Maintaining a good customer relationship should be the core of your business. In a competitive industry, customer retention is the name of the game. You want to make sure that your current customers will buy from you over and over again. Customer retention makes sense considering that acquiring new customers is 5 to 25 times more expensive than retaining an existing customer.
It’s clear that you don’t have to waste your resources on acquiring new customers. You just have to keep your current ones happy. According to Bain & Company, increasing customer retention rates by 5% increases your profit by 25% to 95%. There’s no denying that keeping the right customers is valuable for your business. Your aim should be to reduce your customer churn rate (customers who end their relationships with a company).
But it doesn’t mean that you should stop acquiring new customers. You just have to ensure that current customers are happy with your service. You should deliver excellent customer service to keep your customers happy. 71% of customers will leave a company due to poor customer service experience.
Customer loyalty translates to revenues for your business so building customer relationships is vital to the success of your business. If you want to increase your profits, you need to take your customer service to the next level. A 2018 study revealed that 57% of customers expect a lot for customer service. Strengthening customer relations is vital to retaining long term customers. In this article, we shall cover the following topics:
1. What is Customer Relations?
2. Customer Service vs Customer Relations
3. Benefits of Positive Customer Relations
4. What is CRM?
5. Signs Your Company Needs CRM
6. How To Build Better Customer Relationships
What is Customer Relations?
Customer relations refers to the way your company will engage with customers to improve their experience. The aim of customer relations is to address short-term roadblocks and create long-term solutions. Customer relations aims to create a mutually beneficial relationship with the customer that goes beyond the initial purchase.
While present in all aspects of a business, it is most common in the customer service department. Customer relations may also extend to the marketing and sales department since they can also influence your company’s interaction with customers.
Customer relations includes both reactive and proactive functions done by the customer service team. The former are efforts for solving issues reported by customers such as responding to complaints and solving problems. The latter involves steps taken by your customer service team to ensure long term relationships with customers by satisfying evolving customer needs.
Customer Service vs Customer Relations
You may think that they’re one and the same but customer service and customer relations have one distinct difference. Customer service is an inbound function that is already expected by customers at the initial interaction. It is usually delivered in response to a customer action.
Meanwhile, customer relations include both inbound and outbound measures of your company. It involves your ability to respond to present issues and your approach to improve future experiences. Also, it encompasses all the important functions performed in customer service as well as efforts made before and after customer interactions.
Benefits of Positive Customer Relations
Ensuring positive customer relations can have huge benefits to your business including more potential leads and higher customer retention rates. Positive customer relations provide your business with an open channel of communication for relaying customer feedback. Here is a look at the benefits of building positive customer relations.
Effective customer relations management can deliver higher retention rates. 61% of customers stop buying from a company because of a poor customer experience. Customers are willing to overlook your mistakes as long as you show your commitment to their success. Just be transparent with customers and you can see a decrease in your churn rate.
Positive customer experience usually translates to repeat customers. This is one of the most intangible incentives of positive customer relations. 55% of customers are willing to pay more money for a product or service in exchange for good customer service. While it may be costly for you to build positive customer relations, the pay off in the long run can mean consistent revenues for your business.
Most of the time, there is no way to tell whether or not your customers are truly happy with your business. 91% of unhappy customers don’t complain. They simply don’t return to a company for another purchase. To prevent customers from leaving your company, build a strong customer relations policy.
What is CRM?
Customers are the lifeblood of a business. They pay your bills and the salaries of your employees. Despite this, why do they still feel neglected? There are many reasons why they may stop being your customer. They relocate, go out of business, or go to a competing company. Such reasons account for 34% of customer loss while 66% is attributed to another reason—they just feel ignored.
Many companies use spreadsheets for customer data storage. The problem with this type of database is that they get lost or become outdated. Worst, they may even fall into the wrong hands. Also, they don’t allow collaboration. This is where customer relations management (CRM) software comes in.
CRM is a powerful tool in building relationships with their customers. It helps create loyalty and customer retention. With CRM, you can expect increased profits for your business. With this tool, you can have a simple user interface for collecting data. It makes communication with customers scalable and recognizable. CRM can help your business in a variety of ways:
- Learning. With a CRM, you can learn more about your customer such as their purchasing habits as well as their purchase history. This way, you can better anticipate your customer’s needs and fulfill them. CRMs help you select the correct recipients for promotions and new products.
- Organization. CRMs offer efficiency in organizing and automating certain aspects of the business. From sales processes, marketing campaigns, business analytics to customer data. A CRM can streamline your business processes.
- Optimization. A CRM lets you optimize customer interactions. With a simplified and streamlined process, you can look forward to increasing your customer satisfaction.
Types of CRM
While there are different types of CRM, most software will focus on one of the major categories below:
Operational. This type of CRM is related to one of the three types of operation namely marketing, sales, and services. It is an important tool for lead generation because it usually deals with past customer data such as previous marketing campaigns, purchases, and service satisfaction. Operational CRM aims to automate these processes for the purpose of improving both business and customer experience. This type of CRM is the perfect solution if you have a short sales cycle and high repeat sales.
Analytical. The main purpose of analytical CRM is to analyze customer data to help you better understand market trends and customers’ wants and needs. This type of CRM is used for improving customer satisfaction. It uses data mining and pattern recognition. Analytical CRM is suitable for higher priced markets with several competitors.
Collaborative. Collaborative CRM allows companies to share customer information with outside companies and businesses. By pooling data together, certain businesses will be able to create an even greater customer experience by acquiring data otherwise not accessible to them. It is perfect for markets where innovation and new product development contributes to its success.
Signs Your Business Needs CRM
As a business, are you still relying much on spreadsheets and email to create and collect customer data? But is such a method really that effective for you? If you aren’t getting the results that you desire from your database, maybe it’s time to consider a CRM for your business. Here are some indicators that you need to take your customer data gathering to the next level.
You’re Far From Organized
Remembering every conversation that you had with a client can be tough. Sticky notes or business cards on your cork board can be considered office clutter. Searching for email messages can take twice as long as it should. Worse, you forget that you need to follow-ups on a client or you have a deadline to meet.
With a CRM, your company information is arranged systematically as you collect them keeping you organized and updated on what to do next.
Your Spreadsheets Are Too Hard To Read
Spreadsheets can be a good starting point for tracking your clients. Information like contact details, name, business address, and position can be initially noted on an Excel spreadsheet. However, as your business grows, your customer information grows as well. More data will be needed to close a sale but finding that information can be difficult.
With a CRM tool, locating customer data can be hassle free. No more scrolling or squinting at what you wrote.
You’re Losing Leads
Important data, such as follow-up with potential customers, gets ignored because you don’t have the time to enter it in your spreadsheet. This isn’t helpful because you could potentially lose business from that customer. If you are not on the same page with employees, customers would not be happy with their experience.
CRM systems makes it easy for you to enter customer data and schedule follow up with a potential buyer.
You Can’t Create Valuable Sales Reports
Compiling sales reports by inserting rows of numbers into custom-made charts and graphs can take your time away from what you should be doing. Sales reports are crucial to your business but they won’t be of any value if you can’t pull out your data for analysis and application to your sales goals.
You need to analyze your data in order to create actionable goals from your reports. But if you can’t do that, it is time to evaluate your data collecting process. With a CRM, you can get real insights on customer behavior, sales margins, and company campaigns.
You Can’t Stay in Touch When You’re Away
Sometimes you need to access your data and enter it into spreadsheets when you are away. This is one of the biggest limitations of a spreadsheet. If you need to call a customer on the road and need access to customer details, it can be challenging or impossible with a spreadsheet.
With a CRM, you can upload the data from any smart device and your team can view any updates you made. This ensures that you can stay connected and updated.
Your Team Is Growing
A growing team means your business is also growing. It also means you need to change the way you run your business. Most likely your customers are communicating with more than one member of your team. Your employees need to have access to all customer interactions and details so that calls and follow ups will go smoothly.
A spreadsheet can be a good start for collecting customer data. However, it is not designed for building team collaboration on customer communication. With a CRM, multiple team members can collaborate on a customer, campaign, or support ticket.
How To Build Better Customer Relationships
Improving customer relations is a surefire way of improving business performance. You need to give them a reason to connect with your company. 73% of customers say a good experience is crucial in keeping them loyal to a brand. In addition, a superior customer experience generates 5 – 7 times more revenue than businesses who lag in customer experience.
Furthermore, loyal customers are five times more likely to buy again and four times more likely to refer your company to a friend. Here are some tips on boosting customer relationships.
1. Understand what your customers value
To determine what is most valuable to your customers, always listen to what they say and how they say it. Then adjust your approach to match their expectations. Some people want to personally contact your business. Others just want to call, place an order, and continue with their day. Some will look for a better price while others will look for bells and whistles. Just keep on listening to them.
2. Show you truly care
In general, people want to connect beyond the professional level. Be friendly and personal with your customers. Look for something in common with customers and start engagement with that subject. Follow up on key details, ask about their kids, or greet them a happy birthday on their day.
Some people are able to keep those details but if you can’t just write them down on your contact list. The important thing is to always be authentic. Customers have the knack for knowing when you aren’t being genuine. If you’re not the “people person” type of manager, find someone from your team who is.
3. Adapt to their pace
If a customer answers the phone and is obviously rushing, don’t slow them down with your small talk and pleasantries. If the customer is in a chatting mood, don’t rush them.
4. Let your brand be your guide
When you make a promise of customer experience in your branding, marketing, and company as a whole, stick to it and it is essential for you to keep on your promise. If you claim that you’re always there for customers but can only be reached through voice mail, then you are not being true to your promise.
5. Model the behavior you want to see
How you treat employees gives them a glimpse of how you want customers to be treated. If you are always worried about costs, they would have the assumption that they shouldn’t be offering discounts or adding value in other ways, which can make a difference in exceeding customer expectations.
6. Remember that relationships are built over time
Some companies use CRM to build and manage their relationships over time. Although these can be helpful particularly in larger businesses with formal programs, they don’t exactly provide exceptional customer experience. It is important for you to be conscious of the experience and deliver it consistently.