Why it makes sense to focus on CRM in the current economy

By Todd Fleming

Senior Consultant, Microsoft Business Solutions

IT spending in the current economy is expected to decline in certain areas but not all. A recent Gartner Study showed that enterprise applications including ERP and CRM was number 2 on the 2009 Top 10 Technology Ranking Priorities list. "In 2009, companies must do more with less as they strive to provide high levels of customer service with limited resources. But while CRM will be geared more toward client retention during this Great Recession, as time goes on, the ability to define, clean, integrate, and manage vast customer data will be at the center of the enterprise." - Stephen Loynd, program manager, IDC Contact Center Services program

The importance of customer retention:

• Major global corporations now lose, and must replace, half their customers in five years. A typical company's customers leave at a rate of 10% to 30% per year. Frederick Reichheld, The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value
  
• Increasing customer retention by just 5% can increase profits by 25% to 95%. Bain & Company
  
• Patronage by loyal customers yields 65% of a typical business' volume. American Management Association
  

How can CRM help improve customer retention?

To understand how a CRM solution can help with customer retention it's important to look at the four major reasons a customer leaves a company.

1. They die or are no longer buying products and services you supply
   
2. They are unhappy with the price
   
3. They are unhappy with the product
   
4. They think that you do not care about them
   

Rockefeller Corporation shows that 68% of customers leave because they think that you do not care about them. Since this is the biggest reason that customers leave a company let's focus on that reason and a few areas where a CRM solution can help overcome this.

It is important to know who your customers are.

Keep track of your customers and all of their interactions in a central repository. Let your staff in every department know who your best customers are and more importantly be sure that they are treated as such.

• When using CRM as a central repository, activities and notes from all departments provide a more complete view of the customer allowing staff to better understand and serve the customer's needs
  
• CRM should be used across all departments to manage tasks, scheduling of follow-up phone calls and appointments with customers
  
• CRM should be used to track specific customer interests and demographics so that they can be selected for fewer more targeted campaigns
  
• CRM should be used to store all customer information and interactions so that reporting and business intelligence tools can be used to provide useful insight into customer trends and identify problem areas
  
  

It is important that you communicate with your customers.

• Workflow rules can automate repetitive tasks allowing a salesperson more time for personal communication with customers
  
• CRM can be used as a central repository for recording customer information such as birthdays, special interests and hobbies. This will allow the staff to build a more personal relationship with their customers.
  
• Workflow rules can manage case escalation so customer service requests are assigned to the appropriate parties and are followed up within acceptable time limits
  
• Staff can run reports and filtered lists to monitor customers that have not had any activity within a certain timeframe and be pro-active in scheduling follow-up calls, appointments or emails to reconnect with these customers
  
  

Your competition is constantly trying to make your customers their customers. Knowing more about your customers and keeping in constant contact with them can help reduce the customer attrition rate. A well designed CRM solution will allow you to store and analyze key customer information, uncover and respond to any trends, and identify new opportunities with existing customers.