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November 17, 2019 Conecta Software
ANALYTICS GUIDE

Resources for Segmentation

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CRMCustomer Relation Management is the management of customer relationships. It is a key tool in the digital transformation, for the growth data driven of the company.

While the ERP is focused on the company's resource planning, the CRM has the focus on the clients.

 

The purpose of the business is to create and maintain a client

Peter Drucker

 

 

CRM, process management and software

To take advantage of the benefits of a CRMIt is important to understand that it is both a management model and a software. As a software, it has modules for marketing campaigns, communications with potential customers and monitoring of customers already acquired in order to provide them with value.

The CRM allows you to have all the data in one place and that it can be easily updated at any time.

As a management model, the function of the CRM is to put the customer first. When the company analyzes each transaction through the eyes of the customer, it cannot help but provide a better customer experience, which in turn increases loyalty to the company.

 

Almost all quality improvements are achieved by simplifying design, manufacturing ... design, processes and procedures.

Tom Peters

 

 

Objectives to be achieved with the CRM

The general objective of implementing a CRM in the company is to increase customer loyalty and consequently improve the profitability of the business.

This is divided into 3 specific objectives:

 

  1. Customer acquisition
  2. Customer retention
  3. Increase in customers

 

Customer management before the arrival of the CRM

The software CRM is constantly innovating, enriching itself with new technologies, either Big DataThe following is a list of the most important IoT. Thanks to the new CRMIn addition, we have increasingly accurate estimates of the likelihood of a sale closing and the factors that actually influence it.

The philosophy behind it, however, is not new. It's as old as commerce. It's easier to sell to a customer you already know and who already knows you. The cost of acquiring a customer, the CAC, is lower for a customer who has already bought from us before with a good experience. In other words, "Better a known customer than a new one«

Many costs must be added to the cost of acquisition, from travel to the time spent on each meeting, both tangible and intangible.

Records of purchases and sales by name of buyers and sellers are over 20,000 years old. These rudimentary registers or databases used by the first accountants have been perfected throughout the commercial history of all companies.

 

image with a business card holder general

 

From the rolodex to the computer

Computers from the 1950s and 1960s would give these records a new lease on life. The rolodex however will keep a preferential place in many office desks until well into the 21st century.

The rolodex was high tech in the 1950's. Thanks to its format, it was able to advance through hundreds of contacts and get their contact information handwritten or typed.

It is here, through the automation of tasks allowed by computers, that the CRM goes beyond accounting to become a key tool in other areas of the company, mainly in sales and marketing.

 

The 1980s, the CAC and the LTV

In the 1980s, database marketing was born. Statistical calculations allowed first estimates of probability about the reactions of potential customers to certain marketing campaigns.

The objective of this new marketing was to open a two-way communication or dialogue with customers, achieving a competitive advantage and no longer depending on traditional media that are in decline.

The pioneers of direct marketing using customer and prospect databases are Robert and Kate Kestnbaum. They developed metrics to measure direct marketing.

Examples of key system metrics CRM are the CLTV, the CAC and the RFM.

 

CLTV - Customer Lifetime Value:

The net revenue value a customer generates while maintaining a satisfactory business relationship with you

 

CAC - Customer Acquisition Cost:

The investment we have made in getting a potential customer to purchase our product or service

 

RFM - Recency, Frequency, Monetary

Customers are placed in sub-segments according to age, frequency and monetary value of previous purchases

Merlin Stone and Robert Shaw published in 1988 the book "Database Marketing: Strategy and Implementation«

Their goal was already to increase sales and improve customer relations.

 

"Database Marketing is an interactive approach to marketing, which uses individually addressable marketing media and channels (such as email, telephone and sales force): to extend support to a company's target audience; to stimulate demand; and to stay close to them by registering and maintaining an electronic database memory of the customer, the prospect and all business contacts, to help improve all future contacts and ensure more realistic marketing".

 

1999 - internet, cloud and SaaS

In the 1990s, many systems were developed CRM. The main innovation was the CRM and electronics and, on the other hand, Salesforce with cloud technology and the new disruptive model of Software as a Service, or SaaS.

 

 

How does the CRM the company to manage its customer relationships more effectively?

 

CRM uses by department

The function of a Rolodex is to provide access to customer data, and this is crucial for managing relationships. A system CRM takes the Rolodex to another level.

The filing system in a physical Rolodex involves choosing a single criterion; - usually in alphabetical order by last name. A CRM allows you to group customers by different categories, in addition to the alphabetical one.

The CRM allows not only to store, but also to label and filter the contacts. By organizing the customer database more efficiently, we are in a better position to identify our target audience.

For all these reasons, we found the CRM mainly in the sales, marketing and customer service departments.

These departments can achieve better results through access to relevant and up-to-date information about their customers.

 

Sales

The sales team learns more about your customers and prospects to better manage your sales channel. In addition, the CRM helps you automate daily tasks, such as scheduling follow-up calls at an agreed interval.

 

The first rule of any technology used in a business is that automation applied to an efficient operation will increase efficiency. The second is that automation applied to an inefficient operation will increase inefficiency.

Bill Gates

 

 

Marketing

The information from the CRM helps guide the profiles of buyer person and JTBD (demographics, location, needs, interests, etc.) when planning new campaigns The CRM also measures the ROI in their marketing activities and campaigns so that they can be continuously optimized.

 

Customer Service/Support

The CRM is a valuable tool to help maintain and retain existing customers. The database CRM provides information about a customer's previous problems and interactions. This allows the operator to better manage the current situation and plan future activities and communications with the customer.

 

Human resources

Customers can be divided into two types: internal and external. So far we have talked about external customers. The human resources department manages the internal customers, the employees. If we want to improve customer satisfaction, the starting point is employee satisfaction. There is a direct relationship between these metrics.

The CRM doesn't just mean a lead management system or a customer database. It helps improve the employee experience. It provides tools to facilitate collaboration between departments, a common source of conflict.

 

 

Types of CRM

 

CRM is a strategic tool

The CRM is a strategic tool, whose function is to gather information on customers and market trends, in order to offer a better proposal to the customer.

It is focused on winning and retaining customers, both internal and external, by creating and delivering better value propositions than competitors.

The method is done by capturing and collecting data from customers and market trends. Through the analysis of information, the company can adapt to the needs and expectations of its ideal customer. It is in a good position to recognize the purchasing behavior of customers and offer them better proposals.

This is subdivided into CRM collaborative, operational and analytical.

 

1. Operational

This system includes all business processes and is customer focused. This includes services, marketing and sales.

Earlier we talked about task automation. These are the main ones included in the CRM operational:

Sales forceThe following are some of the crucial sales and administrative functions of the sales force team

MarketingCustomer segmentation and customer data integration (CDI: process of consolidating and managing customer information from all available sources)

Service SalesProduct: diagnoses and solves problems related to products

 

2. Analytical

Companies with large customer information databases run the risk of being "data rich and information poor". As a result, considerable attention is paid to data analysis. For example, companies often segment their customers based on analysis of differences in customer behaviour, needs or attitudes.

The CRM Analytics collects, stores and captures customer data.

Salesproducts, purchase history

FinancialsPurchase history and credit score

MarketingCustomer response rates to marketing campaigns

 

3. Collaborative

The CRM collaborative draws value from customer interactions. It uses all communication systems, such as direct interactions, on the website, social networks, email and the call center.

 

4. Social

The type of CRM The most recent is the Social CRM. That's because social networking sites like Facebook, Twitter, LinkedIn, YouTube and other Google products, and messaging platforms like WhatsApp and Messenger, have completely changed the way we communicate, share, and co-create information. Companies tend to use social media to advertise their brand and products and also to communicate better with consumers.

 

What KPIs are monitored in a CRM

The CRM provides valuable information about customers. Thanks to it, the company can grow data driven.

A KPI is a key performance indicator. We invest in customers to generate revenue and be profitable. These actions make some customers valuable in terms of lifetime value, but there are always some customers who reduce profitability. We need to identify these patterns of behaviour, segment customers and act accordingly.

We have already talked about the CLTV, the CAC and the RFM. These metrics are related to each other.

 

 

RFM - the metric that measures the value of a customer

Thanks to the information collected in the CRMIf you are a business owner, we can identify the most profitable customers and build stronger relationships with them. This knowledge increases sales revenue as you know the optimal time to repeat sales.

It is the basis for defining our buyer person real, as we get to know our business better. At the same time, it allows us to identify and take action against moralla customers.

Recent - When did the customer last buy?

FrequencyHow often do you buy?

Monetary valueHow much do you spend?

 

CLTV - Customer Life Time Value

The CLTV or LTV is the net value of the income that a client generates to us during the time that he is our client. For them, the RFM is multiplied by the time the client has been with us.

In order to know this value, we multiply the average expense with the recurrence during the year and the number of years you have been a client with the company.

 

LTV= Average Expenditure x Recurrence Acquisition x Customer Life

CLTV is closely linked to ACC and both to CRM. The probability of selling to a potential customer is much lower than selling to a loyal customer:

Potential: 5 - 20%

Loyalty: 60-70%

Therefore, it is important that the LTV is lower than the CAC.

 

CAC - Customer Acquisition Cost

This metric refers to the economic investment we spend on each new client.

If we spend 1,000 euros on an online marketing campaign and have gained 100 customers, the average CAC will be 10 euros

 

Churn Rate

It calculates the percentage of clients or subscribers who stop using the services offered by a company during a given period of time.

To calculate the churn rate, we divide the number of lost customers in a month by the total percentage at the beginning of that month.

If at the beginning of the month we have 100 clients and during the month, 5 of them drop out, the churn rate is 5%.

The CRM can help reduce this loss rate. This is possible because the CRM provides information on indicators related to the abandonment of previous clients. We can set up alerts to deal with "at risk" customers.

 

CRM software solutions

Choosing a software CRM requires an analysis of the business needs and comparing these with the characteristics of the software available on the market. When choosing, one of the determinants must be that it is integrated with the ERP of the company.

Salesforce

Odoo

ZohoCRM

SugarCRM

 

One system CRM helps to integrate not only the contacts of each employee, but all the contacts in the company. These in turn are integrated and enriched with other tools that can simplify the contact management process to provide better results and excellent customer service.

 

Next resources for Segmentation

Selling online or making our company known through our website is really just opening another channel of communication and interaction with our customers.
Depending on the objective, several data sources can be combined and the analysis process will also vary. Here is an example of data collection with the SemRush tool
In this article we will see the most common logical fallacies that can be found and that should be avoided in data analysis. As we've seen in the articles on Big Data y Small Dataor the summary of "A sea of data"We have more data than ever before. We can use tools to collect some of this data, shape it, interpret it and try to leverage those representations to make better business decisions.
It is very common to relate technology, innovation and business as an almost continuous whole through which the most advanced management strategies are directed.
What are the KPIs of an Ecommerce? Why do we need them and how are they used to get better results and more profit?
 

Download our free ebook: "Practical Guide to Selling Online"

We have developed a complete guide to these steps. It includes strategy questions such as the different business models available, how to create a marketing strategy and what data to analyze. You can download the ebook for free here:

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