The Power of Customer Relationship Management (CRM) For Small Business

In my last post, I explained what a CRM system is and some of the many uses for both small businesses as well as larger ones.  While simply having and utilizing a CRM system can instantly increase marketing productivity and communications, in truth there’s a lot more to be gained by integrating the system with a CRM process or mindset.  When done properly, truly implementing Customer Relationship Management processes can help increase sales and marketing ROI, identify and retain your most profitable customers, and generally increase the profitability of your small business.

At its core, CRM supports the key business principle of customer segmentation.  The premise of segmentation is that not all people care about the same things and they don’t act in the same way.  If you don’t actively segment your customers, you’re hurting your customer relationships in several ways:

  1. You’re not treating your best customers as well as you should because you’re not presenting them with special promotions and perks
  2. You’re spending too many resources on unprofitable customers
  3. You’re incenting your customers to ignore you by barraging them with many communications they don’t find relevant

A CRM system will allow you to track customer behavior, demographic information, and details about their key interests.   Truly implementing CRM into your business means using that information to personalize and strengthen your customer relationships.  For example, let’s think about a non-profit who’s interested in generating donations and recruiting volunteers.  A very common approach is to send out a monthly newsletter informing everyone on their mailing list of key activities or issues.  Perhaps they also rotate requests between donating and volunteering.  However, many of the donors may be out of state or busy executives with no interest or history in volunteering.  Further, perhaps a subset of donors has gone dormant and hasn’t responded to mailings in over a year.  By understanding your relationships, you could save money by eliminating the volunteer request mailings to out-of-state donors and potentially eliminating mailings to dormant donors all together (or create a special phone campaign targeting donors that have stopped responding to mailings).  This serves both to increase your marketing ROI as well as strengthen your donor relationships by not pestering them with things they don’t care about.  There are countless other examples of how this concept can be utilized.  For example, periodically running a report of your most profitable accounts (which aren’t always the biggest) and having an executive personally call to check in and thank them can go a long way.  If you haven’t read my earlier post entitled, “Not All Customers Are Created Equal – Stop Treating Them Like They Are”, I encourage you to scroll down and take a look for some deeper discussing around the benefits of customer segmentation.

Again, collecting customer information is the first step and will improve productivity, but fully utilizing that information to personalize relationships is the key to drastically improving your business and profitability.  Until next time, thank you for reading.

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