Customer Relationship Manager

There can be various types of customers a business have to deal with. Here are some prominent types of customers −

► Loyal Customers − They are completely satisfied customers. Though they are less in numbers, they can promote more sales and profit. They expect individual attention and demand polite and respectful response from the supplier.

► Discount Customers − They visit the business outlets frequently but transact only when business offers discounts on regular products and brands. They are the ones who buy only low cost products. Their buying behavior changes according to the rate of discounts. They are important to a business, as they contribute a significant portion of business profit.

► Impulsive Customers − They are with the business in urge and buy on impulse. They don't plan for buying anything specific in advance, but they urge to buy anything that they find good and productive at the time when they are in the store. These customers are challenging and very difficult to convince. They are capable of bringing high profit when treated tactfully.

► Need-Oriented Customers − They have a specific product on mind and they often plan before buying. They only buy when they need a product. They are difficult to satisfy. They need reasons to switch to another product or brand.

► Wanderers − They are least profitable ones to a business. At times, they are not sure what to buy. They are normally new in the industry and mostly visit the suppliers only to confirm their needs on products. They like to find out the features of the products in the market but they are least interested in buying.

► High Volume Customers − They are the ones who consume a high volume of products.

► High Future Lifetime Value Customers − The ones who can contribute profits in future.

► Benchmark Customers − They are the ones whom other customers follow.

► Door Openers − They can open doors to a new market for the supplier.

► Inspiring Customers − They force the suppliers to change for betterment. They suggest product improvements or inform the suppliers about opportunities of cost reduction.

Every business regards its customers as a lifetime stream of revenue; losing a single customer can cost the business very high. Lifetime Value (LTV) for a customer is considered to analyze the effectiveness of a particular marketing channel.

For example, if the Churn Rate of a business X is 5% and that of business Y is 10%, then in the long-term, business X would have a larger customer base than business Y, which places business X at the position of competitive advantage and directly influences profit of both the businesses.

A business can generate greater sales volume and in turn greater revenue if it knows its customers well and have good relationship with them. Thus, solely for the economic purpose, every business wants to have healthy relationships with their customers.

Strategic CRM is a type of CRM in which the business puts the customers first. It collects, segregates, and applies information about customers and market trends to come up with better value proposition for the customer.

The business considers the customers' voice important for its survival. In contrast to Product-Centric CRM (where the business assumes customer requirements and focuses on developing the product that may sometimes lead to over-engineering), here the business constantly keeps learning about the customer requirements and adapting to them.

These businesses know the buying behavior of the customer that happy customers buy more frequently than rest of the customers. If any business is not considering this type of CRM, then it risks losing the market share to those businesses, which excel at strategic CRM.

Analytical CRM is based on capturing, interpreting, segregating, storing, modifying, processing, and reporting customer-related data. It also contains internal business-wide data such as Sales Data (products, volume, purchasing history), Finance Data (purchase history, credit score) and Marketing Data (response to campaign figures, customer loyalty schemes data). Base CRM is an example of analytical CRM. It provides detailed analytics and customized reports.

Business intelligence organizations that provide customers' demographics and lifestyle data over a large area pay a lot of attention to internal data to get more detail information such as, "Who are most valuable customers?", "Which consumers responded positively to the last campaign and converted?", etc.

Analytical CRM can set different selling approaches to different customer segments. In addition, different content and styling can be offered to different customer segments. For the customers, analytical CRM gives customized and timely solutions to the problems. For the business, it gives more prospects for sales, and customer acquisition and retention.

The customers make the following sacrifices when it comes to buying from a business −

► Time

This is the time taken to physically arrive at the business outlet or to search for the required product online, and to compare various similar products with respect to specifications and costs. It also includes waiting time to avail the required product and extended time when a business delivers a product with incorrect specification.

► Money

It is the primary concern. Apart from the cost of product or services the business offers, it may be the cost of Value Addition Tax (VAT), surcharge, interest on the late payments, etc. Similarly, there can be discounts for first few customers or under any other schemes.

► Energy

The customers invest energy to get ready, step out for shopping, to drive or to travel from home to the business outlet. The energy also includes fuel consumption for transport.

► Emotional Costs

Purchasing a product can be a very hectic, frustrating, and at times annoying experience for the customers. Right from planning what and when to purchase, budgeting, getting ready and stepping out of the house for shopping, being through the crowd on the road, arriving at the store, dealing with the business staff who don't possess adequate knowledge of the product or schemes, paying exaggerated prices, carrying heavy packages, exchanging faulty or outdated products, etc. At times the customers need to travel in bad weather only to find out that the last piece of the required product was just picked by some other customer.

While buying the product, the customer has to deal with various risks such as financial (regarding product price), physical (possibility of the product turning harmful to customer's body), and performance (possibility of the product failure).

Customer development is an important process in any product development with which a business uses customer feedback to define and develop its product. The four core phases of Customer Development (Four Steps to Epiphany) are as given:

► Customer Discovery

In this phase, a business evaluates how it can address the customer needs or problems. The business knows about the target customer. The business gathers customer feedback about their requirements.

► Customer Validation

This is a phase when the customers understand the idea of the product and validates the product by realizing that the product will be able to solve their problems. In this phase, a business knows about the problem and the solution.

► Customer Creation

The business then evaluates customer feedback, and plans a strategy for product launch and product positioning in the market based on the feedback.

► Company Building

It includes transforming ideas and concepts to execution and scaling the business venture.

The business conducts situation analysis by considering internal and external factors. This is nothing but SWOT (Strength, Weakness, Opportunities, and Threats) analysis to find out how the business is doing with the objective of examining readiness for CRM implementation.

The managers analyze and appraise existing customer strategy, served market segments, market position of business, marketing channels, etc. They try to find out the answers for the questions such as −

► Which customer segments does the business serve?

► What are the marketing and customer related objectives of the business?

► What is the business position and market share?

► What is the cost to customer management?

► How effective the present strategies of customer acquisition and retention?

► Which products/services under what category does the business offer?

► To what extent the customers are aware of the products/services?

► Who are business competitors, and what are profit margins?

► Which channels we use for product distribution? What is the depth of channel penetration?

► Which channels are effective? Which are becoming obsolete?

► How do channel partners find dealing with our business?

► Will the business buy, rent, or create its own CRM? What is each option's feasibility?

Thus, situation analysis serves as a foundation to know what the managers want to achieve by implementing CRM.