How a CRM System Boosts Customer Retention Rates

 

How a CRM System Boosts Customer Retention Rates

What are the main customer retention challenges?  

Finding and gaining customers is tough, but keeping their loyalty is even harder. Yet it’s been proven by businesses in a range of industries that investing in ways to keep customers happy can have a significant positive impact on a company’s profitability. 

Harvard Business Review found that reducing customer churn by 5% can increase a business’s profits by between 25% and 95%. Yet, the unique difficulties in improving customer retention mean few companies prioritise this within their service strategy. Some of the challenges businesses face include: 

• Understanding customers: you might understand the customer needs your products meet and how to communicate this to prospects, but do you know what they want after they’ve made a purchase? Having a thorough understanding of your customers, what they want and how you deliver this effectively is key to retaining them for the long term. 
• Measuring lifetime value: customer lifetime value is the measure of how much revenue each  customer generates over their entire relationship with your company. Although this is a complex calculation, it can bring huge benefits to a business’s profitability. At a top level, this figure will help you to understand your long-term profitability and what you can expect each customer to bring in. If examined in more detail, customer value can be reviewed based on specific demographics, purchasing frequencies and overall costs, allowing you to meet your customers' needs and continue to convert them in the long term. 
• Creating a personalised service: to attract prospects to your business, you need to engage with them on a personal level. To retain customers, this personalisation needs to continue, whether it's by reflecting their values, meeting their needs or making them feel valued. This can only be done effectively by collecting, analysing and implementing findings from in-depth customer data. 
• Integrating real-time feedback and data: are you collecting customer feedback on your products and services? If you are, how long does it take to implement the findings from this feedback? Or does it get pushed to the bottom of the draw never to be seen again? Creating a process for collecting and using customer feedback or data quickly and effectively is key to continuously improving your service. 
• Building loyalty and trust: if customers don’t feel appreciated, valued or don’t benefit from a long-term relationship with you, then they won’t stick around for long. Knowing how much and where to invest your time and money to build a valuable relationship with each of your customers is a huge challenge, but one that will pay dividends in the long run. 

By integrating the right CRM system into your business, you can start to address these challenges and begin to improve your customer retention rate. 

How can CRM systems solve these challenges?

CRM software and tools are unique in their ability to help businesses understand and improve their customer journeys. This means that, if the correct CRM system is effectively integrated into a business, it can help teams to overcome their customer retention challenges.

The key features CRMs have which can help teams decrease their churn rate and improve their number of reconversions are: 

• Customer data management: personal details, previous interactions and preferences can all be collected and stored within a single, fully verified database. This means teams have a single source of truth they can work from to segment, analyse and make data-informed decisions about their customer journeys. It can also help teams identify why customers might churn and address these problems quickly and easily. 
• Task automation: whether it's sending a birthday special offer email, automating a response to particular queries or updating a customer’s record based on their actions, all of this can be done automatically within a CRM system. This means teams can spend less time carrying out these tasks and invest more effort in analysing and improving customer retention rates. 
• Personalisation: from adding a first name to an email to communicating with customers based on their preferences or previous purchases, CRMs make it easy for businesses to personalise their service and improve their retention rates. 
• Workflow management: keeping customers happy requires a team effort. Marketing, service, technical and IT teams are just a few of the departments that may need to be involved. Working from a single tool that integrates all the workflow tools they use means each team has a total overview of a customer’s journey and information. This makes communication and collaboration easier and makes it less likely for customers to get mixed messages, poor service, or become frustrated. 
• Tracking and analytics: with the right training, teams can start to use CRM systems to monitor, understand and improve their customers’ journeys and relationships. Plus, teams can be reassured that the data they’re using to make decisions is correct, as it’s automatically updated in real time. 

In short, by integrating a CRM tool into their business, teams can better understand and meet the needs of their customers more easily, and for longer. 

What benefits can this bring to businesses?   

By integrating a CRM system and using the data to analyse and improve customer journeys, businesses can start to improve their retention rate in an effective, strategic way. Specifically, CRMs give teams the insight and data they need to direct their efforts and investment in a productive way. 

This doesn’t just benefit customers by helping businesses meet their needs, but means businesses can make their service more efficient and effective. This includes specific advantages when it comes to customer retention. 

Build long-term relationships

Whether it's automating basic tasks, adding personalisation to communications or helping teams understand their customers’ needs more thoroughly at each stage of the journey, CRMs make building trust and loyalty with individuals easier and more effective. With the powerful data and automation CRMs provide, businesses can start working to customers’ preferences, preempting their needs and tailoring their service in an efficient way. 

Make data-based decisions

CRMs are able to collect, store and analyse significant amounts of data. From the moment a prospect shows interest in your business, their interactions will be automatically tracked and stored within the database in real time. This means teams have an in-depth understanding and complete visibility over their customers’ journeys. By analysing this information, businesses can target their time and money into the areas that most need attention and build a data-informed strategy to improve their customer retention. 

Deliver a better service

Automating basic tasks, personalising communications and internal communications about customers becomes easier and more efficient with a CRM system. This means teams can work together to preempt or deal with problems more effectively, as well as deliver a more tailored service based on customer demographics and preferences. In short, businesses can provide customers with a better long-term service. 

How to find the best CRM for your business  

Although CRMs are hugely powerful tools, if they don’t meet the needs of a business or aren’t integrated effectively, then teams won’t be able to take full advantage of their capabilities. 

To find the best CRM for your business, it’s important that you talk to your teams about the challenges they face with customer retention. This will help you to understand the CRM features you need to overcome these difficulties and narrow down the type of software or tools you need. Once you’ve decided on these features, testing out the CRM system with your team will ensure they can use it effectively within their workflows before you make your final purchase. 

How a CRM System Boosts Customer Retention Rates