Many companies have adopted customer relationship management (CRM) systems that can support both acquisition and retention by gathering data from every contact with prospects and customers. Just collecting data should not be an end unto itself, however. The real focus should be on developing a data strategy and tuning the CRM system to help your company acquire and retain the right types of customers.
The goal for the acquisition phase of your program should be deciding which prospects most closely match your company’s "ideal prospect" profile, but you should also decide which prospects don’t meet your criteria for acquisition and eliminate them up front. This simple decision helps focus your marketing and acquisition efforts while saving costs and increasing your return on investment (ROI).
Analyzing your marketing campaigns to determine which are most effective in bringing in new customers is also important. A CRM system that is able to tag data (assigning each contact to a specific campaign) lets you analyze the return on the investment you are making in your marketing effort as well as its overall effectiveness in identifying likely prospects. Another benefit of tagging is that it lets you look at marketing programs and their related expenses by leads generated, customers acquired, and potential and realized revenue. This will enable your company to better tailor campaigns to individual customers and prospects based on response or effectiveness rates.
While looking at data for individuals can help you better understand their needs and interests, analyzing data in the aggregate can show which groupings or classes of customers respond best to your company’s campaigns. This step can help you develop products or services that meet the needs of specific groups of customers or prospects.
There are a number of other questions you should consider as you develop the acquisition part of the data strategy. For example:
- What is our best source of customers?
- Did they find us on their own initiative or were they referrals?
- Did they come from external sources such as a direct marketing list or were they from our own marketing campaigns?
- When customers first contact us, what information are they interested in?
- What was the ROI for that campaign?
- Was it self-service or assisted interaction that eventually lead to a sale?
The absence of certain types of inquiries should also be investigated. For instance, why are there no Web inquiries from groups of prospects that you know are part of your regular customer base? Analyzing the use of self support via the Web (such as searches of the knowledge base or support cases initiated) allows you to see where customers’ interests lie and where self support can be improved.
Keep in mind that prospects may have significantly different information and support needs than customers and use this knowledge to tailor your acquisition program to their needs.
Finally, consider how well the company is responding to prospects. As an example, data may indicate that inquiries responded to within 30 minutes are twice as likely to result in sales than those responded to the next day. This type of analysis can reveal areas where the company’s performance can be improved.
When Prospects Become Customers
As the focus of your program shifts from acquisition to retention, the goals become those of establishing loyalty, advancing the relationship and building a sense of community, participation and affinity. As with prospecting, however, the data strategy should also help determine whether customers do or don’t meet the company’s criteria for retention.
Look for factors that will feed back into the acquisition cycle to reduce marketing costs, increase success rates or both. Look for trends in the length of customer relationships and determine if steps can be taken to avert the loss of customers at critical points along the way. Even a small improvement in retention can result in a significant rise in profitability and your overall ROI.
Since all organizations continually update customer data, reviewing and analyzing the data will identify opportunities where up-selling, cross- selling and service sales can be increased. Sales data, for instance, can indicate which customers are due for product/service upgrades or warranty extensions.
The development of the data strategy as it relates to retention issues should address questions such as:
- What characterizes our best customers, and what keeps them loyal?
- How do the information and service needs of new customers differ from those of established customers?
- Is it necessary to keep all prospect information once a customer relationship is established?
- What changes does the organization need to make as the relationship goes along?
- Were any products returned and why?
- How many service calls did customers place?
- How were they resolved?
- What was the time to resolution on those calls?
- What is the potential for developing other customers such as these?
- Why does one group or class of customer respond to opportunities when another does not?
Choice of a CRM Platform
A company’s choice of a CRM solution will affect its ability to collect, analyze and use data. A balanced CRM solution should offer the functionality the organization needs and provide the agility to help users address changing demands in the marketplace. The ideal CRM solution should be timely in that it is quick to install and deploy, and it should be cost-effective from its initial deployment through its long- term use.
All information about a particular customer should be in one database (not separate databases for marketing, sales or support), and everyone in the organization should be looking at the same data. Universal access to information by all departments makes it possible to present a unified face to each customer.
In addition, the CRM solution should be customizable to reflect the unique business outlook and preferences of the organization using it. It should be readily reconfigurable to record new types of information or to discontinue collecting information that is no longer relevant or is not useful. In short, it should be adaptable to new requirements as the needs of the organization evolve.
Today’s Internet technology enables companies to use customized relationship management services hosted by application service providers (ASPs). An Internet-based solution can make it easy for prospects and customers to use self-service tools and information request forms via the Web. The CRM solutions offered by the best ASPs include management and administrative tools to monitor application usage and provide expected levels of service.
Developing an effective data strategy for the CRM process is a way to develop the information you need to better run your company. Ultimately, it comes down to deciding who you want to pursue as prospects and retain as customers. Your CRM solution should provide you with the tools and flexibility to support that quest on an ongoing basis.
Intelligent analysis of data can indicate whether a company’s activities are in line with its goals for customer acquisition and retention. It can be crucial to both the speed and the quality of the company’s response, and it can influence the future direction of your product and service offerings.
Most importantly, a well-developed data strategy and its effective use in concert with your CRM system will allow you to be selective in the types of customers with whom you choose to deal.
David McNamara is vice president of sales and marketing at Neteos, Inc. McNamara has a broad background in software product sales and marketing with more than 20 years of experience in marketing software solutions and services through diverse channels of distribution. Prior to joining Neteos, he held key management positions at Security-7 Software Inc., The BISYS Group, Network Defenders Inc. and Motorola. He can be reached at email@example.com or (781) 270-7900.