One of the questions regarding CRM that businesses ask most often is
“Which CRM should I use?“
or “Which CRM can you recommend?”
Of course, I have my preferences if someone is just starting out on their Customer Relationship journey and I strongly recommend that if a business does not have a CRM, they should get one. However, if a business is already using a CRM system, “Which CRM?” is the WRONG question to ask! Why? Because every CRM has its pros and cons and everyone of them is great at some things but maybe lacking in other areas. No CRM is going to provide a business with a silver bullet aiming at the holy grail of lead management and winning sales opportunities.
I can recommend and provide solutions which may save a few pounds on the bottom line or which can offer greater flexibility but, and it’s a big BUT, what is the first question you as a business in the 21st century should be asking about CRM systems?
The question a business should be asking is “Why CRM?” or “What is the goal of a CRM?” There are long-winded answers about which CRM will maximise your customer relationships, nurture your customer’s journey through to a sale, improve customer acquisition and customer retention, follow up with up-sells and cross-sells etcetera etcetera etcetera.
However, there is a very simple objective that anyone using a CRM needs to aim at:
To be the centre of everything happening in your market sector for your customers.
In short: Become the HUB!
Become the Hub!
It is generally accepted that acquiring a new customer costs five to ten times more than retaining an existing one, with most stats pointing towards 7 times. In some businesses, taking into account the lifetime value of a customer, this stat can rise to an incredible 20 TIMES more!! Not only that, but repeat customers spend, on average, 67% more (see What is the Cost of Customer Acquisition vs Customer Retention? on LinkedIn Pulse for more stats). So once a business knows the average lifetime value of a customer, they can start getting an idea of the real importance of becoming the hub for their customers today, tomorrow, next month, next year….. This will of course vary from sector to sector but let’s look at 3 examples.
In the property sector, let’s say that the average consumer is now moving every ten years. If an estate agent has 1000 people in their database/CRM/contact lists, based on 10% conversion rate, they should be carrying out about 100 transactions every year. If the estate agent is not the Hub for their customers, this will be difficult to achieve even with agent-to-agent referrals.
If you are an estate agent, being the Hub means if people are
- thinking about selling, they call you
- thinking about buying or someone they know is thinking about buying, they call you
- looking to refinance their home, they call you and not their bank
- looking for home valuations, a gardener, a handyman, a plumber, etc they call you
(For an American perspective on this, take a look at this video from Coach Tom Ferry)
Painter & Decorator
A painter & decorator goes in to paint a front room for a new home owner. They notice that the rest of the house is also looking tired but they realise that the new home owner’s budgets are probably tight after the house move. If they never look at a strategy for becoming the Hub i.e. they never get in touch with the home owner again when budgets have sorted themselves out, they may
- never get the job to paint the rest of the house 6 months down the line
- never get the opportunity to get a referral fee from a kitchen and bathroom installation partner 12 months later
- never get the call to paint the nursery for a new arrival
- never the chance to quote for repainting the customer’s new home after their house move after 5 years
- never get the referral fee for the sofa they bought from an interior designer
With the introduction of online services from the government, accountants may find themselves, rightly or wrongly, with less work to do for their clients. Their work is becoming increasingly reactive. Most individuals and small business owners do not have the time (or inclination) to keep abreast of changes in the financial landscape. However, with a bit of analysis and forethought, accountants can become the Hub in order to
- provide information and advice about upcoming government grants and tax incentives etc
- offer special promotions at certain times of the year to help with financial planning
- gain referral fees by implementing mutually beneficial strategic joint ventures/partnerships with related service providers
- recommend specific tips and advice for all areas of a client’s business (technology, sales, marketing etc) and gain referral fees
Becoming the Hub
Basically, the strategy is to communicate with everyone in your database/contact list/CRM on a regular basis. For some businesses, this may mean every week, for others it may mean every 3-6 months etc. It is important that notes created for each customer provide information about things that are important to them (i.e. context specific) so that when you contact them you are able to have genuine, meaningful conversation about how the business is going, how the family is growing, etc.
In short, before you ask “Which CRM?“, ask yourself “Why CRM?“. Put the wheels in motion to ensure that when your customers think about anything to do with your market sector, you and your team become the people they turn to for advice for EVERYTHING!
If you would like to see how your business can benefit from strategic Customer Relationship Management to improve your processes and customer relationships in order to become the Hub, then please get in touch to request a free CRM consultation.