For any business, customers are the most important assets. You may have an excellent product or service. Your business would not thrive and grow unless there are customers who want to buy your product or service. Hence it is many times said that ‘customer is a king’. You may be aware that companies spend hefty budgets on acquiring new customers. Sales and marketing department is given target to increase the new customer base so that companies would earn more revenue.
In the hoard of acquiring new customers, existing customers get ignored. This can prove to be very costly in the long run. It is generally said that it takes 5 to 10 times efforts and cost to acquire new customer as compared to retaining the existing customer. Additionally the existing customer is likely to be more ready to pay higher price than the new customer. Considering these, it is crucial to retain the customers. Hence there is a lot of focus on customer relationship management or CRM strategy. In distance MBA in marketing management various aspects of customer relationship management are focused.
“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs
Advantages of customer relationship management
With technological advancements it has become more easy to track and sense customer behavior. With social media and digital marketing, knowing customer sentiments and preferences is easily possible. Here is the list of advantages CRM would provide.
- Cost of acquiring new customers is much higher than retaining existing customers.
- Maintaining relationship with existing customers can be targeted for up-selling or cross-selling more products.
- Existing customers are more likely to pay higher prices than the new ones as they have experienced the service or brand.
- When customers are kept engaged even after their first purchase, they can become more loyal to your brand.
- When customers are getting value from your services and in addition getting respectful and engaging treatment, they can recommend your product and services to their friends.
- Now-a-days consumers purchase things online. They go through the reviews and videos about the product before taking the final decision for purchase. Loyal customers can help increase your sale multifold with their good reviews, comments and may be testimonial videos.
- On the contrary, if you have any customers who are unsatisfied, if you listen to them carefully. They are the greatest source of learning for you.
- Customer who has been purchasing the products regularly and is connected to the brand, he would be happy to advocate your brand to others. He becomes a brand ambassador for you.
- If customer relationship maintenance is implemented using a computer software, from the stored data customer analysis can be done on various dimensions. This will help business know their customer well.
- With the analysis, appropriate promotion campaigns and offers can be designed and rolled out.
- With CRM automation, the speed of responding to customer can be very fast.
Customer Life time value
There is a term called Customer Life time value (CLTV) or simple life time value (LTV) in marketing management. It is the estimated value of average revenue a customer will contribute to your company. Obviously this would involve repeated purchases over a period of time. Longer the stay of the happy customer and higher is the value of LTV.
Basic formula to calculate LTV is
LTV = (Average Order Value) x (Number of Repeat Sales) x (frequency of purchase) X (span in say years)
By applying Lifetime Value, marketing managers can easily arrive at the rupee value associated with the long-term relationship with any customer.
If you observe the formula carefully, there are two aspects which will drive the value higher. First one is customer satisfaction about the product or service delivered by your brand and secondly, the retention. Higher is the retention period, so may be the frequency of purchases and the higher LTV. It is very important for marketing manager to make all attempts to retain the customer and build a strong long term relationship. Distance MBA in marketing management program would give to in-depth knowledge on such critical concepts and models so that you will be able to create your own successful marketing strategy.
CRM for a Distance MBA in Marketing management professional
Customer is king and its relationship is divine. Anyone who is aspiring to do career in Marketing Management after distance MBA should take this to his heart. Now the whole world is moving towards digital. Customers are tech-savvy and they use a lot of electronic gadgets. As 21st century marketing manager should not lose any opportunity to connect to your customers at different points on interactions face to face or digitally.
Knowing CRM as a strategy, one should focus on understanding how the top Customer Relationship platforms like Salesforce, Zoho CRM work. How digital technologies like e-mails can be effectively used to increase customer engagement by providing value to your customers.
