We recently discussed value creation strategies with a rapidly growing firm. They were experiencing heavy turnover among their customer base and did not know what was going on since their product was clearly superior to anyone else out there. One of the casualties of rapid growth is poor customer service to existing customers. While this is understandable (particularly in the case of startups), it is inexcusable and potentially disastrous, as was the case with this firm.
Why customer relationship management (CRM) is needed?
Why customer relationship management (CRM) is needed?
- The #1 reason is that in absence of a structured process, employees can get distracted. New business is always more exciting (bonuses, promotions, etc.) to employees than keeping existing customers happy. One company that we worked for had salespeople to sell and account executives to manage the account afterwards. Fair enough. The problem: the account executives were lower in hierarchy than sales executives. If an account executive performed well, s/he could be promoted to sales executive. The result: Maintaining an account was considered less important and customers fled as soon as a major competitor moved in with a more customer-centric strategy.
- While you must already know this, but still it is good to repeat it: the cost of acquisition of a new customer is several times higher than retaining the business of an existing customer. A well-designed CRM program allows you to keep the turnover close to zero because you keep your existing base happy.
How to leverage customer relationship management programs?
- Work with the leaders in the CRM space for your industry vertical (e.g. Siebel CRM for everyone, Medfone for healthcare, Salesforce for sales, OnContact for sales and customer service, etc.). A CRM program has to incorporate the need for data but balance it with the personal touch that has been the cornerstone of service for decades.
- Customize the program for your business. Even if you opt for a solution designed for your vertical, make sure that you redesign it for customers. Customers are human beings and most sales decisions are still emotional.
- CRM is not a substitute for customer pampering. You still need to sit in front of the customer and ask about her daughter's ballet lessons or son's performance in the little league.
Related article: How to listen to your customer's needs for service?