Why CRM is critical for small businesses for customer retention?

1. Introduction

Customer retention is usually defined as the amount of customer contact a company makes with its clients over a given period (typically one to two years).

However, this isn’t exactly true. Customer retention, in fact, is the sum total of how much you actually do with your customer after they purchase your product.

In other words, customer retention is how much money you make from each customer that purchases your product over a range of time (typically one to two years).

The true customer retention rate is not just how many customers you actually have and whom you serve. It’s also how often those customers purchase your product again (or “re-purchase”).

To get a better view of customer retention and usage, you need to check out what happens when you split customers into two categories—those who purchase within the first year and those who do not continue purchasing from you after that time—and then analyze what happens next. From there, it will be easier to separate out why some people continue to use your product on a regular basis and others don’t.

If we can understand which customers are renewing their accounts and which ones aren’t, then we can know valuable insights from our CRM system about what customers really want and what messages will really resonate with them. As we mentioned earlier, this knowledge would allow us to advertise more effectively in our campaigns so as to drive more sales for each sale made.

2. Definition of CRM

Customer retention is a complex and tricky business. It takes teamwork and close communication among team members to get the best results. In order to achieve better customer retention, it is vital for small businesses to have effective CRM software. A CRM system gives you access to your customers and helps you to react quickly when they are in need of your services.

If you do not have a CRM system in place, then even if you have good sales people and great marketing, your customers may still not be interested in buying from you. This is because most small businesses do not have databases which can be updated regularly with new information about their existing customers. So, the only way to ensure that these data are being updated regularly is by collecting this information from each customer who comes into contact with your business (such as through an email address).

You may think that this will take lots of time, but it isn’t as difficult as it sounds. For example, you can use an online tracking service such as EmailTrackr or look through campaign website such as KISSmetrics . These will enable you to track where your customers come from and what they do after they leave your business. You can immediately see if there has been any change in the number of emails coming into contact with your company or if there has been a spike in action such as buying products or going on holiday . All of this information will help you work out what changes need fixing or what needs more attention from your team on a daily basis.

The second reason why building a CRM system for small businesses is extremely important is because it means that whenever someone contacts them regarding their business, they will be able to read up on how well they are doing with regards to their current customer base - and offer them personalised advice tailored specifically for them (and their category).

3. What Is "CRM" For Small Businesses?

Customer relationship management (CRM) is a subset of customer referral and retention. It is the process whereby a business can develop and maintain a solid relationship with it’s customers. In this edition of DiGiTALK Newsletter we look at the opportunity to build a CRM tool that will help small businesses both retain their current customers as well as attract new ones.

First, let’s talk about what CRM is for small businesses. According to research done by CNET, 67% use CRM tools, while 25% have no plans to switch because they think they don’t need them. The rest tend towards using it for marketing purposes (such as email), sales promotion and customer service.

That last part might be important if you are trying to grow your company or keep up with the competition in an industry where people are constantly on the move and getting paid less than market rates (like IT). But even if you aren’t doing any of that, it’s still worth investing in good customer service regardless of whether your business is growing or not.

A good way to think about CRM is as a kind of behavioural economics: not every interaction between two parties represents a transaction, but most do. If you're trying to sell an item or get someone's attention on Twitter, for example, there's a high probability that your interaction will be with someone who feels like buying from you rather than just sending them an email asking them if they want to buy something.

That’s why it’s important for small businesses to have some way of measuring the quality of their interactions with their customers; and that means using some sort of data-driven automation platform like Salesforce or Marketo (which can also offer some additional benefits such as better reporting). Unfortunately these data-driven automation platforms are very expensive (and we discuss why in this episode); so let's look at some alternatives instead...

4. How Does It Work?

Customer relationship management (CRM) is the practice of using marketing tools to build and maintain customer relationships. CRM can help small businesses such as restaurants, retail stores, real estate agents, and many other businesses to sell more products or services. CRM is absolutely critical for small businesses to retain their customers and benefit from their loyalty.

The other day I met with a guy who was about to launch his own online store the next day. He asked me for advice on how he could improve his customer service and lower the cost of operations in order to increase customer retention rates. I suggested that he learn about the contents of his database and use this information as one of the keys to improving his service by providing better customer service at a lower cost. He was skeptical but agreed that it might be worth looking into this some time in the future (at which point I told him that no matter how much he disliked me, 9 times out of 10 he’d still hire me).

In today’s market, there are many ways in which small businesses can improve their business strategy:

? They can focus on customer care instead of sales

? They can give discounts to existing customers

? They can build loyalty programs for existing customers

? They can offer special deals for new customers

As long as these elements are present in your company’s strategy, you have got a leg up over your competition. You just need to know what these elements are so that you can capitalize on them, and then you will have an edge over your competitors. In our case though, we really wanted the above three things: things like loyalty programs and discounts would be great if they were available or built into our core platform; discounts would be great if they were easily accessible; but we believed that most people would just want better customer service once they had a good understanding of how much they were being charged per month or per transaction (and what they could expect from us once they reached monthly commitment levels). If we want people to stay with us more than just until it’s time for them to move on (say, if they are active customers), then we need better quality customer service than just offering free stuff along with full-stack support at launch time (with a chance at full-stack support after 3–6 months). We also needed a way—and fast—to measure ROI (and potentially monetization) from this improved level of customer experience so that

5. How is it Beneficial For Small Businesses?

The cost of customer satisfaction is high, and the benefits are even greater. According to a 2012 study by the Harvard Business School, it costs businesses an average of $97,000 per customer service call to get them engaged. But once that engagement happens, the business can reap a massive payoff. According to research from Dimensional Research Group, a human resources analysis firm, a one-time charge for customer service can result in an increase in sales of 20%.

In addition to helping businesses retain customers through better communication and more efficient processes, CRM also helps businesses find new customers by offering insights on how their customers react to their products and services. With this information at hand, business owners can determine which products or services are most beneficial for their company's growth and best suited for their target audience. It also prevents unhappy customers from leaving because they don't feel they have been dealt with properly (especially since some brands have struggled with bad customer service).

6. Conclusion

Customer relationship management (CRM) has gained a lot of traction in the last few years. Apps have started to appear in the market that are designed to collect customer data, sell it and track their share of the market. Almost all apps do this today, but there is a much larger number of CRMs out there, each with different approaches and different goals.

As a very small business owner, it can be quite easy for me to fall into the trap of just using an app or two for collecting and pushing customer information. However, I think that this approach is not very strategic and if you want to take your business to the next level, you will need more than one app. You need not only one CRM solution for your company but you should also have multiple ones — one for sales, another for marketing and a third or fourth dedicated to customer service. And even if you choose an app, you will still need a separate CRM system as well as e-commerce platforms that can manage your customers’ accounts and payments.

You cannot do everything at once — so make sure that your CRM tools are compatible with each other and also focused on what they offer rather than what they don’t offer (like email marketing). If you use one tool to sell products online while another one collects orders from clients while another collects payments from clients then all these three tools will become redundant: no matter which tool you choose — it won’t be able to do what is needed by all three clients at once!