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.

CRM systems for marketing are reliable tools for enhancing audience loyalty through personalized user data collection. These data are utilized to improve service quality and the products offered.

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.

Following emails, marketing tools shifted to SMS, messaging apps, and push notifications, but the abundance of advertising content led to a decrease in audience loyalty.

This necessitated the development of new customer communication strategies, shifting from mass email campaigns to personalized interactions.

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:

1. Collect and accumulate complete and reliable customer data from various sources.

2. Develop effective tools for analyzing customer data.

3. Select appropriate communication channels with consumers and create mechanisms for effective feedback.

4. 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

Delayed effect: CRM marketing aims to increase customer loyalty to the company, so the increase in sales volume and other metrics does not happen immediately. In this case, the relationship is not direct, and often, proper communication with the consumer not only leads to attracting new customers but also reduces the churn of old ones. In the long term, the implementation of CRM marketing leads to increased final profit.

Platform adaptation difficulties: The system will work well only if marketers and managers are familiar with the platform; otherwise, the opposite effect will occur — difficulty in working with the platform. In theory, the implementation of a CRM system should simplify and speed up the work of managers by automating routine operations and providing flexibility in customization. However, this is justified only with the correct choice of the system and the completion of relevant training by employees. In practice, CRM implementation often occurs without the necessary preparation, so managers need time to adapt to the platform's features and master its functionality.

High cost: A CRM system requires funds, but in the long run, it can bring significant benefits and increase the company's profit. This tool automates and optimizes customer interaction processes, improves service quality, increases customer loyalty, and enhances their satisfaction. Thus, investments in a CRM system can be considered as investments in business development and improvement of its efficiency.

CRM system and marketing automation platform

A CRM system differs from marketing automation software in that it is more sales and customer interaction-oriented, while marketing automation focuses on marketing tasks. However, both systems can work effectively together, exchanging data to achieve better results.

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

CRM marketers have access to various types of customer information:

Email addresses, used for email campaigns, studying preferences and interests, creating loyalty programs, and trigger communications.

Contact information such as phone numbers, links to social media – these identify customers and are collected through order forms or website subscriptions, used for loyalty programs, and special offer promotions.

Gender, age, name — personal information used to populate customer profiles in CRM databases, segment data, and create personalized offers. Collected through user accounts, surveys, order or delivery forms.

Location — geographical address information used to expand customer profiles in CRM systems and for geographic audience segmentation.

Email interaction — email campaigns provide this data. Information on customer interaction with emails is used for audience segmentation and improving the quality of the customer base. Understanding how users interact with messages helps identify their activity and remove inactive users.

Website behavior data — used to analyze user activity and interaction with various elements. Collected from web analytics systems such as Yandex.Metrica or Google Analytics, used for optimizing user experience, configuring notifications, and personalized email campaigns.

Purchase and payment history — generated by the CRM system from user interaction with online order and payment forms. Allows sending personalized offers via SMS, email, messengers, and social media, as well as analyzing reasons for refusals and adjusting online form operations.

Purchase and payment data stored in the CRM system, formed from user interaction with forms. Used for sending unique offers to customers. CRM analyzes refusal reasons and adjusts online form operations.

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

Chatbots can help save on customer support. To do this, you need to gather the most frequently asked questions from your customers from CRM. Then, write down the responses in the chatbot's messages. This will reduce inquiries to the support service.

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 program via chatbot

Loyalty programs

To engage customers, develop a customer retention strategy. This could include reviews, referral programs, upselling and cross-selling, thank-you letters, and loyalty programs.

Bonus program from Sephora

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.

Starbucks rewards 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.

Example of a personalized birthday discount

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.

Example of a referral program from Tesla

Example of referral program from Dosh

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.