What is CRM, anyway?Article added by Ed Morrow on March 11, 2010
Joined: October 29, 2005
Ranked: #24 (2,111 pts)
Much has been written about customer relationship management (CRM) and lately, CRM has become an international marketing buzzword. However, it is really nothing more than highly successful attempts to strengthen and maximize the vital relationships with prospects, customers, and clients.
Techniques and practices that have been employed since the beginning of marketing, when combined, systemized and replicated often, will become a system of customer relationship management. When employed in the scale demanded by the best practices and high labor costs of today, this invariably requires computer software.
What CRM is not
It is not just a database into which information is entered about a customer/client or a prospect. However, it is essential that this vital data be retained. How could you communicate with this most critical component of your business or practice unless you could use the proper direction? At first, this meant street address, city, and state. Then the Postal Service required a five-digit zip code. Then nine digits. Now, if you want fast delivery, you need to add those pesky little bar codes.
But today's environment dictates you must also have the e-mail address (often both business and personal). Folks are now clamoring to be contacted through Social Networks, such as Facebook, Twitter, LinkedIn, etc. You cannot contact them in that venue unless you have retained their information and you are oriented to that communication media.
It is not just a record of contacts. Yes, it should retain a record of communications. This should include mailings, e-mail, phone conversations, tasks performed, and records of physical meetings. But you need to be able to recall the actual communication piece -- instantly. It is not sufficient to know that on February 12, you sent Letter No. 112. A year later, that letter may have been altered or even re-named several times. You need the actual letter, just as it was mailed.
It is not merely a record of purchases. However, your CRM system should have records of prior acquisitions of products or services. And also their expressed or perceived interests. What events surrounded those acquisitions, such as response to a direct mailing, e-mail or attendance at an exhibit, conference or tradeshow?
It is not only personal characteristics. However, you do need to know the relevant groups or categories that can be accessed in order to measure suitability for a contact or solicitation. Is age relevant? Net worth? Occupation? Fraternal association? If you have inquired about these and recorded that information, then that form of link-up or relationship basis is possible and can be productive.
Research can help
In a series of studies, Jim Cecil learned that consumers required multiple, favorable contacts in order to form a favorable association with a vendor. The number of contacts has steadily increased from 11 to 13 and, at his last study, 15 positive impressions were required to create and maintain a positive top of mind awareness (TOMA).
This explains why there is so much repetition in advertising, repeating the logo, the brand and the constant reinforcement of the message. Some TV commercials are run three or even four times during the same 60 minutes. Is that because they think you were at the refrigerator during the program break? No, it is because they want to firmly embed their images into your conscious and subconscious memory. It explains why ING wants to link their favorite shade of orange at every opportunity in advertising, sales literature, stationery, business cards, and even vehicles.
Russ Prince, who researches, writes, and speaks about how to reach the affluent community, indicates that because the upscale persons of society are subject to more and better ad messages, the affluent now require 28 positive impressions before the bond becomes solid.
New TOMA requirements
Moreover, once you have built your TOMA bond, you must maintain it or it will be replaced by someone with a flashy orange, red, or purple logo. Your nice, brown brand identification will gradually fade away. If you offer a truly unique product or service, then you may not need 28 impressions to create TOMA, and 15 or 20 impressions per year thereafter. You waste your initial marketing efforts if you do not maintain your brand, strongly and frequently.
Branding is essential
Branding links images. We all have favorite advertisements. Yours might be hundreds of clean-cut young people pouring over a hill with an American flag singing about what they'd like the world to be. Another might be a handsome Hispanic man sitting on the seat of a car and running his hands over the "soft Corinthian leather" of the luxury car. It sold lots of cars, but do you really believe that Chrysler imported leather from the small Mediterranean city of Corinth? The 1976 Chrysler Cordoba was very successfully promoted by celebrity spokesman Ricardo Montalbán, and the leather was produced in Newark, NJ.
What are your brands and logos? You should have some, and they should be constantly employed to build this CRM-based tie. Graphics, personalities, colors, shapes, word selection, sounds, tastes, and even smells can all be part of achieving and maintaining the TOMA bond. Procter & Gamble and Johnson & Johnson know that the first smell of their products must convey the sense that cleanliness or shine will accompany their use. What image does your brand convey? Is it financial security, highest performance, potential riches, or a friendly, receptive counselor?
Do you have a jingle, slogan, or motto? If so, it should be incorporated into your CRM efforts. Billions of pounds of detergent were sold simply because, "Tide's In -- Dirt's Out!" That was to remember than the various chemical properties of the new "detergent" soap.
Your marketing effort must continuously expose your clients or customers to favorable impressions. These messages cannot and should not be sales attempts, but the bonding that takes place will lead to sales. It conditions the recipient for your sales attempt at a later date.
Automation is essential. You are very busy running your enterprise. You do not have the time to be thinking, "Now, how long ago was I in contact with customer XX, and what might I be sending out next?" You cannot do it. However, you can build a sequence of marketing messages, articles, information bulletins, perhaps accompanied by your letterhead (that naturally incorporates your logo, contact information, slogan or motto.) Then, it can be replicated over and over, starting anew with every new prospect or customer as you add them to your CRM system.
Computers are great at repetitive tasks. You can design a marketing sequence, and then gradually fine-tune it for maximum results. It will track where every client, customer and prospect is within your contact cycle, send the next item out automatically, and maintain a record. You can always insert special invitations or offers, based on the characteristics that were recorded previously.
Converting prospects into customers. One you have entered a person who might be interested, and as you make further contact, your information is enriched. Gradually you are learning more about what might be of interest or value to this person. As they come to identify your messages, logos, brands, information and perhaps your building or your photo, they are moving from the status of prospect to that of customer, or from a one-time purchaser to a loyal fan.
Retaining customers. Especially at the outset of a relationship, customers are especially vulnerable to approaches from competitors that create doubts about your ability to deliver as promised. Frequent additional contact, even if automated, is very reassuring. These items reinforce each other and all the personal contact. Gradually, your bonding grows ever stronger.
Getting more referrals
Obtaining new prospects. In every business or profession, the most valuable source of new customers is referrals from those who are very pleased, not merely satisfied. It is the "raving fans" that offer the most valuable referrals, but only if this is encouraged and solicited. Privacy is a more of an issue today, so you can no longer expect leads to be entered on "public" post cards. You must offer a nomination card that is easy to fill out, and supply a postal reply envelope. The payoff to this supplemental marketing can be enormous, because it can simply be inserted as an add-in to other mailings.
Operating a CRM system
While CRM software is very powerful, its operation should be fairly simple, especially after a bit of training. The tasks break down to the following:
Loading and configuring the software. You may have several persons who should be listed as authors of communications. You may also have a number of persons who will use the CRM database, adding information about new prospects and customers, and generating memos, letters, calendar entries and task management. This requires an understanding of your firm and the network configuration. But once it is set up properly, the CRM system will require only minor maintenance.
Basic contact information entry. Almost anyone can perform this task. A small but important aspect is to be sure a person is not already in the system. The data can come from a list, roster, or another record system.
Transferring a block of names and data. This is not a difficult task, but having just a tiny misalignment can invalidate the entire block of data. So, support is often advisable, even if there is a small charge.
Inserting letterhead and authorship. A CRM system can print on your pre-printed letterhead or reproduce the letterhead on plain paper. For firms with color in their stationery, that means using a color printer. But all types of logos and even watermarks can be inserted. Using only one type of paper simplifies operations.
Daily operation by all users. This will be quickly mastered, and usually someone in every firm becomes the "go-to" person who will say, "Oh that is easy, here is how I do it!"
Sending basic correspondence. Picking an existing letter and/or article and generating it with a label or envelope is easy. The CRM system should permit swift edits and automatically record the distribution. For common letters, only a small comment may need to be added -- often none.
Authoring new letters or articles. This may be a good place for help from someone with writing and editing skills. Your image is dependent on text that is well-written and perfectly prepared. Spelling and grammar errors destroy the image you wish to maintain. But, unless you are creating a lot of text, this should not be a problem.
Building new marketing sequences. This is perhaps the most challenging task because you need to understand how the sequences work and then modify or create new text to go into the sequence.
Responding to new events. Maybe this is a new item, an Internet link, or an article published by or about you. Your CRM system can instantly send out notification and copy.
Operating the automated marketing. This takes a bit of time to master, but once the sequences have been created and edited, and the first few runs have been achieved, it is not so challenging. For example, you have selected to run your marketing (there could be several sequences running simultaneously for prospects, new clients, and more established customers) on Tuesday. This could be mailed on Wednesday and delivered on Friday. Other firms would prefer processing on Thursday, mailing on Friday for delivery on Monday.
CRM cost analysis
The first aspect is installation. Software, hardware, printers. Generally, the firm already has the computers and printers, and they are networked. So the only cost is for the software, and that will be modestly incremental for the number of users. Mainframe systems for the phone sales departments of mail order firms cost millions. Modest stores will only need 15-20 workstations, and the cost is usually less than $100,000. Professional firms and smaller operations will benefit from the low costs associated with more frequently purchased systems that are not so customized.
The second element is training. Onsite training is not usually necessary, but a key marketing person and the operations employee would benefit from attending a one-day hands-on training with a small group of participants. The transportation, lodging, and hourly rates generally exceed the cost of tuition.
The biggest expense is postage. While the Internet is free, it is not nearly as effective as the traditional paper mailing that can be passed around the office or shared with an associate. Many people do not have the time to read a lengthy e-mail message when it is received. If mailed physically, they will just put it aside to read at a convenient, reflective time. A quick click deletes an Internet mailing, but a paper mailing may sit on a desk or counter for several days, and may even be noticed by family or friends.
Is CRM right for you?
You can easily perform a self-analysis that will indicate the potential value of CRM to your operations. Read the list below and tabulate your score. For every instance that the situation applies to you, add one. If your total comes to five or more, then you're a prime candidate for CRM.
*For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.
- Current customers or clients have the ability to make future purchases
- Current clients provide ongoing revenue from renewals, parts or service fees
- We are competing against large institutions with very big advertising budgets
- Many prior customers have been neglected, but can still do more business
- We would like to sell other services or products to our existing customers
- We need to document purchases, payments, commitments and special terms
- We need to maintain a record of all customer support and service
- There is a significant potential liability that better records could help offset
- Customers might file regulatory complaints that could become major issues
- Acquiring new customers or clients is vital to the success of our business
- The economic reward for each newly acquired customer is substantial
- Existing customers could provide referrals to new customers - if asked well
- Moving a referral into a prospect and then to a customer is a big challenge
- We have significant capacity to offer far more products or services
- Our key persons are very busy and cannot easily find time for marketing calls
- Our staff is effective communicators, but somewhat reluctant to make calls
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions