CRM Marketing: What It Is, Why It's Needed, and Who It's For
CRM marketing is a set of tools that nurtures relationships with existing and potential customers.
The history of CRM marketing
Emails pioneered CRM marketing. Email campaigns were actively used for some time, but soon became less effective as conversion rates gradually declined. New marketing methods emerged as replacements.
The demand for a tool to streamline and enhance customer communication, as well as to expand management capabilities, led to the inception of CRM systems in the late 1980s.
In 1987, Conductor Software released the first version of CRM ACT!, which boasted nearly all the features of modern management systems. This CRM system integrated customer databases with sales analytics tools.
In the mid-1990s, the "mother of all CRMs" emerged - a system developed by Siebel Systems. Siebel CRM stood out for its numerous sales and customer needs analytics tools. Thanks to this system and its counterparts, CRM marketing became a separate and effective direction.
What is CRM marketing and how does it work
CRM marketing is marketing communications based on detailed personal user information. This data is captured in CRM systems, giving rise to this term.
Setting up CRM marketing involves several stages:
- Collecting customer information into one system: CRM consolidates data from various sources into a single database, gathers customer information from communication channels, and creates a personalized profile card for each customer, storing this data.
- Identifying customer needs at different interaction stages: At this stage, what the user needs to move to the next level in the sales funnel is determined. The customer's path is mapped out, and their common obstacles are identified.
- Segmenting the customer base: Customers entered into the database are divided into groups according to their needs, preferences, and other criteria, allowing for the creation of multiple segments. A unique offer can be developed for each segment. Each customer is assigned a specific status, and an individual interaction scenario is developed based on this.
- Configuring communication channels: Data analysis identifies the most effective customer interaction channels: email campaigns, push notifications, SMS, messaging apps, calls, etc.
- Establishing communication to achieve the goal: At this stage, a CRM marketing strategy is developed. Data analysis helps determine the optimal ways to interact with users and develop personalized offers that take into account the customer's status, behavior, and stage in the sales funnel. This helps establish effective communication, adjust the strategy, and attract customers to make purchases, thereby increasing the number of loyal customers.
Commercial offers are developed based on an understanding of the unique needs of the audience. Customers are recommended exactly what they need at the moment.
Goals and objectives of CRM marketing
The main goal of CRM marketing is to increase customer loyalty and retention through effectively structured communication. To achieve this, it is necessary to:
- Collect and accumulate complete and reliable customer data from various sources.
- Develop effective tools for analyzing customer data.
- Select appropriate communication channels with consumers and create mechanisms for effective feedback.
- Develop tools to assess customer reactions to messages for adjusting the current or creating another communication strategy.
All these tasks must be addressed together. Only in this case will it be possible to create a unified, convenient, and flexible communication management system.
Advantages of CRM marketing
The ability to control interactions with customers and leads is the main advantage of using a CRM system. Customer profiles, interaction history, and service issues are available for viewing. This data is stored in one place and accessible at any time.
CRM system has the following advantages:
- Additional segmentation and personalization capabilities. The most profitable customers are identified to make profitable offers to them in the future.
- Contributes to the creation of relevant marketing campaigns. Offers are tailored to users based on their position in the marketing funnel.
- Increases customer retention and loyalty.
- Ensures revenue growth and reduces marketing costs.
- High-quality relationships with users increase their satisfaction with service and increase LTV and loyalty.
- Increases return on investment (ROI) by increasing customer lifetime value (LTV).
Disadvantages of CRM marketing
CRM system and marketing automation platform
When CRM marketing is not needed
CRM marketing is not suitable for everyone.
It requires significant investment, including the implementation of a large number of technical solutions and their regular maintenance. Bonus programs, promo codes, discounts, and promotions also entail some costs.
It is not suitable for businesses focused on short-term goals. The return on investment in CRM marketing takes a long time, and the first positive results are visible only after several months.
For businesses where repeat purchases and loyal customers are absent, CRM marketing is not relevant. However, implementing a CRM system should be considered in the long term for any company.
It is important to understand that CRM marketing utilizes CRM in combination with additional tools.
When to implement CRM marketing
- Large customer base. In such a scenario, it becomes difficult to provide individual communication manually, so automation is necessary.
- High product cost or high customer value. It is essential to consider the profit from a single purchase or the total amount of purchases made by a customer over time. If products have a low cost or do not involve repeat purchases, the expenses for personalization may not be cost-effective.
- Ability to collect customer data. Information about customers is necessary to facilitate personalized settings.
CRM marketing is most commonly used in the B2C sector with a large user base, but it is also successfully applied in the B2B segment when dealing with numerous buyers.
How to implement CRM marketing in business
Start by implementing a CRM system in your business that will encompass all communication processes. It is important that all communication with your customers occurs solely through the CRM system. Also, dedicate enough time to prepare and train your employees.
- Conduct an analysis of communication channels. You should have a clear understanding of which products are actively purchased and where your customers come from.
- Implement cross-channel analytics — collect data from all channels. If there is no ready-made solution for cross-channel analytics in CRM, integrate a third-party cross-channel analytics service. This way, you will track every action of your customers.
- Organize the process of collecting analytical data. Determine the parameters that need to be recorded in the CRM system.
- Use monitoring and analysis of all data to identify the advantages and disadvantages of business processes.
- Develop and implement a CRM strategy. Data analysis and the selection of effective communication channels are important steps in strategy development.
- Evaluate the results and make changes to the strategy.
- While implementing CRM strategies, track changes and results. Look for methods to improve communication, address shortcomings, and achieve business goals.
Information used in CRM marketing
What businesses are suitable for CRM marketing
The high cost of implementing CRM marketing imposes certain limitations on its usage. Implementing CRM marketing tools is advisable when there is a need to implement:
- Promotional offers — these include not only discounts but also promotions for customers who have already called the company or visited the website, viewed products but have not made a purchase;
- Loyalty programs — CRM systems can launch a points accumulation system based on the purchase amount or quantity of items in the order, which customers can later redeem for prizes or discounts on subsequent purchases;
- Discount programs — with the help of CRM tools, it is possible to develop cumulative and personalized discounts for specific categories of customers, such as motorists regularly buying accessories for their cars, parents looking for gifts for New Year, etc.
CRM marketing for sales is widely used in companies operating in niche market segments where it is important not only to attract new customers but also to retain existing ones.
- The tourism industry — personalized offers increase and maintain a steady flow of guests in hotels, attract tourists to new products and programs;
- Automotive industry — this sector is characterized by high product costs and customer involvement. Here, CRM can help accurately group customers and develop personalized offers for each segment;
- Alcohol and tobacco industry — manufacturers and sellers of alcohol and cigarettes are not allowed to advertise their products by law, so for them, CRM is one of the few channels of interaction with customers;
- Manufacture of everyday consumer goods — in this industry, there is always a large and active audience of customers who need to be segmented and constantly stimulated with new offers;
- Additional education — here it is important to retain customers for as long as possible by encouraging their interest in learning something new;
- Insurance and finance — due to constantly changing and extensive data in this industry, it is possible to constantly create new product options, and loyalty programs and various offers maintain customer engagement.
Examples of CRM marketing implementation
Customer chatbots
With its help, you can inform your customers about new products, services, promotions, as well as perform other tasks, such as introducing a loyalty program through the chatbot.
Loyalty programs
Most companies focus on acquiring new customers rather than retaining existing ones. However, retaining an existing customer is five times cheaper than acquiring a new one. Returning customers typically generate more revenue for a company. To retain familiar customers, it is necessary to use an online CRM marketing tool such as a loyalty program.
Personalization
CRM services gather data for personalized marketing campaigns across various communication channels, using customer information such as age, location, purchase history, and product views on the website. This information can be actively used for personalized offers to your customers.
Conversion boosting programs
Using referral programs attracts new customers. The company motivates customers to recommend the product to their friends and family. Everyone receives a reward for successful recommendations. Referral marketing programs provide a 30% increase in conversion.
Conclusion
CRM marketing is an effective approach aimed at better understanding customer needs. CRM for marketing plays a key role in customer retention, creating relevant offers, increasing repeat sales, and turning one-time buyers into regular ones.
Tracking changes in consumer behavior, analyzing user data, researching the audience, and developing a CRM strategy are all necessary for effective CRM marketing.
