Can a Business Grow Through “Customer Management”?
When aiming for business growth, such as increasing sales or expanding market share, the application of Customer Relation Management (CRM) is becoming a standard practice.
However, CRM is often misunderstood as merely “customer management,” and instances where its true benefit has been disregarded can be seen every now and then. In this article, the kind of results that can be anticipated from CRM and how to realize those results will be explained.
Will the business grow by only introducing CRM?
CRM could be directly defined as “the management of customer relations.”
Did you know that the CRM policy is also a method that uses segmentation marketing to segregate customers into categories? One representative example of this policy is the market automation function.
Due to the widespread use of the Internet, customers are currently receiving much more information than they could receive from a visiting salesperson. If existing customers are left unattended, they could easily change companies.
Therefore, it is important to manage and maintain the relationship and increase their satisfaction to retain existing customers. In addition, with the diverse needs of the customers, grasping those is also of significant value.
Since market automation is a tool to automate high-precision marketing tasks and improve efficiency—such as the analysis of customer action history or customer information management; the automation of mail marketing; management of important actions for lead nurturing, reporting functions, etc.—there is a tendency to misconstrue that what carries out this marketing automation itself is CRM.
However, although CRM is the management of customer relations, is that actually all there is to it? Let’s rethink from the beginning why CRM is necessary.
Why is CRM necessary?
In taking into consideration the importance of CRM, let’s begin with the difference between sale and sales.
Both words mean the selling of products or services; however, selling and conducting sales differ largely.
The difference between sale and sales is, simply put, the difference between “selling a product” and “selling a service.” Sale is the term for customers who are simply looking for a “product,” while sales is for customers who are looking for some kind of “service” such as attachment or convenience. Of course, a person could be either one or both types of customer.
When a customer is looking for a “service,” to provide the most ideal one, it is without a doubt a must that the company (salesperson) builds a relationship with the customer to understand what kind of “service” he/she is actually looking for.
In other words, it can be said that a sale should be specialized for the retail of a “product” through sale management, while sales should specialize in customer relationship management through customer management.
Therefore, for a company with sales as the main axis, the concept of CRM enabling customer management is necessary. Through CRM, the number of times that a customer could bring profit to the company could be maximized; this is called the Customer Lifetime Value (CLV), which is one result that could be anticipated from CRM.
Moreover, improving CLV is actually the biggest issue for any company; this is partly because of the widespread misconception about CRM. However, to aim for business growth, increasing the CLV of a customer possessing an already high CLV is important. In other words, the ideal scenario is for the customer to refer another customer, and the size of the value that makes these customers want to refer is called Customer Recommended Referral Value (CRV).
Even though both CLV and CRV are results that could be anticipated from CRM, at present, there are actually many companies implementing CRM strategies focusing only on increasing CLV.
Hence, what kinds of CRM-increasing strategies are there?
What is the CRM strategy that increases CLV and CRV?
A case study of a CRM strategy implementation that increases not only CLV but also CRV will be introduced.
Have you heard of the product “Jagarico,” which was developed by Calbee Co., Ltd.?
The details of the product will not be mentioned, but the important point is that the customer could participate in its product development.
As a CRM strategy, the benchmark point is that through this service, the customer’s attachment toward the product “JagaRico” is increased (which also increases CLV), and there is a venue for people who want to promote the product they developed themselves to their acquaintances (which equals an increased CRV).
Summary
Nowadays, any company talks about the importance of CRM in the expansion of sales and promotion of company growth; however, the important point is whether a strategy capable of increasing both CLV and CRV is devised.
Among the companies, those that succeeded in CRM strategy by creating a customer network became benchmarks. However, it should be pointed out that approaching the issue of “creating a unique CRM strategy for the company” from the perspective of increasing CLV and CRV is as important.
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