Summary: CRM also referred to as ‘customer retention management’ has existed for decades.  Both small and large businesses have found that a happy customer is a loyal one.  This article provides some insight to how CRM helps with customer retention.

Customer retention management is a fitting explanation for the acronym CRM when we consider the significance businesses accord to retaining customer loyalty. CRM has existed for as long as trade has, and since the time the Romans traded with India. Traders have always known that when dealing with established customers, it takes less time and resources and thus, there are proven ways to retain existing customers. Diane I re-worded it was not making sense at all.

The loyalty business model, which can be considered a basis for developing customer retention management practices states that a customer’s first or recent experience with a business is the key to the buyer’s opinion on the business transaction at hand.  This is because the customer today is more informed than before, and initiates an interaction with a business with preconceived ideas and notions based on information gathered, which puts the expectations higher on the one selling.

It is a documented fact, that selling back to your existing customer base yields profitability/benefits for businesses regardless of the industry or mode of operation. Therefore, even if you run a transaction-oriented business, customer retention is just as important for you as it is for businesses that operate over longer cycles. Customer acquisition and retention are to be pursued as simultaneously as the current sale on hand,  if business success and growth is to be achieved and with longevity.

How does CRM help with retention?

The basic objective of a CRM solution is to help with customer retention. Its secondary objective is to gain customer acquisition at a low cost, without jeopardizing existing customer relations and ensuring a smooth transition of a new customer to loyal long term customer.

A focus on customer retention enables a company to achieve maximum positive results with regards to ROI, loyalty, acquisition, and revenue. Customer retention is the common thread that runs through all CRM objectives and most of all, profitability.

CRM systems empower a business to efficiently retain customers by providing data on customer history, identifying valuable customers, niche customers, and frequent customers as well.  The information extracted from the data is used to execute the two most crucial steps in retaining customer loyalty. These are ensuring customer satisfaction and being proactive with customer relationships.

Customer satisfaction means promising and then delivering on your promise, getting it right the first time, and ensuring successful problem resolution when it occurs. Proactive initiatives with CRM implies offering that little bit extra to your customers, going beyond the defined deliverables and making the customer feel good about doing business with you. This is KEY.

A few customer retention pointers

1. Customer retention can be achieved at a low cost by implementing CRM in a structured manner.
2. Awareness of the distinguishing features of your business, and offering the customer a great experience reduces your dependence on having to compete on price. There is slack when service is that good. 
3. Activities for broadening the existing customer base and retaining customers are not to be seen in isolation; they complement and often overlap each other.
4. You should track the cost of acquisition and retention as well as calculate the Return on Customer (ROC). This aids in developing balanced marketing strategies.
5. Existing processes related to acquiring new customers, nurturing existing relations, and analysis of CRM data should be on par with the industry best practices.

Conclusion

The availability of CRM packages come across a wide price spectrum, which  means that companies of all sizes and budget capabilities; can deploy CRM to work on customer retention. Companies that neglect customer retention, and lay greater stress on customer acquisitions will find that an existing customer base dwindles within time. The best approach is to work on both customer loyalty and customer retention.