Customer loyalty and repeat business are the cornerstones of today's market conditions. In the words of many industry professionals, losing a customer is the absolute worst thing that could happen to your company. This mantra has always stood true, but when you're fighting with competitors for every dollar, customer retention is key.
According to the American Express Global Customer Service Barometer released July 7, 61% of 1,000 American consumers surveyed think good customer service is more important amid economic instability and are willing to spend an average of 9% more at a retailer that provides it. Some additional numbers from the survey are that 81% of American Express respondents are more likely to give a retailer repeat business after receiving good customer service, while 75% say such measures will make them spread the word about a company that treated them well.
As Charles Green puts it in How to Build a Culture of Corporate Trust, 'most sales models are inherently transactional. But if you start thinking about your customers in terms of relationships rather than transactions, where it's never about one deal, you'll build relationships.' This guide will explain what customer relationship management is and the principals you should follow for better relationships with your customers.
How To Build Personal Relationships with Customers: What Is CRM?
So while everyone seemingly understands the importance of customer relationships, they have come a long way in a short time. In the 1990s many academics and industry gurus spent time popularizing theoretical visions of how strategically managing customers would improve relationships, then in turn sales, loyalty and profits. What that led to was a boom in technology software aimed at managing and measuring CRM (or Customer Relationship Management).
But what exactly is CRM? According to the experts at CRM Magazine, 'it is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer satisfaction, loyalty, and advocacy. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This allows customer-facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics.'
In fact, CRM users, vendors, analysts and consultants from around the world descended upon New York City last week for a three-day conference called CRM Evolution which featured panels, seminars and discussions on how technologies and economic forces are changing the industry.
'If you don't have any kind of relationship with a customer, they're simply not going to be a customer,' says Brent Leary, a columnist for Inc. Technology and the co-founder and partner of CRM Solutions, LLC., based in Stockbridge, Georgia. 'If we can build a relationship where they know who we are, they like what we can do, and give an example of how we can help them, then we can give them the trust and that helps solidify relationships.'
Dig Deeper: How to Choose CRM Software
How To Build Personal Relationships with Customers: Defining Your Strategy and Implementation
But once a business recognizes the need, how can they implement strategies to improve customer relationships? It is actually considerably easier than many may think. First and foremost, it's about your talent. If you understand your employees and get the right people involved in relationship management, you'll be at a benefit right away. But you should also be collaborative with the customers to see what they want and whom they want to work with. Remember, it's a two-sided relationship.
'Focus on people, process and technology,' says Esteban Kolsky, a noted blogger and the Principal and Founder of Thinkjar, an advisory firm focused on Customer Strategies. 'With technology, the software you adopt will differ based upon what type of company you are, your employees, and much more. But there is so much available now that every company should be able to find a CRM solution that fits them individually.' With that said, here are some core principles to relationship management that any company can, and should follow:
1. Communication: Listening is just as important as telling. Think about how often you actually speak with your customers. Then evaluate, am I only calling when we need to make a sale or close a deal? Focus on less financial-driven communication (whether it's email, phone or face-to-face interaction is up to you). Do you have a newsletter or a new tool you're testing out? If you make your customers feel involved, they feel as though they actually have a stake in your company, and feel like you care about more than just getting the sale.
2. Rewards: Every industry has companies who do reward and customer loyalty programs differently. It is a very simple form of saying 'thank you.' And particularly of late, loyalty programs seem only to have grown in popularity. Why? Customer loyalty programs are the next-generation marketing strategy. It is a viable and measurable marketing tool that small businesses can use to retain their customers and grow their business. It's all about recognizing and understanding your customers (and each one is unique, so learn about each of them separately). Once you do that, you can gear a loyalty program around their habits, likes and dislikes (think about the way LBS services like Foursquare, GoWalla and others are implementing rewards strategies).
3. Enhanced Customer Service: This rule goes without saying, but as Ray Wang, a partner at Altimeter Group in San Mateo, California, put it best at CRM Evolution, 'Customers no longer care about what department you're in, they simply want their problem fixed.' With social CRM channels like Twitter replacing traditional call centers, it's imperative that everyone in your company buy into a singular customer service strategy. As the earlier cited American Express survey notes, good customer service can be the determining factor in repeat business. So why wouldn't you focus extra attention on it?
4. Start Small and Emphasize Human Touch: Everyone remembers the theme song to the ever-popular television series Cheers. Well it's very true, as getting to know the names and faces of regular customers shows that you care. Additionally, as a small business, make the extra effort to emphasize face-to-face interaction as opposed to phone or email.
5. Be Flexible: Be quick and attentive to a customer's problems or complaints. In the past, some companies would simply say, 'I'm sorry, it's policy' in response to a customer complaint. That answer doesn't really work anymore, as customers are savvy enough to take their business elsewhere if they're not getting the service and attention they want. You should set aside some strategic ideas for dealing with an unhappy customer, but you shouldn't waver far from the old mantra that the customer is always right.
Dig Deeper: How to Use Customer Relationship Management Software