CRM Marketing: Introduction and Activity Process

Categories CRM

What is CRM Marketing?

Companies need to focus on building relationships with their customers to improve their sales. Rather than advertising to a larger audience, it is now required to respond to individual specific needs. CRM marketing is gaining more and more attention in building relationships with customers. This article provides a detailed overview of CRM marketing, its benefits, the activities process, and how to choose the right system.

Table of contents:

  • Overview of CRM marketing
  • Objectives of CRM marketing
  • Benefits and cautions of CRM marketing
    • Advantages
    • Cautions
  • How to conduct CRM marketing activity process
    • Accumulating customer information
    • Analyzing the data
    • Implementing the measures
  • Important points for CRM marketing
    • Preparation before conducting CRM marketing
    • Identifying the issues
    • Setting clear goals
  • Convince employees to implement CRM
  • How to choose a system for CRM marketing
    • Choose a system that is easy to implement
    • Make sure it has the features you need
    • Choose a system that is easy to use
    • Check if the system can be integrated with other systems
    • Try a free trial

Overview of CRM marketing

CRM is an abbreviation for Customer Relationship Management. CRM marketing is a marketing method that manages and analyzes information about each customer and devises strategies that suit each customer. To implement CRM marketing, you will need to implement tools.

Objectives of CRM marketing

No matter how high-quality your company offers, you won't be able to make sales without customers buying them.

It will not be possible to sell products if you don't know what your customers are looking for, whether they are looking for inexpensive products, products of reasonable quality with good cost performance, or are looking for high-quality products.

Also, due to changing values of markets and customers, it is no longer possible to expect the effectiveness of mass marketing through TV and other media, which worked in the era of mass production and mass consumption.

For these reasons, it is necessary to carry out CRM marketing to acquire new customers and improve repeat customers' satisfaction.

Advantages and cautions of CRM marketing

What are some of the advantages and cautions of CRM marketing?

Advantages

The first benefit of CRM marketing is that you can centrally manage customer information distributed across multiple tools.

With centrally managed customer information, it becomes easier to analyze. You can think of strategies based on the analyzed data to improve the efficiency of your marketing activities.

Second, you can determine the timing of the implementation of measures by the use of customer information. If you provide information about the product or service customers want to buy when they feel like buying it, it will be easier to make a purchase. Customer information can also help you know the best timing.

Third, it makes it easier to improve customer satisfaction and build good long-term relationships. From the analyzed data, it is possible to derive and provide the most suitable products and services for each customer.

From the customer point of view, it would be better to receive only information about products they are interested in purchasing, rather than receiving uniform information. Knowing customer needs helps improve customer satisfaction.

Cautions

The first caveat in CRM marketing is the cost of implementing the necessary systems. You will need to be prepared to spend a certain amount of money.

The second is that it takes time and effort to introduce and get used to it. No matter how useful it is, implementing something new will inevitably involve a lot of work and financial costs.

You will need to consider whether the site you are trying to implement CRM can afford the time and effort.

The third is to ensure that you manage security thoroughly. You must pay close attention to security measures because you always deal with customer information in your marketing activities.

How to conduct CRM marketing activity process

Let's take a look at the three activity processes of CRM marketing:

Accumulating customer information

Customer information requires the collection of detailed data such as region, age, and occupation. Since occupations may change due to job changes, or areas of residence may move due to relocation, it is necessary to accumulate the most up-to-date data. There are four categories of customer information:

The first is demographic variables such as age, gender, income, and occupation, called demographics. It can be said to be the social characteristics of customers.

The second is geographic variables such as region, year, population density, etc. It is called geographic. It is an external factor that surrounds the customer.

The third is psychological variables such as lifestyle, preferences, and personality, which is called psychographic. These are the characteristics of the customers themselves and can be said to be internal factors.

The fourth is behavioral variables, such as frequency of product use and impressions of the product, and product service attribute variables, such as the type of product service purchased or used.

Analyzing the data

There are five types of customer analysis: decile analysis, RFM analysis, segmentation analysis, behavioral trend analysis, and CTB analysis

The first is decile analysis. It is a method of analyzing customers by dividing them into ten equal groups. Sort customers by purchase amount, divide the number of customers into ten groups evenly, and calculate the percentage of the total purchase amount per group. 

There is an advantage that it is simple and easy to understand. It has the advantage of being simple and easy to understand. But it has the disadvantage of including customers who made a large purchase some time ago but have no recent purchase history in the data. It will be necessary to analyze the data, such as by dividing the period of purchase.

The second method is RFM analysis. It is a method to analyze the latest purchase date of a customer, where R is the most recent purchase date, F is the purchase frequency, and M is the purchase amount. While this analysis helps you follow up with repeat customers, it is not suitable for approaching prospective customers or items that are not purchased frequently, such as cars or houses, because the results will not show up if there is no purchase history.

The third is segmentation analysis. It is a method of subdividing and analyzing customers by some element. You can clarify your targets and concepts by knowing from which age group and regions most likely to purchase your products. Even if you do not have a purchase history, it is worth actively promoting your products to people in the age group and gender you are targeting.

The fourth method, behavioral trend analysis, is to analyze purchase data focusing on a specific season. Separate customers by age group and determine which age group is purchasing seasonal or limited-time products and when. 

The age group that is the first to purchase limited-time products will lead the other age groups in setting the trend.

The fifth method, CTB analysis, is a method to analyze products by dividing them into CTBs, where C stands for Category, T for Taste, and B for Brand. It is not likely that the same person will buy the same product unless consumed daily, such as cosmetics. However, if customers know their favorite brand name and taste, there is a good chance that they may buy something close. CTB analysis includes whether the purchased product is relevant.

Implementing measures

It is necessary to think about the strategy based on the accumulated and analyzed customer information. For example, consider how to promote a new product by targeting existing customers.

By presenting what other products people who bought the same products as you are interested in, you can promote them by making them interested in new products. After considering the strategy and implementing the measures, you collect data to check whether the results are as per strategy and evaluate and improve them.

If you do not get the results according to the strategy, consider the possibility that the analysis method is not suitable for you, and then continue the PDCA cycle.

Important Points for CRM Marketing

Just because you implement CRM marketing doesn't mean you'll get better sales right away. When conducting CRM marketing, your goal should be to build good relationships with your customers over the long term rather than seeking short-term results.

Also, to manage customer information smoothly, you need to have your system ready before implementing CRM marketing.

There are many different types of CRM systems, so it is necessary to choose and operate the right CRM system for your company.

Preparing for CRM Marketing

Here are three ways to prepare before implementing CRM marketing:

Clarify the issues

In addition to managing customer data, CRM has many functions that you can use for marketing, such as data analysis, customer support, and email delivery functions.

The ability to use many functions in a single tool may seem like a great advantage, but if your purpose is not clearly defined, you can't get the most out of CRM. Clarify what your company's issues are and identify the functions you need in a CRM. The following are the most typical issues before implementing CRM:

  • You have created a website but have not been able to acquire enough potential customers
  • Communication with business partners and the progress of sales projects are unclear, making it difficult to accurately grasp the status of achievement and the rate of goal attainment
  • Sales processes are not shared, and sales skills are not being raised and standardized
  • Customer satisfaction and the number of existing customers are decreasing due to the lack of transferability of customer data, which is managed individually by each person in charge

After identifying the above issues, you should organize how you will utilize CRM.

Set clear goals

Once you have clarified the issues you want to solve with CRM, set KPIs to establish clear goals. KPI stands for Key Performance Indicator

It is necessary to break down and concretize the processes that are necessary to achieve your business goals.

For example, in a case where 5% of the 300,000 monthly visitors to your website purchase a product, if you want to increase product sales by 50%, one way to achieve your goal would be to increase the number of visitors to your website by 50%. By setting clear numerical goals with KPIs, you'll be able to determine the direction of your organization and improve the goal achievement rate.

Also, the effective KPI setting method varies depending on the product, business type, and customer base, but it is necessary to maximize LTV in any case. LTV stands for Lifetime Value. LTV is the sum of the total sales of how much one customer purchases their products and services over a lifetime.

When you send a DM to an existing customer, should you recommend a discounted set or a subscription? Let's say that a single set sale generates sales of $300, while a subscription generates sales of $100. However, if you have analyzed the past purchase history and know that after one year, the set sale will generate $600 in sales and the subscription will generate $1200 in sales, you should recommend the subscription with the higher LTV.

Even a DM has various variables such as destination list and time of day. 

To maximize LTV, it is the most important point to achieve results using CRM by calculating back and incorporating it into concrete measures and verifying the effects. 

Even if you calculate backward from LTV, it takes time to verify the effect and is difficult to measure, making it difficult to practice in business.

Therefore, it is necessary to set KPIs that are easily correlated with LTV and monitor them daily. The indicators used for KPIs vary depending on the product and business model, but here are two typical examples.

Repeat rate

The repeat rate is the "percentage of customers who purchased the product and who purchased it again next time." For example, if 20 of the 100 first-time buyers purchase the second time, the repeat rate is 20%. The higher the repeat rate, the higher the LTV. Similarly, monitor the "withdrawal rate" for regular customers and the "rate of increase" to this product if you are offering free samples.

Cost per customer

Unit price per customer refers to the number of money spent by one customer per shopping trip. For example, if three customers (Mr. A, Mr. B, and Mr. C) shop and Mr. A spends $500, Mr. B $600, and Mr. C $700, then the price per customer is "(500 USD + 600 USD + 700 USD) ÷ 3 = $600. LTV increases as the unit price per customer increases.

Once you have implemented CRM and set KPIs such as increasing the repeat rate of existing customers by 5% or increasing the unit price per customer by $200 by the end of one year, run the PDCA cycle after CRM implementation to verify and improve with data. Cross-selling related products or up-selling high-priced products to existing customers is an effective way to increase the amount spent per customer.

Convince employees to adopt CRM

One of the most common problems with CRM is the burden on the field.

While listening to the opinions of employees in the field, consider implementing CRM so that the workload does not increase after the implementation, and make sure that they understand the purpose of CRM implementation. You need to pay attention to whether CRM can replace the groupware, daily reports, and other systems and tasks you are currently using and whether the inputting process is not a double hassle.

How to choose a system for CRM marketing

How do you manage business cards manually when the amount of business cards becomes so large that you feel the limits?

Here, I will introduce the method of business card management using methods other than Excel. Try to understand the number of business cards your company has and the characteristics of your sales force, and use this as a reference to manage business cards in a way that suits your situation.

Choose a system that is easy to install

The higher the cost, the more difficult it will likely be to continue operating the system even after implementing it. Some systems can be used free of charge for a certain period, such as a month, so it is a good idea to try out the system on a trial basis.

Make sure the system has the functions you need.

CRM systems have various functions, such as collaboration and analysis functions depending on the tool. Collaboration features include the ability to link with Gmail, and analysis features include the ability to segment customers easily. It is necessary to clarify the purpose of implementing a CRM system for your company and choose the right tool for the purpose. Make sure you know what features are in place before you implement them.

Choose a system that is easy to operate.

If you implement a CRM system that is not easy to operate, you will need to have a dedicated system administrator in your company. In addition to the cost of implementing the system, having a person in charge of the CRM system will cost even more labor costs. If the system is intuitive and easy to use, it may be easier to operate without the need for a full-time staff member. It is also necessary to check if the system has a support system in place, allowing you to get help if you have trouble operating the system.

Check if you can integrate with other systems

Identify the functions that your company needs. And make sure to check if you can integrate with other systems. For example, if you are using an inventory management system and not integrated, you may not immediately respond when customers ask about inventory or delivery dates. And you may miss out on sales opportunities. Make sure that you can integrate the system to the functions that your company needs.

Try a free trial

Try a free trial to see if it has the functions you need. Some trial software may not include features available in the full version, so it is necessary to check with the vendor. 

It is also necessary to have an interface that is easy to use. The interface must be easy to use, and the salesperson should try it out and select one that has a good feel.


See also:
Reasons for Failure in Implementing CRM Tools
Open Source CRM Software and Tools
Customer Relationship Management Tools / CRM Software
CRM System
Advantages and Disadvantages of CRM

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