If I’m totally honest, I’m hardly being a visionary when I say that it’s strategically vital for all organisations to build customer loyalty and increase the ‘share of budget’ available?
Research regularly tells us that the most significant increases in profitability are derived by increases in customer retention of as little as five per cent. Compare this to the cost of acquiring new customers – up to 10 times more than retaining an existing one!!. To my mind, it’s no surprise that Companies are focussing on customer retention strategies – often to the budgetary detriment of any new business acquisition programme. Getting the balance right is fundamental – May our effectiveness in retaining business be matched by a cost-efficient acquisition strategy!
My experience is that many companies felt they had ticked this particular box by implementing CRM (customer relationship management) programmes. The investment made was considerable, the returns promised huge, but in practice the ROI metrics have not been delivered – and these metrics were largely predicated against customer retention and the increased revenue therein! So why is this? An effective CRM strategy comprises two elements –the first, deployment of an effective CRM technology. The second (and IMHO the one on which organisations consistently fall down) is the strategic use of the CRM data to yield personalised, relevant, timely communications – via the optimal channel (s) – both on & offline. So many organisations concern themselves with new data when the real concern is not how much data they currently own or are able to obtain, but how to use the data effectively once they have it!
The net impact of this is a ‘double whammy’ – not only are organisations not making the returns they planned but they also risk losing long term customers through ignorance and an inability to address them with relevant communications.
The answer to this lies, not in a new technology , but in approaching the management of customer data differently and as the basis for the most basic of all CRM principles – “treating different customers differently”.
By using data to define Customer (and prospect) segments, by creating distinct and discrete content channels and by delivering this content across all media, we can accelerate the ROI by allowing businesses to drive profit through managing customer data to deliver intelligent marketing insight.
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