The power of CRM

Australian companies spend the majority of their time trying to find the best way to convert occasional customers into loyal devotees. And while it sounds like a tall order, changing customer behaviour isn’t as difficult as you might think.

Growing numbers of Australian businesses are realising that technology is friend, not foe and implementing a Customer Relationship Management (CRM) system, which can offer a competitive edge.

A CRM system works by capturing detailed information about your customers, including contact information, buying preferences, days they prefer to shop and more. CRM also allows you to quickly see which products sell better at certain times of the year, which can help manage stock levels, innovate product lines and roster staff accordingly. And better understanding your customer enables you to create more targeted marketing campaigns.

Who needs CRM?

Experts say CRM should be used by any businesses wanting to encourage repeat sales. That means fashion boutiques, plumbers, solicitors, mobile phone shops and everyone in between should be using CRM to capture as much information as they can about their customers. Using this information to your advantage can be the difference between occasional and repeat custom.

“If there’s no emotional attachment with the customer, then you haven’t got a snowball in hell’s chance of getting that loyalty,” Tony Bailey, CEO of CRM testing organisation Access Testing says.

But a large number of Australian businesses are under-utilising CRM – and retailers are among the worst offenders, according to Paul Bennett, CEO of Sydney advertising agency Euro RSCG. This is partly because retailers adopted the IT revolution so much later than other sectors. In fact, many Australian retailers continue to scramble to offer online retailing, he says.

CRM can be a powerful tool to build customer engagement, Bennett says.

“CRM is a common discipline that’s vastly under-utilised in this country. A lot of businesses have the view that mailing people offers is the same thing as CRM, but it most certainly is not. CRM is about adding value to the customer experience, which is a distinct difference,” he says.

“Many businesses already know a lot of information about their customer, but they don’t utilise it in any way, which means they’re missing out on opportunities to increase revenue.”

Sydney’s Tall Emu writes software to support CRM systems for Australian businesses. CEO Mike Nash says back in the dotcom days, the plan was for everyone to get a presence on the net.

“Then it was all about trading online and being able to accept payments online. These days it’s all about CRM, so businesses need to make sure they’re keeping up.”

Nash says CRM will help a business ensure every single opportunity is tracked and followed up.

“With CRM, within a couple of clicks of the mouse you can pull up all the data you need to run your business effectively.”

And while CRM capabilities and systems vary from business to business depending on a business’ needs and the software used, a CRM system will capture:

• Client contact information.
• Buying habits – when they shop, what they buy.
• Buyer preferences.
• How much each customer spends, enabling you to build a VIP list.
• How long someone has been a customer for.
• Past conversations with clients, which can help get a sale over the line.

Crude systems don’t work

But a number of businesses are making do with crude CRM systems that make life more difficult, not easier, by recording customer buying preferences manually on a spreadsheet or in a word document, according to Justin Hind, chief operating officer of Sydney marketing firm Downstream Marketing.

“You just can’t keep on top of data freshness and sudden changes in customer behaviour by recording information in this way. Businesses need to remember that their best customers are always out there flirting with your competitors. And 75% of customers move on because they didn’t feel like they were being looked after,” Hind warns.

Potential revenue sits dormant for most businesses who aren’t utilising a CRM system,
he says.

“There are customers out there looking for products and services you stock that haven’t heard from you since their last visit, so they go elsewhere.”

“Nearly every business can reach their next revenue or profit target by understanding business behaviour. An old marketing rule of thumb is that it’s five times more expensive to get a new customer than it is to keep a current customer happy,” Hind says.

What’s the cost?

So what will CRM set you back? While the country’s banks and telcos fork out tens of millions to capture information about their customers, it can cost as little as $600 to buy CRM software off the shelf and a further $4,000 to have an IT consultant implement and customise the system to your needs.

“It takes commitment to build the database. Within a year or two, you’ll have critical mass and start to see a return,” Bennett says.

Bright Blue Solutions has been implementing customised CRM systems into SME and blue chip businesses for six years. Solutions manager David Wong advises businesses to ensure they’re dealing with a reputable CRM provider.

“Where some companies get into trouble is they go along the path of hiring a programmer to build their own specialised system. But there’s not much point doing that because there are a growing number of packages you can buy off the shelf that you can tailor to your business.”

Wong recommends a business does some research on reputable CRM providers in their local area, either via Google or by speaking to their industry association seeking recommendations.

One of the most affordable products on the market is from email and SMS marketing services provider Vision 6, which markets itself as an entry level CRM product. The software comes with a built in database functionality and its 6,000 Australian customers can use it to collect and store information on their customers, which costs from $30 a month.

David Lammey, Vision 6’s general manager of operations, says the software allows a business to manage its contacts, record transactions and more. The software is downloadable from the internet. A 90 day free trial (with some limitations) and an on-call support team can be a good place to start, he says.

“My advice to businesses would be not to go big and grand to begin with. You simply need to keep good quality data accurate and up-to-date.”

Do customers mind?

But do customers mind that a business stores all this personal information about them? Bennett says no, who reminds businesses to keep the communications relevant.

“So many people are time-poor, so if you’re able to anticipate their needs and present a solution, then people will respond by showing your business loyalty,” he says.
Nash agrees.

“As long as the information being kept and used isn’t invasive, customers don’t mind. But if you’re asking for customers’ date of birth to send them a birthday card when they’re in your store, then make sure you actually send them one, otherwise customers will quickly become disillusioned.

The benefits of CRM:

• Creates a database of your customers and their buying habits.
• Highlights changing buying habits, enabling quick reaction times.
• Allows a business to innovate its product range to meet customer preferences.
• Builds customer loyalty by responding to shopping habits with special offers and discounts.
• Create more targeted and effective marketing campaigns.
• Records previous conversations with customers, which could help get a sale over the line.
• Helps a business understand when busy periods are and what sells best at certain time of the week or year.
• Helps pinpoint when to build stock levels and roster staff efficiently.