Customer Relationship Management (AQA A Level Business): Revision Note

The purpose and value of CRM

• Customer relationship management (CRM) involves a business focusing its marketing efforts around building a deep understanding of customers, consistently meeting customer needs and developing long-term customer loyalty

• Its purpose is to;

  • centralise all customer information in one place, giving every team a complete picture of each customer's history, preferences and behaviour

  • improve communication with customers by making interactions more timely, relevant and personalised

  • support sales, marketing and customer service teams in working more efficiently and consistently

Benefits and costs of CRM

Elements of CRM

• CRM strategies and tactics are focused on four key areas

 CRM strategies and tactics

Customer acquisition

• Attracting interested consumers and converting them into customers to achieve growth, make money and improve chances of business survival

• Businesses can acquire customers in many different ways, including

  • Building a strong brand identity

  • Delivering excellent customer experiences

  • Providing clear information

  • Offering special rewards, such as price promotions

Customer retention

• Customer retention involves encouraging customers to remain loyal to a business and its brands over time

• Encouraging loyalty is important for several reasons

  • Attracting new customers often costs more than retaining current customers

  • Loyal customers tend to be valuable repeat customers

  • Retained customers can refer new customers to a business

    • Word-of-mouth marketing is a form of free marketing for a brand

    • Happy customers talking about a business or brand in positive ways can help persuade people they know to become loyal customers as well

• Businesses can retain customers in many different ways, including

  • Customer loyalty schemes

  • Regular communication about new products or promotional offers

  • Targeted price promotions or other perks for existing customers

Customer expansion

• Customer expansion is the process of encouraging existing customers to increase the value and frequency of their spending on products and services over time

• Businesses can achieve customer expansion in several different ways, including

  • Upselling by encouraging customers to upgrade to premium products 

  • Cross-selling by offering customers a related product or service

  • Providing add-ons such as insurance policies, extra features or extended warranties 

Customer reactivation

• Customer reactivation involves reaching out to customers who have previously expressed interest in or purchased a product but have since become disengaged

• Businesses can adopt a range of techniques to reactivate customers, including

  • Social media engagement

  • Targeted price promotions for returning customers

  • Direct mailings via post or email

CRM and lead generation

• Lead generation is the process of identifying and attracting potential customers, known as leads, who have shown some level of interest in the business's product or service but have not yet made a purchase

• CRM systems capture lead information from sources, such as website enquiry forms, social media, events and email sign-ups, and store it in a single database for the sales team to follow up

• Leads can be scored based on their likelihood to convert

  • For example, a lead who has visited the pricing page three times is more likely to buy than one who has only read a single blog post

  • Higher-scoring leads can be prioritised

• Automated follow-ups, such as a series of helpful emails triggered when someone downloads a guide, can be managed through CRM software, keeping leads 'warm' until they are ready to buy

• A well-managed lead generation process ensures the sales team always has a pipeline of potential customers to work with, reducing the risk of a sudden drop in new business

CRM and pipeline management

• Pipeline management involves tracking all potential sales opportunities through each stage of the sales process, from initial contact through to a completed purchase

  • The sales pipeline gives the team a clear, visual picture of where every opportunity currently stands

• CRM software displays the pipeline as a series of stages, showing how many opportunities are at each stage and their combined value

  • This allows sales managers to forecast future revenue, identify where deals are stalling, and provide support to the sales team at the right moments

A typical sales pipeline

• If many opportunities are consistently dropping out at the same stage, it signals a problem

  • Perhaps the price proposal is putting people off, or the follow-up process is too slow - that can then be addressed

• Effective pipeline management improves the efficiency and success rate of the sales team

  • It reduces the number of opportunities lost through poor follow-up, and gives management a reliable forecast of future income