What is CRM and Why SMEs Should Care?
If your goal is to understand how to better serve and meet your clients’ needs, this article is for you. It is designed to help SME's owners and managers understand the basics of customer relationship management (CRM). And more specifically, how implementing a CRM software can help your business.
What does CRM mean?
An acronym for Customer Relationship Management.
When you say CRM most people think it is a software solution only. In recent years it became truer than ever but, essentially, CRM is a business strategy, not a technology. It is an integrated approach to managing relationships with new as well as existing customers by focusing on building long-term customer loyalty.
The concept CRM includes both customer centric strategies and principles and technology-based CRM solutions. By implementing technology to gather information about your customers you can use this intelligence to better respond to customer requests and customized their experience to establish, nurture, and sustain long-term customer relationships.
What is a CRM software?
Basically, CRM system is a database that collects information about your customers from a range of different channels, including a company’s website, telephone, email, marketing campaigns, manual data entry and more. All this information is structure and in one place, providing a way to further analyze the information.
There aren't any specific features or functionalities a software has to have to be called a CRM. No, nowadays a CRM’s capabilities vary from system to system. It has to help you manage customer data and customer interaction, give you information on customers' history with your company, and you can call it a CRM solution.
The goal of CRM systems is to integrate and automate sales, marketing, and customer support in a single solution so the business can more easily access and manage all customers' related activities.
Some of the most common features of CRM software include:
- A central place to store leads and customer contact information accessible by all employees to view and update
- Analysis and reports of customer data including segmentation by various criteria
- Abilities to schedule meetings or other events as calls and emails within the software
- Automated sales workflow through all stages in the sales cycle, from creating the contact to nurturing the prospect into an actual client.
- Planned, create, analyze tracking activities for each marketing campaigns .
A CRM software can help you gather a lot of data about your prospects and clients but the important thing is what you do with that information to increase company revenues and customer value.
What are the benefits of CRM?
Effective CRM gives you the opportunity to show your customers that you know who they are and what they need. Your customers aren't just those who buy from you, but also your suppliers, employs, close circle of people. You need to have a different approach to each of this groups. A CRM can benefit you in many ways, but most importantly it can improve customer service, loyalty, and retention.
The major benefits you can gain by CRM are:
- Increase revenue - Maximize repeat business opportunities by anticipating your existing customers’ needs. Using CRM can help you increase repeat purchase rates* and reducing customer acquisition costs*.
- Improve efficiency and collaboration - All customer details, information about deals, historical data and more, are stored in an easy to access place. You’ll always have access to up-to-date customer information.
- Improved customer experience - You have a consolidated knowledge base of customers past orders, requirements, prefers, interactions with your company etc. All this information helps you identified customer needs and better serve them.
- Data-driven insights into your business - Allowed you to anticipate future business needs based on data on historic sale and service trends.
For some companies, CRM is simply a customer database, for others it's a sales force tool that automates and bridges sales and marketing functions in order to improve targeting efforts. However, CRM is is not merely technology solutions but, when successfully integrated into your organization, a customer orientated and technology-integrated business process that maximizes relationships with clients and can result in higher revenues and lower operational costs.
Repeat purchase rate - it is the proportion of customers that have shopped more than once. The repeat rate shows you the percentage of your current customer base that has come back to buy from you again.
Customer acquisition costs - CAC is the cost of convincing a potential customer to buy a product or service. CAC can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent. For example, if a company spent $100 on marketing in a year and acquired 100 customers in the same year, their CAC is $1.00. (https://blog.kissmetrics.com/customer-acquisition-cost/)