A Guide to Managing Customer Relationships - Business ...

This guide explains methods for customer relationship management, as well as software tools available to improve customer relationship management for small. BusinessNewsDailyreceivescompensationfromsomeofthecompanieslistedonthispage.AdvertisingDisclosureHome>GrowYourBusiness>Sales&MarketingWhatarecustomerrelations?ImportanceofcustomerrelationshipmanagementBenefitsofgoodcustomerrelationsTypesofcustomerrelationshipsHowtobuildpositivecustomerrelationshipsEnablecustomerstoservethemselvesImproveaccessibilityMeasurecustomersatisfactionDemonstrateappreciationforcustomersCommittoemployeetrainingEstablishasupportiveworkplaceenvironmentImprovefirstcallresolutionrateIncreaseefficiencywithsoftwareandtechnologyAGuidetoManagingCustomerRelationshipsDavidGargaroBusinessNewsDailyContributingWriterUpdatedNov19,2021Managingcustomerrelationshipsiscriticaltoretentionandcustomerloyalty.Here'showtoeffectivelymanagecustomerrelationships.Managingcustomerrelationshipsisacriticalelementofbuildingasuccessfulbusiness.Smallbusinesseswithstrongcustomerrelationshipswillseerepeatbusinessandimprovedwordofmouthreferrals.Softwaretoolslikeacustomerrelationshipmanagement(CRM)systemcanhelpimprovecustomerrelationships.Thisarticleisforsmallbusinessownerswhowanttoimprovecustomerrelationships,buildreferrals,andestablishbrandloyalty.Youmighthavedevelopedsomegreatproductsorservicestoaddressaneedforaspecificmarket,butthatdoesnotautomaticallymeanyourbusinesswillbeasuccess.Yourcustomerswillhaveasignificantimpactonhowwellyourproductorservicesells.Theycareaboutwhatthey’rebuying,howandwheretheybuyit,andwhathappensaftertheymakethepurchase.Thegrowingpoweroftheconsumermeansthatcompaniesmustinvestmoreresourcesinbuildingandmaintainingcustomerrelationships.Accordingtoarecentcustomerexpectationsreport,79%ofconsumerscaremoreaboutpersonalizedservicethanpersonalizedmarketing,and84%willgooutoftheirwaytospendmoremoneywithgreatexperiences.Asaresult,companiesmustcreatebetterandmoreconsistentcustomerexperiencesduringeveryinteractionwithconsumers.Tomeetthedemandsforgreatercustomerexperiences,companiesmustfocusonmanagingtheircustomerrelationships.Strongcustomerrelationsareessentialforbuildingcustomerloyaltyandretainingcurrentcustomers.Thismeansunderstandingwhatisrequiredtoensuretop-qualitycustomerrelationshipsandcreategreatexperienceswithyourcustomers.Whatarecustomerrelations?Customerrelationsdescribeshowyourcompanyengageswithcustomerswithrespecttoimprovingthecustomerexperience.Thisinvolvesovercomingshort-termchallengesanddevelopinglong-termsolutionsthatensurecustomersuccess.Thegoalistobuildamutuallybeneficialrelationshipthatbeginsbefore,andexistslongafter,theinitialpurchase.Whilecustomerrelationsinvolveallpartsofthebusiness,itismostcloselyassociatedwiththecustomerservicedepartment.Thismeansthatthecustomerservice,customersuccess,customersupport,andproductdevelopmentteamsmustcontributetobuildingandmaintainingthecustomerrelationship.Customerrelationsincludesthecompany’ssalesandmarketingdepartmentsaswell,astheyinteractwithcustomersinnumerousways.Customerrelationsconsistsoftwofunctions:Reactivefunctions:Addressingcustomers’reportedissues(e.g.,replyingtocustomercomplaints,workingwithcustomersupport). Proactivefunctions:Buildinglong-termrelationshipswithcustomersandestablishingbrandloyalty(e.g.,providingproductinformation,promotingdiscountsandspecialoffers).Notethatcustomerserviceandcustomerrelationsarenotthesamething;customerserviceispartofcustomerrelations.Customerserviceisaninboundfunction–yourcompanyprovidescustomerserviceinresponsetocustomeractions(e.g.,acustomercallsforsupportwithaproduct).Customerrelationsinvolvesbothinboundandoutboundfunctions–yourcompanyreactstocustomerrequestsforassistance,andtakesactiontoimprovefuturecustomerengagement(e.g.,yourcompanysetsupacustomerhelpdesktoaddressfuturecustomercalls).Customerrelationsareproactive,withthegoalofcreatingabettercustomerexperience.ImportanceofcustomerrelationshipmanagementCustomerrelationshipmanagementisanessentialpartofensuringthesuccessofyourbusiness:Ithelpstobuildabondwithcustomers,whichreducestheamountofworkinvolvedingettingthemtopurchasefromyourcompany(comparedtoattractingnewcustomers). Itincreasesthelikelihoodthatcustomerswillmakeadditionalfuturepurchases. Ithelpswithbuildingloyaltywithyourbrand. Itprovidescustomerswithanimageofyourbrandwhentheyarelookingforsolutionstootherissues,orwhentheyarelookingforoptionsrelatedtowhatyouprovide. Ithelpswithcreatingastrongerassociationbetweenyourcompanyandthecustomers,whichcanhelpwithsmoothingoverproblemswithproductsorinthecustomerrelationsprocess. Itencouragescustomerstopromoteyourbrandtofriends,familymembersandcolleagues,whichwillhelptogrowyourbusiness.Keytakeaway:Strongcustomerrelationscanimprovebrandloyaltyanddrivereferrals,helpingtogrowyourbusiness.BenefitsofgoodcustomerrelationsCustomerretentionImprovingcustomerrelationsmeansyourcompanywillhavehighercustomerretentionrates.Customersaremorelikelytostoppurchasingacompany’sproductsorservicesiftheyhaveanunsatisfactorycustomerexperience.Customerswilloverlookacompany’smistakeswhenitputsintheefforttocreateasatisfyingcustomerrelationsexperience.Beingtransparentinyourattempttomakethingsrightwillhelpwithreducingchurn.Accordingtoonestudy,increasingcustomerretentionratesby5%canincreaseacompany’sprofitsby25%,sothereisafinancialincentivetobuildapositivecustomerrelationship.CustomerloyaltyMaintainingagoodrelationshipwithcustomersovertimemakesitmoredifficultforcompetitorstocaptureyourcustomers’attention.Repeatcustomersaremorelikelytomakepurchasesthanleadsthathavenotbeenconverted,whichmakescustomerloyaltythatmuchmorevaluable.Positivecustomerrelationscanincreasecustomerloyaltyasitgivescustomersanintangibleincentivetomakefuturepurchases.AccordingtoEstebanKolsky,CEOofthinkJarResearch,55%ofconsumerswillpaymoreforaguaranteedgoodexperience.Thismeansthatcustomerloyaltycangenerateconsistentrevenueoverthelifeofthecustomerrelationship.CustomersatisfactionMostdissatisfiedcustomerswillnotcomplainaboutapoorcustomerrelationsexperience;theysimplywon’treturntomakeanotherpurchase.Asaresult,it’sdifficulttotellwhencustomersarenothappywithyourbusiness.Investingincustomerrelationscanhelptopreventthesetypesofcustomersfromunexpectedlyendingtheirrelationship.Creatingopenchannelsofcommunicationthatinvitecustomerfeedbackcanhelpwithidentifyingcustomers’problems,whichwillenableyourcompanytosolvethoseissuesandbuildcustomers’trustovertime.Creatingbettercustomerexperiencescanalsoinfluencetheirpurchasingdecisionsmorethanadvertisingandmarketing.Keytakeaway:Goodcustomerrelationsboostcustomerretention,customerloyalty,andcustomersatisfaction.TypesofcustomerrelationshipsCompaniescanhavedifferenttypesofcustomerrelationshipswithinaspecificcustomersegment.Yourcompanycanestablishaparticularrelationshipwithdifferentcustomersegmentsdependingonyourgoals(e.g.,acquiringnewcustomers,increasingsales).Differenttypesofcustomerrelationshipsinclude:Transactional:Thecompanyhasnorelationshipwiththecustomerbeyondthattransaction(e.g.,aretailkioskinamallorairport). Self-service:Thecustomerdoesnotdirectlyinteractwiththecompany,whichprovidesthetoolsandprocessesrequiredforthecustomertohelpthemselves(e.g.,agasstationhasself-servicegaspumpsandvendingmachinesforcustomers). Automatedservices:Thecompanyprovidesautomatedprocessestosupportthecustomer’sself-service(e.g.,ahotelsetsuppersonalonlineprofilesaccordingtotheirindividualcustomers’characteristics,andprovidesinformationbasedontheirpastpurchasesandinteractions). Long-term:Thecompanyinteractswiththecustomerrepeatedlyandoveralongperiodoftime(e.g.,acardealershipsellsacartoacustomerandprovidesregularserviceandmaintenanceoverthelifeoftheownershipofthevehicle). Personalassistance:Thecustomerinteractswiththecompanythroughcommunicationswiththecustomerrelationsrepresentativeduringorafterthesale(e.g.,acomputercompanyenablescustomerstointeractwithcustomerrepsthroughcallcenters,point-of-salepurchasesandemailinteraction). Dedicatedpersonalassistance:Thecompanyassignsadedicatedcustomerrepresentativetoaspecificclient(e.g.,afinancialadvisorwithaninvestmentfirmworkswithhigh-net-worthclients). Community:Thecompanysetsupanonlinecommunitywhereitscustomerscanshareknowledgeandhelpothermemberstosolvetheirproblems(e.g.,apharmaceuticalfirmsetsupacommunityfordiabeticpatientswhocantalkabouttheirissuesandsharebestpracticeswithotherpatients). Co-creation:Thecompanyworkswiththecustomerstoco-createvalue(e.g.,anonlinebookresellerinvitescustomerstocreatefavoritebooklistsandpublishbookreviewsforothercustomerstoenjoy).Keytakeaway:Therearemanydifferenttypesofcustomerrelationships.Understandwhichtypeofcustomeryouaretalkingtoandmanagetheconversationaccordingly.HowtobuildpositivecustomerrelationshipsIttakesallpartsoftheorganizationtobuildpositivecustomerrelationships.Asaresult,yourcompanyshouldfocusonthefollowingkeyareastoensurethewholecompanyisonboardwithensuringpositivecustomerrelations.PutcustomersfirstEnsuringpositivecustomerrelationsbeginswithdevelopingacustomer-centriccultureinyourcompany.Thisinvolvesfocusingonthecustomers’success,aswellasimplementinglong-termsolutions.Creatingacustomer-centricbusinesswillmotivateemployeestohelpcustomers,astheywillhaveabetterunderstandingoftheirpurposeandroleintheprocess. Somestrategiesthatcanhelpacompanytobecomemorecustomer-centricinclude:Creatingacustomerjourneymaptolayoutthebuyerjourneyforthetypicalcustomer Anticipatingcustomers’needsatdifferentstepsoftherelationship Employingacustomerrelationsexecutivetoleadthedevelopmentofcustomerrelationshipinitiativesandprocesses Creatinganonboardingprocessforcustomers Collectingcustomerfeedback Meetingwithcustomersfacetoface Beingproactivewithcustomerservice Implementingcustomerservicetoolsandtechnologies ThinkingaboutthecustomerrelationshipafterthepurchaseEnablecustomerstoservethemselvesWhileitwouldbeidealtocustomizecustomerrelationsforeveryconsumer,itsnotpracticalorcost-effectivetodoso.Somecustomerswouldprefertospeaktoalivecustomerrelationsrepresentative,butyoucanhelptheminotherwaysandstillensuretheirsatisfaction.Technologyenablesyoutoprovidecustomerswiththetoolstohelpthemselvesfindsolutionstotheirquestionsandissuesatanytimeoftheday.Forexample,youcanimplementchatbotsonyourwebsite,whichcanprovidevisitorswithinformation,guidethemtotheareasofyourwebsitethatwillhelpthemfindtheanswerstheyneed,andlinkthemtodownloadablecontent.Youcanalsouseknowledgebasestoaddressthemostcommoncustomerquestions.ImproveaccessibilityCustomersshouldhavereadyaccesstocustomerserviceandsupportteamstoensureaqualitycustomerexperience.AccordingtoaMicrosoftsurvey,morethanone-thirdofrespondentssaidthattheirbiggestcustomerserviceissueisnotbeingabletogethelpfromservicestaffwhenneeded.Self-servicehelpdesksshouldcomplement–notentirelyreplace–customerrelations,service,andsupportstaffasresourcesforhelpingcustomerswithproblems.Staffcanusetechnologytoreducetheirworkloadandstress,butonlyarealpersoncanprovidehumaninteractionandcreateamemorablecustomerserviceexperience.MeasurecustomersatisfactionYoushouldtrackandmeasureyourcustomersatisfactionlevelstomakesuretheyimproveovertime.Buildfeedbackintoyourcustomerrelationssystem.Regularlyaskcustomersforfeedbackontheirpurchasingexperienceandinteractionswithcustomerrelations.Trackandmeasureyourfindings(e.g.,customersatisfactionsurveys,netpromoterscores).Onceyoucollectfeedbackdata,actonthefindingsbyimprovinguponareasofweaknessidentifiedincustomerfeedback.Continuecollectingcustomerfeedbackandtrackingtheresultstoensurethatcustomersatisfactionscoresimprove.DemonstrateappreciationforcustomersYoudon’thavetocreategrandgesturesforeverycustomerinteraction.Providingcustomerswithapositiveexperienceandexceedingtheirexpectationsinsmallwayswillgoalongwaytowardbuildingstrongcustomerrelationships.Developingaloyaltyprogramthatrewardsgoodcustomersfortheirpatronage,andprovidingsmalltokensofappreciationfortheirbusiness,willhelptobuildconsumerloyalty.CommittoemployeetrainingYouremployees’interactionswithcustomersisanintegralpartofcreatingagreatcustomerexperience.Therefore,theyshouldbeknowledgeableandskilledintheirduties,aswellasmotivatedtosolvecustomers’problems.Trainingemployeesincustomerserviceandcustomerrelationsextendsbeyondtheirabilitytoperformtheirjobfunctions.Itshouldincludeelevatingtheirsoftskills(e.g.,professionalcommunicationstyle,activelistening,problem-solving).Skillsetscanvarywidelyfrompersontopersonacrossanorganization.Therefore,it’simportanttoinvestinregularandcontinualtrainingtoensurethatallemployeeshaveconsistentknowledgeofyourcompany’spolicies,proceduresandstandards.Thiswillhelptocreateamoreconsistentcustomerexperienceandimprovecustomerrelationships.EstablishasupportiveworkplaceenvironmentAccordingtoresearchfromOxfordUniversity’sSaidBusinessSchool,employeesare13%moreproductivewhentheyarehappy.Itmakesbusinesssensetocreateamorepositiveworkenvironment.Whencustomerrelationsrepresentativesaremoreproductive,theywillbemoreabletoquicklyresolvecustomers’problems,whichwillimprovecustomersatisfactionrates.Atthesametime,customerswillbeabletotellifacustomerrelationsrepisinabadmood,whichwillaffectthetoneofthecustomerexperience.ImprovefirstcallresolutionrateAspreviouslystated,customerswillpaymoreforabetterexperiencefromacompanywhenmakingpurchases.Onemetricthatmeasuresthequalityofthecustomerexperienceisthefirst-callresolution(FCR)rate,whichisthepercentageofcallsthatareresolvedinthefirstcall(i.e.,futurefollow-upsoradditionaltouchpointsarenotrequired).AhighFCRrateequalshighercustomersatisfaction.Ifcustomershavetomakemultiplecallsordealwithmorethanonecustomerrelationsreptoresolvetheirissue,theirfrustrationlevelwillriseandtheywillbecomemoredissatisfiedwithyourservice.Fewercallsandtouchpointsalsomeanyourcustomerrelationsteamwillbemoreefficient,astheywillhavetohandlefewercallsovertime.Ensuringthatyourserviceandsupportteamsareequippedtosolveissuesontheirownwillmeanbettercustomerrelationsandhappiercustomers.IncreaseefficiencywithsoftwareandtechnologyImprovecustomerrelationsbyemployingtools,technology,andsoftwaretohelpsupportandservicemanagehighvolumesofcustomercalls.Forexample,helpdesksoftwarewillhelpthecustomerservice,support,andsuccessdepartmentstomanageandimprovecustomerinteractions.Customerrelationshipmanagementsoftwarecantrackcustomeraccountsandhelptocreatemoresatisfyingexperiences,asrepswillhaveaccesstomoreinformationaboutcustomerswhendealingwiththem.Keytakeaway:Proactivelycreatepositivecustomerexperiencesbyregularlysolicitingfeedback,implementingchangesandconsistentlytrainingemployeesincustomerserviceskills.ImageCredit:DragonImages/GettyImages DavidGargaroBusinessNewsDailyContributingWriterDavidGargaroisacontentwriterandcopyeditorwithmorethan20yearsofexperienceinmultipleindustries,includingpublishing,advertising,marketing,finance,andsmallbusiness.HehaswrittenonB2B-focusedtopicscoveringbusinesstechnology,sales,marketing,andinsurance.DavidhasaBachelorofArtsdegreeinEnglishandActuarialSciencefromtheUniversityofToronto.Heservedasthemanagingeditorofasmallpublishingcompany,andself-publishedabookcalledHowtoRunYourCompany…IntotheGround.RelatedArticlesSeeMoreRelatedArticlesMarketingAutomationBuyer'sGuideTipsandTrickstoUsingCRMforCustomerServiceTypesofSurveysYourBusinessShouldUse11BenefitsofCRMSystemsAdoptingaCRM?HowtoGetBuy-inFromYourSalesDepartmentCustomerRetentionStrategiesforSmallBusinesses8BigDataSolutionsforSmallBusinessesMoreRelatedArticlesRelatedReviewsSeeMoreRelatedReviewsBestCRMSoftwareof2022We'veexaminedthebestcustomerrelationship...BestGPSFleetTrackingSoftwareandSystemsfor2022LearnaboutthebestGPSfleettrackingserviceson...TheBestRemotePCAccessSoftwareof2022Wereviewedthetopremoteaccesssoftwareproviders...MoreRelatedReviewsGrowYourBusinessSeeMore>Updated12.21.21WhatisIVR?ABuyingGuideforBusinessOwnersArundownofdifferentIVRsolutionsforsmallbusinesses.Updated05.20.19HowtoChoosetheBestLiveChatSoftwareSolutionPurchasinglivechatsoftwarenecessitatesadetailed...11.05.20HowtoCalculateandImproveEmployeeTurnoverLearnwhatcausesemployeeturnoverandhowtoimproveretention.Updated10.01.21CRMvs.MarketingAutomation:What'stheDifference?WhileCRMandmarketingautomationseemsimilar,therearekey...Updated10.01.21CRMMetricsYouShouldKnowPickingtherightCRMmetricstomeasuremaynotbedifficult,[email protected],2ndFloorWaltham,MA02451©2022business.comAllRightsReserved.ResourcesHowtoStartaBusinessHowtoMarketYourBusinessHowtoHireForYourBusinessLatestSiteMapOurCompanyAboutUsAdvertiseWithUsPrivacyPolicyDoNotSellMyPersonalInformationTermsofUseAccessibilityCopyrightPolicyAdvertisingDisclosureOurBrandsBusiness.comBuyerZoneContactUsinfo@businessnewsdaily.com2005thAvenue,2ndFloorWaltham,MA02451©2022business.comAllRightsReserved.