Customer relationship management refers to developing and nurturing your relationship with the customer base you already have in order to build on customer loyalty and keep them coming back to you rather than going to your competitors.
Customer Relationship Management
It’s statistically proven that it’s far more expensive to court and convert new/prospective customers than to retain your existing customers. This is because existing customers are always far more likely to make future purchases after their initial purchase and you don’t have to break the bank in advertising fees to attract their attention like you do with new customers.
That’s just a part of it and just a part of the cost, actually, so let’s talk about 3 reasons why you should care about customer relationship management, then check out my various customer relationship management tips video on how to step up your CRM.
Cost – First, as I just covered in opening, it’s much more cost effective to nurture your relationships with existing customers than spending money to gain the attention and business of new customers. That’s not to say that you should ignore advertising and targeting new customers entirely; you should have a healthy mix of both and most importantly remember to never ignore or take your existing customers for granted.
Perhaps the best way to phrase it is that if you don’t work to maintain your existing customer base you won’t survive as a business. You’ll gain an endless stream of one off customers which you’re breaking the bank to pay for in advertising and negative word of mouth will circulate to the point where you’ll even have difficulty bringing on new clients. Instead, with customer relationship management, you can see your profits and customer base increase substantially without spending an extra dime.
More than cost, you just don’t have to concern yourself as much with or rely on ways to get new customers if you have a strong and nurtured customer base; you can just relax and enjoy/take care of what you have.
Income – Existing customers are much more likely to give you repeat business in the future. This is to say that the more transactions you have with a customer, the more they are likely to purchase and deal with you in the future. This is compared to someone who you’re targeting with your ad campaigns who has never tried your product and may not try it even with all of the money you’re spending to get their attention.
Word of Mouth – One additional benefit of customer relationship marketing is that, the better you treat your existing customers, the more likely they will be to recommend you to their friends and colleagues. Existing customers are obviously much more likely to recommend your business than non customers, and a sparkling real life customer review to one of their associates is more persuasive and worth far more than the greatest ad campaign you can put together, again saving you money.