20 Dec CRM (customer relationship management) systems
The main benefit of investing in a CRM system is that it is likely to lead to increased sales and profits. It provides a framework for accumulating data about customers at every stage in the sales process from prospect to purchaser to ambassador. That data can be used on the one hand to deliver effective one-to-one communications with each individual customer and – on the other – to identify insights that can help with many aspects of your business.
Using a CRM (customer relationship management) system is useful for gaining an in-depth understanding of your sales pipeline, as you can track every stage in a customer’s journey. A sales pipeline can generally be understood as a way to visualise your entire sales process.
A sales funnel visually helps to explain how prospects progress through each stage in a typical customer journey, the stages of which are generally understood to be awareness, interest, consideration, intent, and purchase. A funnel shape is often used, as it is typically the case that, at each stage in the process, fewer prospects will make it through to the next stage, as there will inevitably be a percentage of dropouts along the way – this is called the churn rate and the challenge is to minimise this as much as possible.
The point of purchase is where the classic funnel model ends – when a transaction has been completed. Viewing your sales in this way implies that your marketing activities should end when a sale is made; however, there are alternative more profitable ways of thinking about a customer’s sales journey. This is where the bow tie model comes in…
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Pound for pound, an email marketing strategy can be 40 times more effective than social media. Depending upon your business set up, up to 70% of revenue can be generated from an individual customer after an initial sale. Therefore, replacing a funnel concept with a bow tie model enables a wider strategic view of your customers and creates the opportunity to develop long-term loyal relationships that in turn will lead to greater returns. The bow tie model gives equal importance to strengthening relationships with existing customers as it does to attracting new ones. By adopting a personalised after-sale approach, you will naturally develop genuine relationships and generate greater loyalty.
The above diagram visualises one way in which you can structure your post-sale retention strategy. This involves a period of keeping in contact with new customers, making sure that you actively interact with them to keep them engaged with your business. As a result of this, there will be greater scope to grow profits from each customer by increasing sales, suggesting purchases of higher-end products or services and offering exclusive promotions, as well as cross-selling different products or services too. As your customers become advocates of your brand, they are more likely to refer your products and services to others. Brand advocates are far more likely to influence purchasing decisions, as 84% of consumers will take action based on trusted recommendations.
A CRM system: is it worth the investment?
If you are looking to streamline your marketing processes and drive the growth of your business, it is highly likely that investing in a CRM system is very probably worth it. It will enable you to deliver personalised marketing campaigns to individuals at every stage in their journey. Beyond just fulfilling a sale, you can use CRM to establish long-lasting loyalty that leads to greater profits from existing customers – what is often called customer lifetime value (CLV).
CRM is also particularly valuable for email marketing campaigns, as you can refresh your approach to move away from traditional email marketing that is often generic and ineffective to a strategy that makes your customers feel understood and valued. Also, it doesn’t require much effort once you have the system set up, as you can automate each process to send out emails on an ongoing basis.