Why is customer relationship management essential?

Contents :

1. The key sales equation
2. CRM enables you to automate the acquisition of new customers
3. Managing sales contacts (leads) and opportunities
4. Automating marketing activities
5. CRM helps optimise relationship management
6. Sales process management and forecasting
7. Management of sales activities
8. Management of quotations, offers and contracts
9. Other advanced CRM features
10. CRM improves customer loyalty
11. Making the most of your CRM system

The key business equation

Customers + sales = revenue. If your business depends on the market, this is the most important equation you need to keep track of every day.

First of all, you need customers. If you work hard and get new customers, you'll need to get them to buy what you offer (products or services) in order to generate sales. Once your customers have started buying, you'll want them to keep buying to ensure you have a revenue stream and to guarantee the continuity of your business.

This is not an easy task. Today's customers are more diverse and much more knowledgeable than ever before. Companies need to create and maintain sophisticated sales techniques and technologies to remain competitive in the marketplace. One of the most widely used solutions at the heart of many strategies and approaches is customer relationship management (CRM).

CRM is a software solution for managing all aspects of a company's interactions with its customers, from marketing to sales and service. The information collected and analysed by a CRM system relates to business opportunities, contact details, marketing and sales activities, quotations and contracts, and sales processes.

As a business discipline, CRM is designed to address the increasing complexity of downstream (demand-side) activities within the market value chain, to help marketing and sales management teams improve their competitiveness, to enable the use of appropriate information technologies to co-ordinate sales, marketing and service activities, and to enhance the personalised customer and service experience.

No matter how complex sales may be today, in a 'sell to a customer' scenario, all you need to do is ask yourself three simple questions:

1. How do I find customers?
2. How can I get them to buy?
3. How can I keep these customers forever?

Let's look at how an effective CRM system can help answer these questions.

CRM makes it possible to automate the acquisition of new customers

In any market, companies need to attract new customers to buy their products and/or services in order to make their business profitable (or at least to ensure the continuity of their operations). Customer acquisition is not a one-way street: your customers may be 'inbound', if they come to you spontaneously, or 'outbound', if you have to work to attract and retain them.

The customer acquisition process can be broken down into three simple stages: creating demand, establishing communication and starting to sell to customers who have responded to your messages. However, in today's increasingly connected world, where customers have access to the same market and industry information as suppliers (including the proliferation of social networks, search engines and price comparison sites such as appvizer), businesses are trying to attract the most informed customers the industry has ever known. Convincing a new customer to buy can be a real challenge, and the associated integration costs (customer acquisition cost or CAC) increase exponentially.

Conversely, a well-designed CRM system can help salespeople automate the customer acquisition process far more efficiently and accurately than traditional manual (or Excel-based) methods of handling market opportunities.

Lead and opportunity management

Most of the CRM software on offer has an opportunity management engine. This tool is designed to enable 'best practice' opportunity management. It can analyse competitor and market data and identify existing opportunities based on pre-defined geographic or demographic data. The engine aggregates all opportunities into a list and automatically assigns a percentage probability of closing the deal based on the data available at the "sales stage". The CRM system also stores customer details in a unique directory and labels them according to the role they play in the buying decision process. All communications exchanged are retained (emails, faxes, letters or even telephone conversations). These features help the company to identify potential "primary" or "premium" customers and to design strategies or campaigns tailored to different customer groups. Most CRM systems can also inform salespeople of each new opportunity and automatically schedule follow-up activities for the salesperson concerned.

Marketing automation

Every company wants to be seen, heard and remembered in its market, so that it can strengthen its brand, and have a greater chance of presenting its products or services to a large number of potential customers. Generally speaking, the costs of market exposure and brand building account for the bulk of an organisation's marketing budget (let's not forget the 30-second advert that ran for $5 million during the 2017 Super Bowl). Our markets are increasingly 'noisy' and 'crowded', and our competitors are willing to spend more to establish their commercial dominance. It's a gamble, and few companies are strong enough to play it. So what are the best strategies and methodologies for generating strong customer acquisition?

CRM tools help companies to automate their marketing activities, from strategic planning to the execution of each campaign. They can budget, organise and schedule every marketing activity.

Today, most integrated CRM systems offer a marketing automation module. They have the ability to analyse prospect information from the sales opportunity management engine and generate an "opportunity/campaign" map to associate each opportunity with a given marketing campaign. These tools use predictive models to assess the possible preferences, responses and buying patterns for each opportunity, and advise on approach/engagement strategies appropriate to the scenario, to maximise the conversion of the prospect into a buyer. The marketing automation module can also be used to design and implement engagement schemes. For example, it can generate templates to create personalised email marketing campaigns and track responses to these campaigns. Some of the most modern CRM systems have artificial intelligence (AI) that can draft automatic responses (in writing or verbally), without the customer being able to define that the response comes from a machine.

CRM helps optimise relationship management

Attracting a new customer costs five to seven times more than retaining an existing one. This well-known parameter should help every company to understand how important it is to build a relationship with their customers and turn them into loyal customers and brand ambassadors.

Relationship management in the commercial world is about establishing a relationship, or even better, creating a friendship with customers. A good salesperson can listen to their customer's needs, understand their concerns and what is affecting them, propose a solution and gain their trust. Building relationships depends mainly on human characteristics, but can be (and should be) supported by technology in the sales context.

Having worked on both the sales and buying sides, I can say that my personal experiences have shown me how essential relationships are to the sales process. When I was in sales, I realised that most people can't stand the pressure of being pressured into buying. After missing out on a few sales because I pushed too hard, I realised that pressure is not part of the equation for a successful sale. Later, I had more success by listening to and helping my customers. The more I could respond to their needs and make things easier for them, the more they responded favourably to my sales pitches.

When I moved to the buying side, as a customer, some of my best experiences were, unsurprisingly, with salespeople who were attentive to my needs and seemed interested in my business, not just their sales. These 'relationship builders' always interact with their customers without pressure, paying attention to the customer's concerns and taking an honest approach. I was confident that they would be able to help me quickly if I had a problem or faced an emergency. And because of this relationship of trust, when I was contacted by competitors, I always replied that I was satisfied with my supplier, even if the competitor could offer me a better price. That's the power of a good relationship.

But how do they do it? How can a salesperson manage dozens, even hundreds of relationships, while continuing to create new ones? The "wizard" is the customer relationship management system.

The main objective of a CRM system, as that term is used in the industry, is relationship management. CRM is the most robust and effective approach to creating and managing customer relationships. Compared with other software solutions such as enterprise resource planning (ERP), supply chain management (SCM) and business intelligence (BI), CRM is one of two disciplines that promotes the creation of close relationships between people (the other being human resources (HR)).

Below is a description of the main modules offered by modern CRM systems. In addition to the usual account/contact management functions, which are offered by default, other tools can help you to complete the cycle of creating a sales relationship. Used correctly, a good CRM system can make relationship management much easier.

Sales process management and forecasting

The sales process management module built into most CRM systems is actually a rules-based engine for managing the flows associated with the sales process. It enables sales staff to configure and execute the following actions:

• automatic updating of opportunity files
• automatically schedule and assign each sales step or activity in the process
• automatically maintain the probability of 'closing' based on the sales stage
• Automatically send emails, letters, faxes or perform other activities

This flow management engine generally extracts customer data from the same database used by the company's sales opportunity management systems. It can therefore generate sales forecasts and offers management the following tools:

• configurable management of sales quotas
• analysis of quotas in relation to forecasts
• sales analysis based on the sales stage
• configurable management of sales forecasts
• customisable allocation of forecast categories to each opportunity, with the option of manual updating
• mapping of sales stages showing where each opportunity is located
• predefined analysis of sales quotas, pipelines and forecasts (flowcharts and graphs) to be displayed on dashboards and reports

If the company can guarantee a high level of data accuracy, the CRM system can provide valuable information for strategic planning tailored to the target, and configure appropriate sales targets.

Managing sales activities

Sales is a business process that focuses exclusively on activities. The performance of the sales team creates and drives the deal pipeline. By being able to plan, monitor and adjust sales processes, companies can gain a real understanding of how their business is evolving.

The sales activity management functions of CRM systems offer tools that enable the company to link every aspect of its activities to a revenue-generating parameter. In this way, organisations can :

• plan, organise and schedule sales activities on a task-by-task basis
• track and manage open, closed and overdue activities or tasks
• specify due dates and deliverables for each activity and task
• monitor the overall activity matrix against pre-defined key performance indicators
• associate sales activities with accounts, campaign histories, contracts and service requests
• manage real-time activity management analysis reports

Quote, offer and contract management

Once customers have started buying, they want their buying experience to be as easy and enjoyable as possible. CRM tools include functions for managing quotes, offers and contracts to ensure that the customer gets what they want. In most cases, you will find the following tools and workflows in modern CRM systems:

• customisable quotation and offer templates, with the option of electronic copies
• automatic creation of files summarising the modification history of quotations and offers
• contract templates, with the option of electronic copying
• multiple contract layouts to suit different processes and data types
• review and approval of good contracting practice
• automatic notification of contract expiry/renewal
• pre-defined contract analysis (flowcharts and graphs)

Other advanced CRM features

In addition to the usual modules available in most CRM systems today, some full suites also offer advanced CRM functionality, including project management, partner management, unified communications application program interfaces (APIs), document management, industry-specific vertical modules and internationalisation tools. Whatever functionality you need, you can find it on the market, as CRM is a mature discipline.

If you're wondering which CRM tools can help your business, simply download a CRM Tool Request for Proposal template from the Technology Evaluation Centers (TEC) shop. This document will provide you with a comprehensive list of CRM tools and features available on the market.

CRM improves customer loyalty

Everyone knows that it costs more to attract new customers than to retain existing ones. Most companies are looking to maximise customer lifetime value (CLV) by increasing their customer retention rate. But how can they do this? There are many parameters that can help, but the first of these is a good approach to customer relationship management.

According to KissMetrics, 71% of customers have ended their relationship with a company because of poor service. Other "deal breakers" are linked to price or product availability. In this equation, customer service is the most controllable aspect if a good strategy and quality management system are in place. CRM is the answer.

All CRM systems offer a customer service and support module, where you can find all the tools that can help you to be better organised and more efficient in supporting your customers. These modules generally contain the following tools

• a workflow engine to help implement best practice in customer service management
• an automated workflow that assigns service/support requests and links them to contract/warranty data
• a tool for managing, scheduling and allocating customer service requests
• a file communication engine
• predefined rules and a tool for managing the flow of customer comments/complaints
• a tool for managing service level agreements (SLAs)
• a self-service portal
• information on solutions to learn from each case

Keeping everyone happy is no easy task, but with a CRM system, a company can at least identify unhappy stakeholders and take steps to remedy problems quickly.

Making the most of your CRM system

Many people think that CRM software is for managing contracts and sales. Most companies don't use these tools to their full potential.

At appvizer, we not only help customers compare and choose the most suitable software, we also use tools and methodologies to help them determine whether they are making the best use of the tools available to them. In many of our software capability assessment projects with CRM users, we have found that many companies are unaware of the potential of CRM systems. In many cases, the software is simply used as a contact management tool.

appvizer's CRM research offers a broader perspective and helps you understand the importance of a CRM tool to your organisation. The main conclusions of this research are as follows:

1. A CRM system gives you a historical view and analysis of all your existing customers and helps you anticipate their needs and boost your business by offering them better products and services.
2. A CRM system contains the most effective drivers, tools and workflows to help you attract new customers.
3. CRM is highly cost-effective, not only because it boosts your sales and revenue, but also because it is not very expensive to set up thanks to new technologies, particularly software (Saas) and cloud, which allow CRM users to subscribe and thus spread their expenditure.
4. To be compatible with the requirements of other solutions used by the company, CRM systems store all data in a centralised form and are available at all times, on all platforms. This reduces processing times and boosts productivity.
5. Even if CRM on its own isn't enough to satisfy your customers (they probably don't even know whether you use such a system or not), industry best practice shows that CRM tools help to improve customer satisfaction and loyalty.
6. With so many CRM solutions available on the market, there is no "perfect tool", but you are bound to find a "perfect tool for you". A good CRM system will give you the competitive edge to get to know your customers better and interact with them in a more organised and efficient way.

To find out which CRM solution is best suited to your organisation, consult the search engine and use the free comparison tool. If you'd like to find out if your current system is right for you, we can help too. Contact our team of experts today.