Why does my small business need CRM?

I get asked this question by many of the small businesses I work with. There is a common misconception that CRM is something that requires a huge amount of investment in a complicated software system and that is something that only medium and large businesses need to concern themselves with. The reality is that whilst there is never a bad time to start developing your CRM strategy, when your business is small, the data that you hold about your customers is also small and much more manageable; starting when your business is growing allows you to quickly get a good understanding of your customers’ behaviours; who they are, what they’re buying (products and services) and the value of their business, to name a few (the articles about the customer journey and segmentation to understand why this is important).

What exactly is CRM?

In order to fully understand the benefits of CRM and starting it early, let’s start with an explanation of what CRM actually is. CRM stands for customer relationship management – effectively, it involves getting a better understanding of your customers to help you manage relationships with them, which will in turn help you to communicate with them in a way that will engage them and keep them coming back – it really is that simple! Understanding how your customers interact with your business and what motivates them is what will get them to shop with you again. For example if you run a cake making business, it’s a simple as keeping a record of their purchase. Let’s use the example of Mrs Roberts who bought a birthday cake for her daughter’s birthday last year. Assuming the transaction took place without any hiccups, you could contact her (as long as she has given you consent to) a few days ahead of her purchase date next year asking her if she would like to order another cake from you. Not only have you remembered her daughter’s birthday (always nice to be remembered) but you’re also saving her the trouble of coming to you and better still, going to one of your competitors – win, win! This type of thinking works across different types of businesses – hairdressers, if you know that a perm is typically due to be redone every 6 weeks, contact your customers a week or two in advance to try and secure that repeat business. Again, you’ve saved the customer the effort of thinking about when and where to get their hair done again and secured repeat business. You many need to use an offer to get them back the first time but after that, assuming they’re happy with the result, you’ve secured yourself a regular customer.

Whilst a good approach to CRM will drive repeat sales, there are many benefits to understanding how your customers engage with your business:

• Cross sell/up sell – CRM can help to identify other products and services that could be beneficial for each customer

• Get a better return on your marketing - If a particular group of customers (read more about this in the article about segmentation) only buys specific products and services from you, there may be a good reason for that; patterns in purchasing behaviour will help you to get a better understanding of which products your customers are interested in and could save you money by focusing your efforts here instead of pushing products to them that they will never be interested in.

• Identify new opportunities – Some customers will buy multiple products/services from you and there may be others who share characteristics with these customers but may not be aware of your full range of products and services. Amazon does this on their website, they look at what other customers have bought and make these recommendations to those who haven’t bought these additional products.

• Help manage customer services enquiries – Keeping a record of any previous issues can help manage any future issues more effectively and also, stop customers from having to repeatedly describe the issue if it isn’t resolved on the first contact.

• Create effective reporting – Looking at customer behaviour can enhance your existing reporting. Imagine being able to identify who your most profitable customers are, so that you can reward them for their business or understanding which of your marketing efforts is creating the desired result?

• Automation – over time once you get an understanding of which communications customers respond to, these can be sent out automatically, reducing the time and effort spent on marketing and making your marketing more efficient. Again, this need not require investment in complicated systems, there are lots of free email software providers that allow you for example to send an e-mail periodically, to a specific group of customers.

Where to start?

Firstly, you need to define your business objectives. This should always be your starting point and will allow you to ensure your CRM objectives are aligned: If one of your objectives is to grow your business you then need to think about the CRM marketing objectives that will help you to achieve this. For example, one of your CRM objectives could be to increase sales from existing customers or reaching out to former customers for repeat business:

Internal understanding the existing landscape will help to identify the strengths and weaknesses of the business

​External Understand the factors outside of your business that could impact your success

Review the behaviour of existing customers, do your most profitable customers share any characteristics? Are they shopping online or do they prefer to order by phone? Are they ordering multiple products and services or just one? Identify any shared characteristics and try to attract new customers or nurture existing customers who share these characteristics. Look at the performance of past campaigns. The customer journey is also a good way to identify opportunities to communicate with customers to help achieve your objectives.

What types of comments are being left on your website/social media pages - positive and negative? Do you ask customers to review their experience? Reviews are extremely informative; if you’re already asking customers to review their experiences, try to monitor these regularly and categorise responses to help identify any recurring themes that either need to be addressed or capitalised upon. Is there a product/service that customers are repeatedly asking for that you don’t already cater for? What other external influences impact customer behaviour: What are your competitors doing? Are market trends impacting the appeal of your products and services?

In summary

• CRM is about communicating with your customers in a timely manner with relevant content based on insight to help achieve your overall business objectives.

• Remember, not all customers are created equal, it’s important to understand the needs and motivations of each of customer group so you can respond accordingly. (Read more in the article about customer segmentation)

• When developing your CRM strategy it’s important to develop a series of communications based on the behaviour of these distinct customer groups. Consider at a basic level the needs of new customers vs. those of customers who have shopped with you in the past

• Align the strategy with what customers are telling you about their interaction with your business using both internal and external sources of information

• Consider developing ‘baseline’ communications that are received by all customers vs. tactical campaigns to drive specific changes in behaviour

• Test, test, test…and learn! The importance of testing cannot be over emphasised. Very few companies get it right first time and there is always room for improvement. Look at how customers are engaging with the communications, are your open rates as high as they could be? Are customers clicking through to your website once they open an e-mail? Content should be tailored to each customer group as much as possible but there are some best practices that should always be followed. (Get tips on how to improve the performance of your e-mails)

• If you’d like to discuss your CRM needs, get in contact for a free, no obligation chat.