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Building Customer Relationships: How To Create the Best Customer Relationship Management Strategy
According to research by Datumize, 81% of companies with good customer relationships perform better than their competitors. The secret? In most cases, it comes down to customer loyalty. The more connected to a brand the client is, the more frequently they shop, and the more they spend.
In this piece, I’ll explain what building customer relationships brings to the table. I’ll also share our unique approach towards creating an effective customer relationship management strategy. Finally, as it’s hard to strategize without the right software, I’ll also add a few recommendations of the best customer relationship tools.
Ready? Let’s begin with a definition:
What is the customer relationship?
Simply put, it’s the relationship between a brand and its customers. Think of it as the guiding light that informs a brand’s strategy at every step of the buyer’s journey. The deeper this connection is emotionally and personally, the more likely customers are to become loyal. And, the more loyal they are, the more recurring income you can expect!
Now that I’ve answered the question, What is the customer relationship? let’s jump to the next question:
What is customer relationship management?
You’ve likely guessed it — customer relationship management (CRM) is the strategy organizations use to manage their connections with clients. The ultimate goal of CRM is to improve customer relations while boosting growth and profitability. Through an effective CRM strategy, brands can:
- nurture customer loyalty
- analyze customer buying habits
- discover new and valuable ways to boost their customer experience (CX)
It’s possible that you’ve heard this term (CRM) before, though in another context. It’s commonly used to describe the software for storing data on customers and leads. Such tools are an inseparable element of effective customer relationship management.
The main benefits of a customer relationship management strategy
All clear? Now, let’s move on to the benefits you can expect if you build your own customer relationship management strategy!
A better view of customers
According to a study by Super Office, 86% of clients prioritize customer experience over the product’s price. And, to know how to appeal to your customers, you need access to data!
With a CRM, you have a whole range of insights at hand, including when someone has become a customer. Let’s assume you’ve just noticed that a client has had their second anniversary with your brand. You can reward them for their loyalty. For example, send over a discount, limited offer, gift ... you name it!
On the other end of the spectrum, you might also spot clients who’ve stopped buying from you. With a CRM strategy, you’ll be able to brainstorm potential re-engagement initiatives.
Increase the efficiency of cross-team collaboration
It’s easier to strategize when all teams have access to fresh data about each client in one place, isn’t it? Your meetings become more productive and actionable. Marketing knows how to communicate the product value, the sales team understands whom to sell to, while product people are able to collect insights for the product roadmap. As you can see, the entire company benefits from it.
More personalized interactions
83% of consumers say they’re willing to give away their data for a more personalized experience. What does this have to do with customer relationships? Through an effective customer relationship management strategy, every interaction can be monitored and analyzed. And the more customer reactions you track, the better you can personalize future interactions. This will help make each customer feel important.
Higher marketing ROI & easier budgeting
If you have access to reliable data, you’ll be able to spend your marketing budget on initiatives that bring tangible results.
Let’s assume you notice that 30% of your new clients come from Instagram. Also, your data shows that they have a 3x longer lifetime value than customers acquired via LinkedIn. In such a scenario, you’d be able to lower your spending on LinkedIn ads and move more campaigns to Instagram.
Now, time for some practice!
How to create an effective customer relationship management strategy
While working on this piece, I found one rather shocking statistic. Namely, according to a piece by Harvard Business Review, the failure rate of CRM strategies is around 90%. The cause for it could be anything — from technology to budget malfunctions. However, according to the author, the top reason is that CRM tools are used for inspection instead of improvement.
I wrote this piece to help you avoid this and other mistakes. So, roll up your sleeves, and let’s begin.
1. Analyze the customer journey, sales pipeline, and customer lifecycle
Begin by asking yourself, “Are there any customer lifecycle stages where clients drop off?” For instance, you might notice that you have a lot of customers on a free trial, but few of them convert to paid clients. This is an example of a situation worth investigating as you work on your client relationship strategy.
By analyzing your customer journey and lifecycle, you’ll identify key information for your business.
2. Collect customer data
Collecting customer data is the next step in building customer relationships, as you now know what kinds of information are crucial for customer acquisition. The goal at this stage is to understand your target segment’s buying habits and behavioral trends.
While working on your CRM strategy, you should consider gathering data from sources such as:
Product analytics tools
These tools let you collect data on product interactions and assess on-site/in-app processes. Think of insights such as the number of active users, the time spent in the application, most frequently used features, etc.
Here are just a few things you’ll be able to learn from reviewing your sales data:
- what the average basket size for returning customers is,
- how well people respond to upselling campaigns,
- how the order size grows for various customer groups over a chosen period.
Live chat and chatbot reports
Analyzing the way your customers interact with your company will help you to make the necessary tweaks and improvements. Do they talk to a bot or ask for a support worker straight away? Are they satisfied with the quality of the chats? Are there any repetitive questions you should cover in your help center? Data from live chat will give you a tonne of insights if you ask the right questions.
Surveys give you access to data you can’t find elsewhere. How so? You can collect responses to customer satisfaction questions, like Net Promoter Score or CSAT. You can also ask clients to evaluate processes and newly introduced features via the Customer Effort Score. And these are just the tip of the iceberg! With survey data, not only will you be able to understand customer sentiment, but you’ll also collect ideas for customer experience improvements.
I discuss how you can apply these tools in detail further in this article. Let’s move on to the next step.
3. Create a roadmap for your objectives
Each business has different goals, which means you’ll need to decide on the key objective and how the entire team can work towards it. For this, your brand will likely need to use custom tools to support your specific objectives.
Which ones will work best? You’ll have to decide whether you can effectively use a standard, cloud-based CRM or require a personalized, tailor-made system. To do so, you should brainstorm and write down all of your business needs. Create a strategic roadmap that bridges each objective with a course of action that will support each goal. You’ll need to know what specific customer data points you need to track and which tools will better analyze and interpret this information in a format that supports your objectives.
4. Create customer accounts in your Customer Relationship Management software
Got all your data and roadmap in place? It’s time to create client accounts in your centralized system. They will become an asset that you can use to further develop relationships and create customer profiles.
If you can build individual customer accounts, which also include data from touchpoints like loyalty cards and online behavior, you’re even further into successful business growth territory.
5. Set KPIs
To measure the effectiveness of your CRM strategy, I recommend setting KPIs. Also known as Key Performance Indicators — they serve as a benchmark you can compare your results against.
As in the case of your roadmap, it's important to involve the right stakeholders in these processes. You need to have internal buy-in from everyone involved — from sales to top management. That being said, everyone should know what role they play within the CRM strategy. It’s not just your Customer Success team who must care!
6. Analyze the data in your CRM continuously
Data is like a living, breathing organism: It constantly evolves. And so it's important to analyze your CRM data on an ongoing basis to identify changes and new behavioral patterns. As a result, you’ll always be a step ahead, ready for situations that need your instant reaction.
Top tools to use for customer relationship management
In the previous section, I briefly mentioned some of the tools you can use as part of your CRM strategy. I’m now going to discuss them in more detail and recommend a few solutions you can use.
CRM software — Pipedrive
At this point, I’m sure you’ll agree with me that this one is a no-brainer! CRM software provides you with both a bird’s eye view and a detailed look at your customer base.
I recommend using a solution like Pipedrive which, among other things, lets you:
- see where your customers and leads are in the sales pipeline
- create customizable reports to identify so-called “winning patterns,” i.e., what encourages clients to buy
- track your entire customer communication, including phone calls, emails, and chat messages
You can integrate Pipedrive with communication software such as LiveChat, which I will discuss next.
Live chat & chatbot software — LiveChat
Year over year, the bar for customer communication is being set higher. 90% of customers now expect brands to respond to their queries immediately. And let’s be honest, not all brands can afford 24/7 support. Here’s where using a solution for human-to-human and customer automation will do wonders.
LiveChat is an example of a tool that offers a “standard” chat solution as well as an AI bot that can answer questions around the clock. It also integrates with several tools and data sources, including the above-mentioned Pipedrive.
By using LiveChat, you’ll give your customer-facing teams a way to quickly look into each client’s communication, purchase history, and even survey responses. As a result, they’ll be better equipped to respond to requests. They’ll also be able to spot recurring issues and use them to inform your customer relationship management strategy.
Product analytics tools — Mixpanel
You can use product analytics tools such as Mixpanel to check:
- how many active users you have
- which features are the most popular
- where and why users drop off
- which users stay with you the longest, etc.
The software promises to support businesses at all stages of the customer journey — conversion, engagement, and retention.
Mixpanel is the only product analytics tool that allows you to take action on the metrics you track from within the application itself, in a format that even the least tech-savvy can understand.
Surveys — Typeform
Surveys are another customer relationship tool I recommend using. They are a great alternative to talking to your customers face to face. Because let’s be real: You don’t have enough time to schedule a call with every single client (or do you?;))
If you collect customer feedback via surveys, you can keep track of how their satisfaction changes over time.
One such piece of software is Typeform, which lets you use loads of ready-to-use customer surveys. Typeform declares that the average completion rate is as high as 57%. And no wonder — their design is so pleasing to the eye that it's hard to walk past them indifferently.
Most importantly, the tool integrates with a number of other tools, including CRM software such as Salesforce and Pipedrive.
Maintaining good customer relationships — the key to high customer loyalty
I hope that by now you realize that without a customer relationship management strategy it’s impossible to grow your business. Among other things, it gives you a good overview of your customer base, helps you optimize your marketing spending, and improves your cross-team collaboration.
To wrap up, you should start off by gathering data from all your tools: surveys, emails, chat… everything at your disposal! Next, you need to create customer accounts in your CRM, build a roadmap, set relevant KPIs, and analyze your customer journey and sales pipeline continuously.
Speaking of customer relationship tools, it’s entirely up to you to decide which ones to use. Just make sure you’re using the best-fitting solution from the following categories: CRM, livechat & chatbot, product analytics, and surveys. Good luck, and let us know how it goes!