Why is customer relationship management essential?

Contents :

1. The key sales equation
2. CRM helps automate the acquisition of new customers
3. Lead and opportunity management
4. Marketing automation
5. CRM helps optimize relationship management
6. Sales process management and forecasting
7. Sales activity management
8. Quotation, offer and contract management
9. Other advanced CRM features
10. CRM improves customer loyalty
11. Leveraging your CRM system

The key business equation

Customers + sales = revenue. If your business depends on the market, this is the most important equation you need to keep track of every day.

First of all, you need customers. If you work hard and get new customers, you'll need to get them to buy what you offer (products or services) in order to generate sales. Once your customers have started buying, you'll want them to keep buying to ensure a steady income stream and guarantee the continuity of your business.

This is no easy task. Today's customers are more diverse and far more knowledgeable than ever before. Companies need to create and maintain sophisticated sales techniques and technologies to remain competitive in the marketplace. One of the most widely used solutions at the heart of many strategies and approaches is customer relationship management (CRM).

CRM is a software solution for managing all aspects of a company's interactions with its customers, from marketing to sales and service. The information collected and analyzed by a CRM system relates to business opportunities, contact details, marketing and sales activities, quotations and contracts, and sales processes.

As a business discipline, CRM is designed to address the increasing complexity of downstream (demand-side) activities within the market value chain, to help marketing and sales management teams improve their competitiveness, to enable the use of appropriate information technologies to coordinate sales, marketing activities and services, and to enhance personalized customer and service experiences.

No matter how complex sales may be today, in a "sell to a customer" scenario, all you need to do is ask yourself three simple questions:

1. How can I find customers?
2. How can I get them to buy?
3. How can I keep these customers forever?

Let's take a look at how an effective CRM system can help answer these questions.

CRM helps automate the acquisition of new customers

In any market, companies need to attract new customers to buy their products and/or services in order to keep their business profitable (or at least to guarantee the continuity of their operations). Customer acquisition is not a one-way street: your customers can be "inbound", if they come to you spontaneously, or "outbound", if you need to attract and retain them.

The customer acquisition process can be broken down into three simple steps: create demand, establish communication and start selling to customers who have responded to your messages. However, in our increasingly connected world, where customers have access to the same market and industry information as suppliers (think of the proliferation of social networks, search engines and price comparison sites like appvizer), companies are trying to attract the most informed customers the industry has ever known. Convincing a new customer to buy can be a real challenge, and the associated integration costs (customer acquisition cost or CAC) increase exponentially.

Conversely, a well-designed CRM system can help salespeople automate the customer acquisition process, far more efficiently and accurately than traditional manual (or Excel-based) methods of handling market opportunities.

Lead and opportunity management

Most of the CRM software on offer includes an opportunity management engine. This tool is designed to enable the application of "best practices" in opportunity management. It can analyze competitor and market data, and identify existing opportunities based on predefined geographic or demographic data. The engine collates all opportunities into a list and automatically assigns a percentage probability of closing the deal based on the data available at the "sales stage". The CRM system also stores customer contact details in a unique directory, and labels them according to the role they play in the purchasing decision process. All communications exchanged are retained (e-mails, faxes, letters or even telephone conversations). These features help the company to identify potential "primary" or "premium" customers, and to design strategies or campaigns tailored to different customer groups. Most CRM systems can also inform salespeople of each new opportunity, and automatically schedule follow-up activities for the salesperson concerned.

Marketing automation

Every company wants to be seen, heard and known in its market, so that it can strengthen its brand, and have a greater chance of presenting its products or services to a large number of potential customers. Typically, the costs of market exposure and brand reinforcement account for the bulk of an organization's marketing budget (let's not forget the 30-second commercial aired for $5 million during the 2017 Super Bowl). Our markets are increasingly "noisy" and "crowded", and our competitors are willing to spend more to establish their commercial dominance. It's a gamble, and few companies have the stomach for it. So what are the best strategies and methodologies for generating strong customer acquisition?

CRM tools help companies automate their marketing activities, from strategic planning to the execution of each campaign. They can budget, organize and schedule every marketing activity.

Today, most integrated CRM systems offer a marketing automation module. They have the ability to analyze prospect information from the sales opportunity management engine, and generate an "opportunity/campaign" mapping to associate each opportunity with a given marketing campaign. These tools use predictive models to assess possible preferences, responses and buying patterns in relation to each opportunity, and advise approach/involvement strategies appropriate to the scenario envisaged, in order to maximize prospect-to-buyer conversion. The marketing automation module also enables you to design and implement engagement schemes. For example, it can generate templates for personalized e-mail marketing campaigns, and track responses to these campaigns. Some of the most modern CRM systems feature artificial intelligence (AI) that can draft automatic responses (written or spoken), without the customer being able to define that the response comes from a machine.

CRM helps optimize relationship management

Attracting a new customer is five to seven times more expensive than keeping an existing one. This well-known parameter should help every company understand how important it is to build a relationship with their customers, and turn them into loyal customers and brand ambassadors.

Relationship management in the commercial world is all about establishing a relationship, or even better, creating a friendship with customers. A good salesperson can listen to his or her customer's needs, understand his or her concerns and what's affecting him or her, propose a solution and win his or her trust. Building relationships depends primarily on human characteristics, but can be (and should be) supported by technology in the sales context.

Having worked on both the sales and purchasing sides, I can say that my personal experiences have shown me how essential relationships are to the sales process. When I was a salesman, I realized that most people can't stand the pressure of being pressured to buy. After missing out on a few sales by pushing too hard, I realized that pressure isn't part of the equation for a successful sale. Later, I became more successful by listening and helping my customers. The more I could respond to their needs and make things easier for them, the more they responded favorably to my sales pitches.

When I moved to the buying side, as a customer, some of my best experiences were, unsurprisingly, with salespeople who were attentive to my needs and seemed interested in my business, not just their sales. These "relationship builders" always interact with their customers without pressure, paying attention to the customer's concerns and taking an honest approach. I was confident they could help me quickly if I had a problem or faced an emergency. And because of this relationship of trust, when I was contacted by competitors, I always replied that I was satisfied with my supplier, even if the competitor could offer me a better rate. That's the power of a good relationship.

But how do they do it? How can a vendor manage dozens, even hundreds of relationships, and still create new ones? The "wizard" is the customer relationship management system.

The main objective of a CRM system, as the term is used in the industry, is relationship management. CRM is the most robust and effective approach to creating and managing customer relationships. Compared with other software solutions, such as enterprise resource planning (ERP), supply chain management (SCM) and business intelligence (BI), CRM is one of two disciplines promoting the creation of close relationships between people (the other being human resources (HR)).

Below is a description of the main modules offered by modern CRM systems. In addition to the usual account/contact management functionalities offered by default, other tools can help you complete the cycle of creating a sales relationship. Used correctly, a good CRM system can make relationship management a whole lot easier.

Sales process management and forecasting

The sales process management module built into most CRM systems is actually a rule-based engine for managing the flows associated with the sales process. It enables sales personnel to configure and execute the following actions :

• automatic updating of opportunity files
• automatically schedule and assign each sales step or activity in the process
• automatic maintenance of the probability of "closing" based on the sales stage
• automatic sending of e-mails, letters, faxes or execution of other activities

This flow management engine generally extracts customer data from the same database used by the company's sales opportunity management systems. It can therefore generate sales forecasts, and offers management the following tools:

• configurable management of sales quotas
• analysis of quotas versus forecasts
• sales analysis based on sales stage
• configurable management of sales forecasts
• configurable allocation of forecast categories to each opportunity, with manual updating possible
• mapping of sales stages showing where each opportunity is located
• predefined analysis of sales quotas, pipelines and forecasts (flowcharts and graphs) to be displayed on dashboards and reports

If the company can guarantee a high level of data accuracy, the CRM system can provide valuable information for target-oriented strategic planning, and set appropriate sales targets.

Managing sales activities

Sales is an exclusively activity-oriented business process. The sales team's performance creates and guides the transaction pipeline. By being able to plan, monitor and adjust sales processes, the company can gain a real understanding of how its business is evolving.

The sales activity management functions of CRM systems offer tools that enable the company to link every aspect of its activities to a revenue-generating parameter. In this way, organizations can :

• plan, organize and schedule sales activities on a task-by-task basis
• track and manage open, closed and overdue activities or tasks
• specify due dates and deliverables for each activity and task
• supervise the overall activity matrix according to predefined key performance indicators
• associate sales activities with accounts, campaign histories, contracts and service requests
• manage real-time activity management analysis reports

Quotation, offer and contract management

Once customers have started buying, they want their buying experience to be as easy and pleasant as possible. CRM tools integrate quotation, offer and contract management functions to ensure that customers get what they want. In most cases, you'll find the following tools and workflows in modern CRM systems:

• customizable quotation and offer templates, with the option of electronic copying
• automatic creation of files summarizing the modification history of offers and quotations
• contract templates, with the option of electronic copying
• multiple contract layouts to suit different processes and data types
• review and approval of best contracting practices
• automatic notification of contract expiration/renewal
• predefined contract analysis (flowcharts and graphs)

Other advanced CRM functions

In addition to the usual modules available in most of today's CRM systems, some complete suites also offer advanced CRM functionality, including project management, partner management, unified communications application program interfaces (APIs), document management, industry-specific vertical modules and internationalization tools. Whatever functionality you need, you'll find it on the market, as CRM is a mature discipline.

If you're wondering which CRM tools can help your business, simply download a CRM tool RFP template from the Technology Evaluation Centers (TEC) store. This document will present you with a comprehensive list of CRM tools and functions available on the market.

CRM improves customer loyalty

Everyone knows that it costs more to attract new customers than to retain existing ones. Most companies seek to maximize customer lifetime value (CLV) by increasing their customer retention rate. But how can they do this? There are many parameters that can help, but the first of these is a sound approach to customer relationship management.

According to KissMetrics, 71% of customers have ended their relationship with a company because of poor service. Other "deal breakers" are related to price or product availability. In this equation, customer service is the most controllable aspect if the right strategy and quality management system are in place. CRM is the answer.

All CRM systems offer a customer service and support module, where you can find all the tools you need to be better organized and more efficient in supporting your customers. These modules typically contain the following tools:

• a workflow engine to help you implement best practices in customer service management
• an automated workflow to allocate service/support requests, and link them to contract/warranty data
• a tool for managing, scheduling and allocating customer service requests
• a file communication engine
• predefined rules and a tool for managing customer comment/complaint flows
• service level agreement (SLA) management tool
• a self-service portal
• solution information to learn from each case

Keeping everyone happy is no easy task, but with a CRM system, a company can at least identify unhappy stakeholders and take steps to remedy problems quickly.

Making the most of your CRM system

Many people think that CRM software is for managing contracts and sales. Most companies don't use these tools to their full potential.

At appvizer, we not only help customers compare and choose the most suitable software, we also use tools and methodologies to help them determine whether they are making the best use of the tools at their disposal. In many of our software capability assessment projects carried out with CRM users, we have noticed that many companies are unaware of the potential of CRM systems. In many cases, the software simply serves as a contact management tool.

appvizer's CRM research offers a broader perspective and helps you understand the importance of a CRM tool for your organization. The main findings of this research are as follows:

1. A CRM system gives you a historical view and analysis of all your existing customers, helping you to anticipate their needs and boost your business by offering them better products and services.
2. A CRM system contains the most effective engines, tools and workflows to help you attract new customers.
3. CRM is highly cost-effective, not only because it boosts your sales and revenues, but also because it's not very expensive to set up, thanks to new technologies such as software-as-a-service (Saas) and cloud, which enable CRM users to subscribe and thus spread their expenses.
4. To be compatible with the requirements of other solutions used by the company, CRM systems keep all data in a centralized form and are available at all times, on all platforms. This shortens processing times and boosts productivity.
5. Even if CRM on its own isn't enough to satisfy your customers (they probably don't even know whether you're using such a system or not), industry best practice shows that CRM tools help improve customer satisfaction and loyalty.
6. With so many CRM solutions available on the market, there's no such thing as the "perfect tool", but you're bound to find one that's "perfect for you". A good CRM system will give you the competitive edge to know your customers better and interact with them in a more organized and efficient way.

To find out which CRM solution is best suited to your organization, consult the search engine and use the free comparison tool. If you'd like to find out if your current system is right for you, we can help too. Contact our team of experts today.