CRM – Customer Retention Management
Customer retention management is a fitting explanation for the acronym CRM when we consider the significance businesses place on retaining customer loyalty. The loyalty business model, which can be considered as 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. The customer today is more informed than ever before and often initiates a business interaction with preconceived ideas and notions based on information gathered.
Selling back to your existing customer base yields greater profitability and 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 simultaneously with the current sale on hand in order to achieve long-term business success and growth.
How Does CRM Improve Customer Retention?
The basic objective of a CRM solution is to improve customer retention. Its secondary objective is to increase customer acquisition at a low cost, without jeopardizing existing customer relations and ensuring the smooth transition of a new customer to a loyal, long-term client.
A focus on customer retention enables a company to achieve maximum results in 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 and by identifying valuable customers, niche customers, and frequent customers. The information extracted from this 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 making a commitment and delivering on your promise by getting it right the first time and ensuring successful problem resolution when any issues occur. Proactive CRM initiatives imply going beyond defined deliverables and making the customer feel good about doing business with you. This is KEY.
A Few Customer Retention Pointers
- Customer retention can be achieved at a low cost by implementing CRM in a structured manner.
- Being aware of the distinguishing features of your business and offering the customer a great experience reduce your dependence on having to compete on price.
- Activities for broadening the existing customer base and retaining customers are not to be seen in isolation; they complement and often overlap with each other.
- 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.
- Existing processes related to acquiring new customers, nurturing existing relations, and analyzing CRM data should follow industry best practices.
CRM packages are available across a wide price spectrum, which means that companies of all sizes and budget capabilities can deploy CRM to improve customer retention. Companies that neglect customer retention and put greater emphasis on customer acquisition will find that their existing customer base will dwindle over time. The best approach is to actively pursue both customer loyalty and customer retention initiatives.