Customer Relationship Management accomplishes the complete set of activities ranging from customer acquisition and retention to service. This cycle of customer-related activities is termed as CRM cycle.
Marketing Stage: In this stage of CRM cycle, the basic focus is to identify customers by running various marketing campaigns (such as emails, blogs, advertisements, and more), create the database for Account (pertaining to Organization) and Contacts (pertaining to individuals), and finally generate leads by analyzing the gathered customer data.
Sales Stage: In the Sales stage, basic focus remains on leads. They are the individuals who have expressed some kind of interest in your product offering. ‘Leads’ are further categorized into Open, Contacted, Qualified and Un-qualified. CRM offers a functionality to convert ‘leads’ into ‘opportunity’ for carrying out further sales activities.
Product Stage: In this stage of CRM cycle, the basic focus is on delivery of product. CRM offers Product Management functionality that captures details about the product price, vendor, and description, among others.
Support Stage: During Support Stage, the primary focus remains on resolving customer issues and providing customer support. In CRM terminology, this function is known as Case Management.
Acquiring customers has always been the first important step in establishing business relationships. With CRM, advanced software databases are used to capture key customer data at the point of first contact. Profile data includes a prospect’s name, address, phone number, email address and sometimes social media accounts. Entering this data into a computer enables future and ongoing communication access.
The other major benefit of starting a formal relationship with new prospects and clients is the ability to track their behaviors through data analysis. As of 2015, many databases enable analytics, the automated analysis of data through programmed tools. Salespeople can identify at any point in time, for instance, what percentage of customers are at each stage of the opportunity pipeline, or sales process. This knowledge allows for optimized targeting to avoid bottlenecks and to facilitate relationship-building activities.
The real purpose of gathering data on acquired customers is to improve retention rates. The typical customer attrition rate for companies is around 15 to 20 percent per year, but a 2013 Forbes article indicates that some industries experience significantly higher average rates. Effective data analysis, regular and systematic follow-up communication with contacts, and well-serviced accounts help you reduce your company’s churn rate. Data analysis allows you to identify the traits of prospects and customers that offer the best lifetime earning potential as well, which enables greater focus on retaining core customers.
The customer extension phase of CRM includes activities intended to draw out the length of typical customer relationships, enabling greater revenue. A simple perspective is that satisfying a customer during one buying experience increases the likelihood of a follow-up visit. Over time, delivering quality solutions, following through on commitments and addressing problems convert a buyer into a loyal customer. You also can enhance revenue through add-on product selling and cross-selling, which involves recommending unrelated solutions. Because of the high costs of customer acquisition, extending relationships with customers already captured is hugely valuable for a business.