Methods that can be used to retain customers in digital marketing through effective customer relationship marketing (CRM) and marketing retention strategies. you should understand the core features of customer relationship management (CRM) and retention programmes and how contact strategies play a part in shaping them. You should have an appreciation of cross-selling and up-selling techniques and an understanding of how predictive models play a part in retention decision making. You should also appreciate how CRM systems play a part in the process and how social CRM differs from standard CRM.
CRM and retention
It is a well-known adage that it is cheaper to keep a customer than to acquire one, and so for many businesses, retention is key to profitability and growth. Whether your business has a membership, renewal-based or single sale model you will still most often be looking for your customers to stay loyal to your brand and keep purchasing from you as often as possible. This is where CRM and retention strategies come in. CRM is about developing a relationship with your customers so that they want to stay. Retention is about changing the mindset of customers who want to leave. CRM is therefore a proactive strategy (we are working to control a positive situation and therefore stop it from becoming negative) whereas retention is a reactive strategy (we are reacting to the negative situation that has arisen). Neither retention nor CRM are new or unique to digital but they are often overlooked when digital strategies are being developed, as digital is often seen as your acquisition channels and your website experience. This is not the case and there is a great deal of depth to digital CRM and retention.
CRM is often mistakenly thought of as the system used to manage your customer contact details and perhaps the scheduling of interactions with them. Whilst these systems are CRM systems, they are not the definition of CRM itself, which is the far broader essence of developing truly value adding relationships with your customers. There are several factors that are vital to success in CRM and retention. Below is a guide to how these are covered in this book. You should use the following to inform your understanding and implementation of CRM:
1. Personalization: it is vital when developing a relationship with a customer that you demonstrate an understanding of who they are and what they are looking for from you.
2. Segmentation and profiling are important to ensure that communications are not sent out in bulk. Spam e-mails from reputable companies are less common than they used to be as strategies have developed, but they certainly have not disappeared altogether and will not for many years.
3. Content: to create a compelling CRM strategy you need to have something compelling to discuss with your customers on a regular basis. This content needs to resonate with each customer and give them some form of added value. To do this effectively you need a content strategy,
4. Insight: we cannot hope to understand how to build a compelling CRM strategy or how to retain customers if we don’t understand them. Insight and research are vital to understanding the needs, aspirations, beliefs and other factors that cannot be obtained purely through the data itself
Finally, another factor that plays a large part in customer satisfaction and retention rates:
5. Customer service: this has changed significantly in the last 10 years with the direct access to organizations that customers now have through social media.
Principles
The goal of an effective CRM strategy is to ensure that your customers feel they are getting value for money and have a positive relationship with your brand. As a result they would have to think very hard before going elsewhere. This does not only result in increased retention rates but can also allow you to raise your prices without affecting existing retention rates as customers recognize the value in staying with your brand.
The core principles of CRM all relate to creating brilliant relationships with your customers and they can be broken down as follows:
● Frequency: this is a difficult principle to get right. How often do you contact your customers? Each customer may have a different opinion of this. Ultimately this comes down to what you have to say to them:
if there is no value in what you are saying then you should not communicate with them. Never contact a customer just to meet a schedule you have built if you have nothing tangible to say. For example, monthly newsletters will be fine if you have news to provide. Daily cross-selling e-mails are highly unlikely to be popular for most companies.
● Timeliness: are you talking to the customer at the right time? How do you know when this right time is? Understanding the customer and their behaviours will help you to deliver messages they want when they want them and will also mean increases in sales. Understanding your analytics and consumer mindset through data is vital to getting this right.
● Accuracy: is your data accurate? This means that you need to keep your data cleansed, ensure it is being correctly used in your communications and also check that data from time to time through appends. A fantastic CRM strategy can be ruined if the communications are being sent to the wrong individuals, or if, for example, John Smith is being referred to in the salutation as Mr S John.
● Relevancy: does your message truly resonate with the customer? If your customer is interested in fishing, for example, does your CRM programme talk to them about fishing products or do they simply receive the same e-mails as everyone else, which also include jet skiing and dance music?
● Personalization: if your customer has shown an interest in certain areas or displays certain behaviours then are you responding to that? Does the customer only open e-mails in the evening? Do they only ever click on the first item? Do they only like to hear from a specific sales person?
● Value: are you offering true value? What is the customer getting from your communications that they cannot get elsewhere? Are you delivering your company’s unique selling proposition (USP) or brand values through your communications?
Whilst demand for value is a constant and the above principles apply to all CRM programmes, there are some differences in CRM depending on your business model. Below we look at some of the differences between B2B and B2C CRM:
● Scale: B2C companies are more likely to need to develop large and often complex CRM programmes with advanced systems to ensure that they are able to manage a large number of customers, potentially across a number of programmes. B2B companies tend to have smaller databases and fewer, but higher value, sales.
● Frequency: B2C customer touchpoints are often single, short touches whereas B2B relationships are often developed over a very long period of time.
● Interaction: B2B relationships tend to be primarily one-on-one and so personalities can play a major part, whereas B2C customers have a relationship with your brand rather than an individual and so your brand is your personality.
● Goals: B2B CRM is often about increasing and automating sales, whereas B2C is more regularly about decreasing churn and increasing up-sell.
Contact strategy
One of the principles we looked at above is frequency: the number of times you contact your customer in any given period. This can be a very difficult area to get right and will almost certainly evolve over time. You may also run several CRM and retention programmes together and alongside a number of other marketing and customer-led communications, and so the frequency of communications can be quite significant and getting this balance right is crucial.
We mentioned spam above and, whilst this is less common than it used to be, it is still easy to be perceived by customers, if you are not careful, as sending spam. Whereas spam used to be perceived as e-mails coming to you from companies that had obtained your e-mail address without your permission, it is now much more broadly recognized as any unwanted e-mail. This means in practical terms that should a customer actively sign up to your e-mail newsletters but then find them irrelevant or too frequent they may begin to perceive it as spam. In the purest definition of the word this would not be spam, but it is the perception that matters as that is what the customer makes their decision on.
There are three forms of marketing communications that most businesses follow: single campaigns, repeat campaigns and contact strategy, as set out below.
Single campaigns
These consist of the business running a campaign before moving on to a completely separate campaign. This is, in most industries, no longer a sensible marketing strategy. Each communication begins from a standing start and has no relationship with the previous communication; therefore, it offers very little consistency to the communications and fails to tell a compelling story. This method will offer a spike in response and potentially sales but will offer very little if any ongoing activity and no halo effect on other activity. If we were to compare this to a movie it would be a one-off release and is not something that would form part of a CRM strategy.
Repeat campaigns
This is where a company repeats the same campaign(s) regularly over a period of time to encourage further sales. This ensures that the message begins to be seen by those who may have originally ignored it. It becomes more recognizable over time. It does, however, also become tired very quickly and so can become an irritant for some (‘If I didn’t interact with it the first time why do you keep showing it to me?’). It is also not going to convert anyone who has already converted and so the results will tail off over the period. If we were to compare this to a movie it would be releasing the same movie repeatedly over a period of time, perhaps with some remastering or added effects.
Contact strategy
Through developing a contact strategy your business can develop a meaningful programme of communications that take the customer on a journey and offer real value. This means that the consumer will get new and real value from every communication and may even begin to look forward to receiving the next communication. This is not just about sales or keeping customers but is about a journey. If we were to compare this to a movie it would be a strong series of movies that have been released over many years to continuing popularity such as Jurassic Park or Star Wars.