The benefits of CRM (customer relationship management)

At its core, effective CRM promises the following:

• Increased revenue and profitability

• Improved customer satisfaction and loyalty

• Improved service delivery and operational efficiencies

• Decreased acquisition costs – keeping churn low through CRM offsets the need to spend as much on acquisition of new clients, while retention of existing ones is cheaper for obvious reasons

Maintaining good customer relationships is critical to the success of a business.  The cost associated with acquiring a new customer is generally far higher than the cost of maintaining an existing customer relationship. While an investment in a CRM communication programme or platform can be large, these costs are often offset over the increased revenue generated by encouraging repeat business.

Broadly, CRM can be looked at from:

• A marketing perspective – increasing the number of people who know about your service or product

• A cost perspective – decreasing the amount you spend on customers; it costs more to attract a new customer than maintain an existing one

• A sales perspective – turning the people who know about your service or product into people who have made a purchase

• A service perspective – ensuring people who have interacted with you are satisfied and delighted.

Effective CRM can also create a powerful new marketing and referral force for a company: its happy customers. Delighting customers fosters positive word of mouth. The first step to any CRM initiative is to understand the value of a customer relationship to a business.

Relationship value = Revenue generated by customer – Cost