but the CRM of yesteryear also built a rather bad reputation as a costly, never ending IT project with questionable ROI.
However, thanks to the web, perception has changed, and CRM has become a very different ball game. In fact, it’s hard to think of a relationship with a customer without the use of the internet in some form or other and with web 2.0 creating a two way channel of communication it’s definitely disrupted the conventional way we carried out business. Social networks throw up so many different ways to communicate that you have to wonder who the customer is sometimes.
But it goes without saying that the customer is crucial and we’ve noticed that even with head count restrictions and budgets being cut across the board, companies are still making critical investments in CRM to maintain their competitiveness. Businesses are rethinking their customer strategy and although customer attraction is vital, the focus at the moment seems to be on retention, loyalty and naturally, profitability – the old 80/20 rule!
There’s definitely a need for skills based around campaign management, data analytics, consumer insight and sales intelligence and we’ve been involved in a number of search projects for experts in the CRM space which have included: Digital Strategists, CRM Managers, Insight Analysts, Experience Architects, Information Architects, Application Developers and Designers. So, if you look at these skills in demand, you can see that companies are looking to manage their customer data in a deeper and more meaningful way.
We recently placed Kim Smyth, ex head of Global CRM for The Body Shop International, and we got chatting about what makes people tick. Kim said "CRM is a business philosophy that places the customer at the heart of decision making. It is about developing a better understanding of customer needs and how these may differ between customers, then using that knowledge to build stronger, more profitable relationships with them."
I asked Kim if she could give us a check list and some quick tips as CRM can be quite daunting…
Build your customer database. To market directly to your customers (which is often how CRM programmes asked to pay for themselves) you must collect and update at least two things: contact details, and explicit permission - this is a legal obligation as well as good marketing practice. However, to get the most out of CRM you will also want to access other sources of data, such as sales history, loyalty programme data, demographics and product preferences, to name a few. Most companies have a lot of information about their customers, but often bringing it together is the hard part. Start simple, and build more sophistication over time.
Understand the customer. This is the foundation to a smart CRM strategy, but is sometimes overlooked. As a start you will want to know who are your most valuable customers, which have the most potential to grow, and which ones may not be profitable. This allows you to focus your efforts where they will have the most benefit, important at any time but especially in hard economic times. Analytics can become increasingly sophisticated, with basket analysis and segmentation to help understand different customer characteristics and needs. In fact, companies with sophisticated CRM analytics often consider this information to be more valuable than the incremental gain from direct marketing.
Develop a relationship. This is a great opportunity for story telling, explaining benefits, or providing extra information or services that customer’s value. You are looking to develop not only the next sale, but on-going loyalty to your brand. Leading companies take this further, developing two-way dialogue. Allowing the customer to provide information (eg product reviews) can be very powerful - as long as you are willing and able to act on the information you get back. Above all, beware of shouting at your customers: communications should be relevant in tone, content and timing.
Which then brought us to the question of price as there are so many discounted offers being thrown around at the moment and Kim warns “discounting is a blunt instrument, and it can be hard to reset prices once they've come down." She says that although many consumers are becoming more value conscious, “value doesn’t necessarily mean price to everyone. The better you understand different segments, the more you can focus discounting where it is necessary, while finding other ways to increase customers' perception of value."
So that’s the end of the first snippet about CRM and thanks to Kim for her insights. CRM is a massive subject and I have to say has kept me awake at night as we’ve only touched the tip of the iceberg. It will be interesting to see how next generation CRM evolves and how relationships and buying habits change!
Written by Sally Mills for NETT mag.