It is fairly standard practice to manage client relationships through appropriately named Customer Relationship Management (CRM) systems.
In fact, according to Cloudswave 61% of sales distributors use a CRM system and 75% of sales managers say that CRM has helped increase their sales.
So, while they may get a bad rap from some sales people, CRM systems are certainly useful.
But – and it’s a pretty big ‘but’ – in the modern world of digital, social, real-time information, sales people and account managers need to go beyond CRM when it comes to customer retention.
Limitations of using CRM software in isolation
Data is updated infrequently
Cleaning data is a time consuming process, which is why most companies do it perhaps twice a year at most. Transactional data is updated at the time of the transaction, but updating contact data – name, email phone, company etc. – is a much more manual task.
As a result, you could be operating with incorrect, out-of-date details. Your data becomes static. At best that means you can’t communicate with customers, at worst it means you might be communicating using the wrong information, creating a terrible impression.
This is particularly true in the social age, where everyone expects communications to be personal and speak to their unique needs.
The picture is incomplete
The type of data that CRM systems typically store is very limited. Sure, you have their name, email, maybe even their birthday, but you have no idea what is going on in their lives otherwise.
What’s going on at their company? Who have they hired or outsourced to recently? Are there any gaps in the way their business currently operates?
If you know the answers to these types of questions then you will be able to personalise your communications much more effectively as well as communicate at the right time for them.
If you don’t have this information then you’re just guessing as to when the customer wants to hear from you.
Data without intelligence
CRM systems are primarily data stores – you keep all of your customers’ contact and transaction data together. However, what it lacks is much in the way of real intelligence. At best, CRM analytics can be used to make some forecasts about customers based on their buying behaviour.
When it comes to relationship building, account managers are beginning to apply social selling practices. Social selling simply means using all the information available from social media, websites, blogs, press releases etc. to make communications as personal as possible.
From this ‘social’ data it is possible to form some real, valuable intelligence about your customers, as well as spot triggers for communication. These triggers could be purely for communication – such as saying “well done” when they win a new piece of business – or they could be upselling/cross-selling opportunities.
For example, they could have written a blog describing a challenge that they’re having which you could then solve with your solution.
Well-timed communication based on these triggers is extremely effective when it comes to relationship building and customer retention, as well as creating potential sales leads.
Focusing on a small section of customers
Because of the way it’s built and the information it gathers, CRM software is often used with the ‘leaky bucket’ principle. That is, account managers and sales staff focus on the bigger, more profitable clients, often neglecting the smaller, less profitable clients. High churn of smaller clients is therefore expected and tolerated because the ‘bucket’ is being kept constantly full.
However, it’s far better to try and grow the smaller accounts by targeting them with highly personalised and timely communications than simply letting them go; reducing churn rate while maximising the potential of all your clients.
Ultimately, CRM wasn’t designed to handle the vast amounts of data that is produced every single day. In fact, many sales people would argue that CRM never really delivered on its promise to deliver amazing customer retention opportunities.
Kevin Gaither, host of This Week in Sales and Director of Inside Sales at BetterWorks, summed it up best when he said: “CRM wasn’t enough to begin with…. There is so much information being created that the CRM cannot keep up.”
Going beyond CRM
We’ve already touched on the concept of social selling, and it really is the next step in sales and customer retention strategies. The challenge is gathering, storing and using the data you need.
To achieve this we need to go beyond solely using CRM for relationship building. In a previous post we discussed some useful tools for social selling, and many of these can be readily applied to customer retention strategies as well as new sales.
Another way of going beyond CRM is to integrate social media platforms, notably LinkedIn, into the CRM platform itself. Obviously LinkedIn don’t want you moving off-site entirely, taking their data with you; they would much rather you had to visit their site to gather information beyond name, photo and job title. So it is not surprising that their official CRM plugins have limited functionality.
There are some less-than-official ways of integrating information from LinkedIn into your CRM which are well-covered in this article from Surviving CRM, though we haven’t tested them ourselves, so please use your own judgement before implementing any of them.
Monitor more than just social media
Social media sites, like LinkedIn, are a great source of information, but they aren’t and shouldn’t be your only source of information. Ideally you will be building engagement with customers across multiple channels simultaneously.
For example, if the company posts something on their blog, you have a great opportunity to comment on it. Your comment doesn’t even have to be relevant to your industry or product/service, you’re just looking to build up a relationship with lots of small actions.
The company might also be going through a change, moving to a new office, for example. Do you have any experience of knowledge that might help them? Again, it doesn’t need to be relevant to your product or service, being genuinely helpful brings its own rewards.
A brief health warning, however: don’t jump into a conversation just for the sake of it. If you don’t know how to solve their challenge – it’s not in your industry and you have no personal experience – then it is probably better to say nothing. You’re looking to apply soft sales techniques, not harass people.
Apply the intelligence
Wherever you end up getting information from, you need to remember to actually apply the intelligence gained. You may discover some new insight into how customers are using your product, or a reason they aren’t using a feature.
Use that information to refine your product development and then tell your customers about the change – they’ll appreciate having their needs met so directly.
You might also gain insight into what motivates your customers – a loyalty scheme or regular free webinars, for example. If you know what they respond to then you can offer them more of it.
Keeping your customers happy helps with retention and can transform them into brand ambassadors – the kind of people who bring you lots of word-of-mouth business.
Ultimately, understanding your customers by using all the information available helps them to feel understood and valued, leading to more loyal customers and lower churn.