Customer relationship management (CRM) is the system and process that a business has in place to measure and improve how the company interacts with and influences customers. The goal of customer relationship management is to gather enough information about a customer and use it well enough to increase that customer's positive interactions with the company, thereby increasing that company's sales.
Why should you use a CRM Solution?
Customer relationship management Solution is extremely crucial because:
- Creating a bond with the existing customers ensures that you won’t have to work on getting them again like new traffic.
- Having a bond with customers increases the chance of making numerous purchases so a bulk of that first-time buyers is not limited to just that before perishing.
- When you make your customers feel welcome even after the purchase, they too start feeling some loyalty towards your brand.
- Since the brand image is already created before all this even begins, customers will have something to relate to or look up to when they make multiple purchases.
- When you maintain a strong bond letting the customers know they are valued, the customers become your friend.
- With prolonged good customer relationship management, customers feel obliged or happy to advocate your brand to others and that’s how your business rises to success and permanence.
What return from CRM should you expect?
Whilst the value of your CRM may be intuitively clear, how do you measure the return? Will you apply this to non-financial or financial elements? You will need to choose certain metrics and then track them, such as:
- Annual revenue: An improvement in this area will show a positive ROI but this is a very basic way of measurement. Industry conditions, economic changes – all can affect revenue so answers may be misleading.
- Precise indicators of revenue: You may wish to look at sales or number of orders per customer or even total sales revenue per customer. Sales should automatically increase due to improved communication between your business and your clients.
- Customer retention: Whilst this may not be a financial measurement, it should be on the increase. Don’t expect a revolutionary shift as some may drop off due to the normal customer lifecycle trend. Whilst some may remain for years, others may be transient, with much depending upon your industry sector.
- Reduced costs: As efficiency improves, costs should reduce. Admin time will be lessened and marketing to customers who have low response rates will lessen.
An increase in efficiency and productivity are the minimum returns that you should expect from your CRM. Whether or not they feature in the calculation of your ROI, they are soft benefits that can make your team more productive and efficient. The new software should make the sales and marketing departments work together far more effectively, enabling unproductive and wasteful marketing or selling strategies to be removed.
What is ROI?
Return on investment, or ROI, is a mathematical formula that investors can use to evaluate their investments and judge how well a particular investment has performed compared to others. An ROI calculation is sometimes used along with other approaches to develop a business case for a given proposal. The overall ROI for an enterprise is sometimes used as a way to grade how well a company is managed.
How to improve the ROI of Your CRM Solution?
There are several strategies you can use to improve your CRM performance.
- One is using your CRM data to analyze your customer base so you can target marketing efforts at your ideal prospects. By sharing your CRM data with your marketing team, you can focus your promotional campaign on prospects who are more likely to buy from you, increasing your sales conversion rate and the efficiency of your sales calls to sales ratio.
- You can also increase your sales conversion rate by using your CRM tool to automate the steps in your sales process. For example, you can use your CRM analytics to identify your hottest prospects, and then have notifications sent out to your sales team notifying them of which prospects to prioritize. A user can also create a procedure for scheduling follow-up contacts with prospects and have automated reminders sent out when it’s time to initiate a follow-up.
- Investing in additional features, integrations or customizations, automating critical workflows and business processes within your system can take it to the next level. All this will further help increase productivity and thus increase your ROI.
- Choosing which metrics to track is the first step towards measuring your CRM return on investment. You can then establish a baseline for comparison with your CRM performance and compare the result with your expenses to gauge ROI. Finally, the ROI can be improved by making strategic adjustments to leverage your CRM software and optimize your sales performance.
- Maintaining consistency in all your business operations ensures better credibility for your brand. By investing in a good CRM, you can offer your customers hassle-free and consistent services. Along with enhancing your brand’s credibility, you can increase your customer base and enhance the overall ROI of your business.
VTiger is one all-in-one open source CRM providing Sales, Service and Marketing solutions and we are one of the premium partners of VTiger. Contact us to learn what VTiger Cloud CRM V9 services might look like for your organization. Allow our representative to either call you in 24 hours or E-Mail you for more details about our services - Click Here.