Essentials of an Effective CRM Strategy
Every small-and-midsize business (SMB) leader understands the importance of building and reinforcing relationships with potential customers. All businesses need an effective customer relationship management (CRM) strategy to achieve long-term growth.
A well-designed and -implemented CRM strategy will align your business offerings with customer needs and enhance your overall market value.
While CRM initiatives and supporting software are becoming increasingly popular, many businesses find it difficult to craft a CRM approach that can improve revenue and customer advocacy without implying hefty expenditure.
Let's look at an effective CRM strategy and the steps you can take to establish a winning CRM program.
What is an effective CRM strategy?
An effective CRM strategy optimizes profitability, customer satisfaction, and revenue by appealing to specific customer segments. [1] A CRM strategy also involves promoting behaviors that satisfy customers and incorporating customer-centric business processes.
In this way, a CRM strategy involves more than merely forming a rapport with customers—hoping it motivates them to make purchases.
Each CRM strategy works as a tool to help your business reach specific goals. This adds value to not just your business goals, but also to the roles and responsibilities of the organizational heads, investors, and other stakeholders.
For example, suppose you're a manufacturer and want to increase net revenues by 6% over the next fiscal year. To accomplish this, you can design a CRM strategy to fine-tune your products to solve pressing customer problems. One facet of your strategy may involve segmenting your customers into demographic groups. You may personalize communications by launching targeted online and social media marketing campaigns.
In addition, you could collaborate with the research and development department to gather details about customer interests, so you can make adjustments to improve your existing offerings. By developing a customer-centric CRM strategy, you will be able to strengthen customer relationships, taking you closer to achieving your business goals.
8 building blocks of CRM
It’s also important to note that CRM strategy is only one element of the CRM process. CRM consists of many building blocks:
Vision
Strategy
Metrics
Customer experience
Organizational collaboration
Processes
Information and insight
Technology
Strategy is only one element of CRM that serves as a roadmap to guide you to make sound customer-centric decisions that align with company objectives. Stakeholders can refer to your CRM strategy to decide how to improve customer interactions, engagement, and satisfaction by delivering quality products or services.
An effective CRM strategy can solve several business problems as it helps to:
Align products with customer needs instead of producing solutions that your internal stakeholders think the public needs.
Systematically forge long-lasting customer relationships instead of merely providing a solution once or twice.
Turn satisfied customers into promoters and advocates for your brand and offerings.
Ensure marketing efforts do more than increase awareness by presenting your brand and offering in a way that makes customers' lives easier.
Because a CRM strategy is rooted in the customer's needs and experiences, it is easier to align what you do with your consumers' wants.
What are the benefits of an effective CRM strategy?
Your CRM strategy can produce tangible benefits, such as:
Clarity among stakeholder opinions. A clear understanding of your CRM strategy among all impacted stakeholders is an outcome of an effective CRM strategy. When all stakeholders are on board, it’s easier to gain their support and confidence. You also gain allies that can help execute CRM action steps.
Align customer processes with CRM strategies. Once you have a strategy in place, the time and energy marketing, sales, customer support, and other stakeholders invest in consumers can support the same customer-focused goals.
Ensure employee goals and CRM objectives. Once employees understand your CRM strategy, they can align their professional goals. This enables increased buy-in and more internal advocates for your CRM system.
Improve revenue and increase customer advocacy. An effective CRM strategy can turn your customers into your brand advocates. Satisfied customers, who make frequent purchases imply increasing revenue and market reputation for your business.
Reduce costs. CRM strategy focuses your efforts across the board, which results in decisions, actions, and products that hit the target more often. In turn, you don't waste money to develop and promote offerings that don’t address customer needs.
5 Essentials to prepare your business for an effective CRM strategy
It's important to align your business goals to corporate objectives as you design and implement a CRM strategy. This will ensure maximum effectiveness of efforts across the board. Here are five essential steps to position your company for a well-aligned CRM strategy:
1. Determine which decisions to make
The decisions you make form the “how” of your CRM program. Strategy is the scaffolding that enables you to make thoughtful, effective decisions. A CRM strategy becomes a decision-making guide, ensuring each choice aligns with customer-focused objectives. Hence, breaking down the reasons behind every decision you take as part of your CRM strategy is crucial.
2. Set goals and objectives by customer segment
Customer segmentation simplifies the achievement of the business' goals to meet their customers' needs. For instance, a goal such as "increase revenue by 9%" may not be specific enough until you use customer segmentation to guide your decisions.
For instance, you could set a goal to "increase revenue by nine percent among young professionals between the age of 25 and 35 in the Los Angeles region with at least 500 LinkedIn connections." Such specific goals will help derive targeted results.
3. Ensure your CRM strategy aligns with the corporate digital strategy
The ultimate success of your CRM strategy will hinge—at least in part—on CRM software. This is why your CRM strategy must be congruent with your company’s digital strategy (i.e., your online marketing plans and tech stack) .
The easiest way to get this alignment right is to meet with your chief digital officer or someone in a similar position to ensure the CRM software you choose fits with your internal tech team’s vision.
For example, many companies use composable (custom) software solutions designed to work well with other applications your organization may use. This enables faster data sharing and more opportunities for automation. If your company wants to use a composable software solution, make sure the CRM you choose integrates with the custom system.
4. Identify metrics for your CRM goals
The metrics of your CRM strategy are like checkpoints along your journey to success. These include:
Acquisition: Checking the rate you get new, paying customers over a specific time.
Retention: Assessing the number of customers that keep returning and how long you maintain their patronage.
Loyalty: Customer loyalty implies the number of positive emotional connections repeat customers have as they interact with your offerings. To assess this metric, you may require customer reviews, ratings, and overall feedback.
Customer profitability: This metric can be assessed by examining the time and money spent on acquiring a customer and subtracting it from the benefits you make off them.
Customer satisfaction: Analyzing how customers rate your products or services.
Cost of service: This measures your resources and efforts to serve your clients.
Product/channel mix: Examining the effectiveness of each of your communication channels, including paid advertising, social media ads, offline ads, and other channels.
Cross-selling. Quantifying cross-selling involves assessing how many other products or services existing customers buy in addition to their initial purchase.
To illustrate how metrics intersect with CRM goals, here are some common CRM goals and potential associated metrics:
Goal: Increase customer satisfaction.
Metrics: Customer satisfaction ratings for products, services, account managers, and your website analytics and product delivery processes.
Goal: Retain more customers.
Metrics: Subscription renewal rates, customer churn, and loss rates.
5. Create a plan to communicate your CRM strategy with stakeholders
You can gain supporters across the board and enable greater cross-departmental alignment by creating a communication plan for your CRM strategy. The discussion around your CRM strategy should be a two-way conversation, where you attempt to understand the specifics of your strategy and how it will benefit the organization as a whole but also listen to the stakeholders' needs and vision.
For example, you may plan on using CRM software to gather data about customer needs. At the same time, the inventory management department may want to use this data to determine which components they should order and when. Some CRM solutions can combine customer requests with the ordering process, allowing you to derive the required details from a single solution. Hence, the chosen tool will serve the needs of all involved parties.
Next steps
By building a CRM strategy that aligns the efforts of multiple departments with customer needs, you’ll be able to maintain strong relationships with your customers. Improved communication and collaboration in the development and implementation of an effective CRM strategy will ensure satisfaction across the board.
Your next move is to identify the right CRM software for your needs. This requires a combination of CRM choices and knowledge regarding what makes an effective solution. These resources may help: