They feel valued and part of a team in which every member is making the entire group successful. Therefore, they enjoy coming to work which makes for a friendlier employee who is willing to do what it takes to ensure that the company runs well.  This, ultimately, leads to a better customer experience. 

To further heighten the positive customer experience, Costco offers quality products, low prices, and a top-notch return policy.  Overall, customers are definitely satisfied; 90.9% of Costco’s current members renewed their subscriptions in fiscal year 2018.  

 

feedback

 

Evaluating Customer Satisfaction

 

When it comes to measuring customer satisfaction, customer loyalty is the metric that’s worthy of special consideration because of its direct correlation to sustained growth. Loyalty, in general use, is a devotion and faithfulness to a nation, cause, group, philosophy or person. From a customer perspective, loyalty can mean staying with a company that actively shows that they appreciate your patronage even if the company doesn’t offer the best prices.   

The most loyal of loyal customers are those who not only stick with the company but who enthusiastically recommend the company to family, friends, and associates. This form of loyalty is significant because the customers are, in essence, putting their reputations on the line by making the recommendation.  It’s most significant to the company because of its impact on profitable growth.  

Want to find out how likely your customers are to recommend your company to others? You could create an extensive survey and hope that customers are willing to sift through a myriad of questions. Or, you can be mindful of the K.I.S.S. (keep it simple and straightforward) principle and create a one-question survey that zeroes in on the information you’re ultimately seeking:  “How likely is it that you would recommend our company to a friend?” The survey results will lead you to your Net Promoter Score (NPS). 

 

Finding Your Company’s Net Promoter Score 

 

The primary purpose of the Net Promoter Score (NPS) methodology is to evaluate customer loyalty to a brand or company. To obtain your company’s NPS, survey a statistically valid sample of your customers and pose the question: “How likely is it you would recommend our company to a friend?” Your NPS survey can be conducted at little or no cost by taking advantage of the online tools at Survey Monkey or Pendo.

Resist the urge to add more questions to the survey. Research shows that survey response rates and the reliability of the sample are best with this single question. (Although the NPS survey’s single question is considered to provide a viable gauge of customer loyalty, following the likely-to-recommend question with an open-ended request for elaboration is encouraged. Customers’ reasons for ratings can then be provided to front-line managers for follow-up action. Follow-up action can entail calling customers to discuss the provided feedback and learning more in order to coach front-line employees.) 

Provide a consistent scale for responses that range from zero to ten, with ten meaning extremely likely, five meaning neutral, and zero meaning not at all likely

 Once the survey results are in, calculate the percentage of customers who respond with scores of nine and ten (“promoters”) and the percentage who respond with a score of zero to six (“detractors”). Promoters are considered most likely to exhibit value-creating behaviors such as buying more, making positive referrals and staying with the company (even amid market pressure).  Detractors are believed to be less likely to exhibit value-creating behaviors. (Responses of seven and eight are considered to be “neutral” or “passively satisfied” and are only counted toward the total number of respondents).  

To arrive at your NPS, subtract the percentage of detractors from the percentage of promoters.    What does the resulting number tell you? Satmetrix, maker of customer feedback software, found the median NPS to be 16% (based on 130,000 survey responses from more than 400 companies across 28 industries). How does your company stack up?  

Your primary concern, however, should be how your company’s NPS compares to direct competitors. Have market researchers conduct the above survey with your competitors’ customers to see where you stand within your industry and if your current NPS needs improvement.  

If you want to join the ranks of companies like Apple, eBay, Amazon, and USAA (with net promoter scores of 72% to more than 80%), you’ll need to provide the kind of world-class service that will make customers want to spread the word.  

 

apple

 

Why Apple Enjoys One of the World’s Highest Net Promoter Scores 

 

Apple’s high NPS of 72 is the result of an amazing focus on delivering a quality product and an exemplary customer experience. How does Apple do it?

  • Apple’s attention to detail extends from the product itself to the distinctive packaging which creates a sensory experience for customers.
  • Apple successfully alleviates buyer anxiety through its promise of full customer support for its products. Customers feel confident that the product they’re buying is safe, reliable and they’ll be fully supported in using it.  
  • Apple continually works to improve its NPS. NPS feedback is analyzed and provided to stores on a daily basis.  A poor score from a detractor results in a call from the store manager within 24 hours. Internal studies showed that detractors were then substantially more likely to purchase Apple products in the future!
  • Apple focuses on the customer and lets profit take care of itself.  (Research by Deloitte & Touche found that customer-centric companies were 60% more profitable than non-customer-centric companies.)

 

Ensuring NPS Program Success

 

What’s the best time to initiate the NPS survey?  Since NPS is a long-term measure of customer loyalty and you’re interested in assessing loyalty to the company and not to an individual product, sending the survey immediately following a purchase (transactional survey) isn’t recommended.  Sending the survey at regular intervals throughout the year will give a better idea of the customer’s overall experience and satisfaction with your company (relationship survey). Once you’ve established a schedule, stick to it. For most industries, twice a year should be sufficient.  If you opt to send the survey more often than that, be sure not to ask the same customer more frequently than every six months.

 

Additional Actions to Consider

Here are recommended actions to take for an effective NPS program:

  • Nominate an NPS champion within your organization. This person will be responsible for overseeing the program.
  • Design your survey (technology, frequency, storage). Consider storing NPS scores into a customer relationship management (CRM) tool for individual contacts and companies.
  • Decide how low and high scores will be handled. Consider incorporating NPS scores into your marketing segmentation process, which involves sending different messages to satisfied and at-risk customers alike.
  • Incorporate measurement results into a dashboard where they’re visible to all members of your team. Feature the results in all top-level team members’ reviews as a measure of business health. Because of customer satisfaction’s direct correlation to profitability, this is key. 

 

Inspire Existing Customers to Promote the Benefits of Being Your Customer

It’s not enough to build a quietly satisfied customer base. You want to inspire your satisfied customers to speak out on your behalf. Here are some ways to get them to be your “brand evangelists”:

  • Assign a Customer Testimonial owner within your organization with a key performance indicator (KPI) of finding “X” number of testimonials per year, for example. 
  • Utilize NPS Promoters.  Contact NPS “promoters” and ask if they’d go on record in providing a testimonial for your company.  
    • You are the company you keep.  Seek out highly compelling, innovative, or well-connected customers to do business with.  Consider unique partnerships with these customers in exchange for documenting the value you bring them. 
    • Make use of case studies. Document the successes of your customers and your role in their success. 
    • Social proof is a powerful force in persuading others.  Incorporate social proof (testimonials, social media posts) into your business’ core processes. 

 

customer relationships

 

The Role of Customer Satisfaction in the SaaS Industry – The LAER Model

 

In the SaaS industry, technology is no longer purchased in one large up-front transaction — instead, the customer is placed on the supplier’s platform to obtain the technology solution in a subscription format. If the customer’s objectives aren’t being met, service can be discontinued at any time along the customer’s journey. While the customer is on the journey, activities are suggested to convince the customer to stay on the platform, invest in more of the company’s solutions, renew current contracts and, ideally, refer others.  

These suggested activities are the basis of the LAER model. The LAER model is a customer engagement model that’s meant to help companies (especially B2B organizations who provide technology services) prevent customer churn.  It’s comprised of the following life cycle objectives:

 

LAER model

 

Land:  Land customers by engaging in sales and marketing activities that will convince them to implement the supplier’s technology solution.

Adopt:  Ensure that customers are successfully adopting the technology solution and using it in a way that gives them the desired outcome. Mastering this step in the journey can positively impact the Expand and Renew steps. Successfully adopted customers that are happy with their purchases are more likely to add services (expand) and renew existing contracts. 

Expand:  Cost-effectively help current customers expand their spending as usage increases.  Cross-sell and up-sell other solutions as you become more invested in customers’ outcomes.

Renew:  Convince customers to renew technology solution contracts and continue their relationship with you.   

 

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Helping Customers Adopt Your Products & Services

 

One of the components of the LAER model is the successful adoption of a supplier’s technology solution. Companies that work with customers to ensure that they’re happy with the technology purchase and are getting the most out of it are more likely to have customers who expand services or renew existing service contracts.

Here are some suggestions for improving customers’ experiences and helping them successfully adopt your product or service:

  • Send a welcome email and orientation kit to new customers.
    • Communicating directly with users is often a challenge as you may not know all of their names and email addresses. This can be remedied by creating a landing page where all customers/users can register to receive a Welcome Kit and onboarding email series.
    • For business customers, send an email to your primary point of contact at the client company, asking them to forward to all users at the company an invite to download the Welcome Kit and sign up to receive the onboarding email series. 
  •  Direct new customers to onboarding-based webinars.
    • Develop a webinar series for your customers that may include (1) resources for support and training; (2) tips for getting started with their purchase
    • Investing in customers’ success shows that you care about their current investment and aren’t just looking for the next sale.  
  • Check-in with new customers.
    • Schedule a check-in call a few weeks after the purchase to ensure that the customer isn’t experiencing problems with adoption.  

Helping customers get the most out of their recent investment with you will increase their satisfaction, accelerate their progress, and shorten the time to your next expansion opportunity with them. Note that each of these touchpoints is an opportunity to identify potential solutions to customers’ challenges at that stage of adoption, potentially leading to additional training opportunities, implementation services, or even new sales. 

 

How’s Your Customer Satisfaction Program?  

 

You don’t have to implement all of the activities below to have a successful program and best engage with your customers. Select the activity/activities that you feel will be most feasible and impactful for your business.  

  • Customer Orientation:  What assistance do you provide to help customers accelerate the adoption of their recent purchase from you (i.e. customer welcome email, support resources, online training, etc.)?
  • Customer Feedback:  How do you gather and make use of customer feedback (i.e. surveys, Net Promoter Score, etc.)?
  • Customer Retention:  What programs do you execute to actively highlight the value of remaining a customer of your business (i.e. exclusive offers, special perks, etc.)?
  • Customer Advocacy:  What programs do you execute to inspire existing customers to advocate on your behalf to potential customers (i.e. testimonials, case study publications, etc.)?

 

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Final Thoughts – Customer Relationship Management

 

Customer satisfaction is at the core of every flourishing business. As the business climate becomes increasingly competitive, successful management of customer relationships becomes more critical. Companies must employ techniques that aid them in becoming and remaining viable players in their industries.  Soliciting customer feedback through surveys (such as that used to calculate the Net Promoter Score) is one way to stay ahead of issues that could sour customers’ perceptions of your business and cause them to patronize your competitors.

Through the use of technology, CRM systems enable companies to deepen their relationships with customers. Forging solid relationships and keeping track of prospects and customers is crucial for customer acquisition and retention, which is at the core of a CRM’s function. Everything you need to manage customer relationships is all in one place. Everything from a customer’s previous history with you, the status of their orders, and any outstanding customer service issues can be viewed on a simple, customizable dashboard.

If your business is to thrive, you need a strategy that will carry you into the future. CRM provides the framework for that strategy.

 

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