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Customer Service Doesn’t End With a Sale: Using Technology to Manage Relationships

Managing customer relationships

The best online retailers are able to keep track of every person that has ever purchased from their store, while also maintaining regular dialogue with them. Here are some ideas on how to manage customer relationships effectively.

For many years, the relationship between customer and retailer was a rather simple one. Within smaller communities, everyone knew each other well and merchants could develop long-term relationships with their customers. Upon the arrival of the Industrial Revolution, some larger operations might keep track of their customers’ purchasing habits in a journal or logbook, if at all.

Nowadays, retailers not only have to interact with a much larger volume of customers, they often have to manage these interactions across multiple locations. Sergei Veinberg of RetentionLogix, points out that it is the retention strategy of the business that must drive the choice of CRM technologies.

“No doubt most retailers have repeat customers, and in the long run their success will depend on their ability to retain those customers,” says Veinberg. “Customer relationship management (CRM) plays a very big role in customer retention. It is also the area where online retailers have a distinct advantage over their bricks-and-mortar counterparts.”

Customer Relationship Management is No Longer a Game of ‘Guess Who?’

The right CRM system will help any entrepreneur quickly identify who the best customers are, as well as providing clues as to how you can keep them coming back for more. However, in order to do this, a retailer’s CRM system needs to capture and maintain large amounts of customer data.

“The retailer’s guiding principle is recency, frequency and monetary value (RFM) analysis,” says Veinberg. “This states that a customer that purchased recently is more likely to do so again, compared with the one who purchased a long time ago. A frequent purchaser is more valuable than an occasional one. Also, people that have spent the most money in total are most likely to buy again.”

Beyond being a great tool for customer information data analysis, a CRM system enables retailers to create relationships that are analogous to those of a bygone era, therefore providing an online retailer the ability to really connect with its customers.

“The main method that CRM systems increase conversions is the creation of dialogue with the customer,” says Veinberg. “We ‘speak’ by delivering the right messages to the right people at the right time, via the right channel. We ‘listen’ by observing the customer’s response: did they open the email, did they click-through and did they purchase? Using this approach, online retailers can run targeted and highly effective discount campaigns, generating returns of several times the investment.”

Choosing a CRM System

Not every retailer will require a full-blown CRM solution; however there are several criteria to consider that will help any entrepreneur decide if investing in CRM is the right way to go.

Firstly, a retail business needs to have at least the potential for repeat customers. If you’re selling wedding dresses, many of your customers will be one-time-only purchasers. Following that line of thought, a retailer also needs a fairly regular intake of new customers (potential repeat customers) in order to capitalise on CRM. If you have less than 100 or so repeat customers, you can do all your CRM work in a spreadsheet or even by memory.

Beyond those basic concerns, keep in mind that your strategy is unique to your customers, and it needs to fully developed before any investment in CRM is made. It’s no good purchasing a system without having a clear understanding of who your customers are and how you can more effectively communicate and sell to them.

In order to explain all the benefits of a good CRM system, Veinberg supplies the following checklist:

  1. Automation of customer service – It should provide all available customer information at the click of a mouse.
  2. Analysis of customer behaviour – Who are the best customers? What do they buy and when? What kind of offers do they respond to? What aspects of products and service matter to them most? A good CRM will be able to answer these questions easily.
  3. Personalised customer experience, based on analysis – Interacting with all of your customers in the same manner, sending them the same offers, displaying the same product suggestions is a wasted opportunity and often wears customer patience thin. One size does not fit all and good customer relationships means adapting and responding to each customer as an individual. Personalisation maximises every contact with the customer as a selling opportunity and this is where good CRM software really sells itself.

The Technical Side to CRM

A software solution of this kind needs to be able to access and provide data to several different areas of an online retail business. In a vague sense, it can be thought of simply as an automation tool for customer data.

“The main system the CRM needs to interface with is the shopping cart,” explains Veinberg. “All the customer details and sales history need to be synchronised between the shopping cart and the CRM. It also often needs to integrate with your website in order to monitor customer behaviour on-site. This is usually done by inserting a small segment of code onto each page of the site.”

On a higher order level, CRM allows retailers to access the heights of data and analysis that was previously unattainable before the arrival of the internet. From this has sprung several theories and methods for the best way to target customers – of course, don’t make the mistake of thinking that the same theory will apply to every business in every niche.

For more information on CRM systems, consult our Solution Providers Directory.

Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.

3 Comments

  • Hi Campbell, nice article and CRM is important to a growing business be it online or offline. One point to clarify is that integration may not always be so easy. To quote Sergei, “This is usually done by inserting a small segment of code onto each page of the site.” Oh if that were true it would make life so much easier for site owners, managers and developers. But unfortunately it is not and so it is better not to set a false expectation. Integration to any 3rd party system might already be available via your ecommerce software. But it is not always simple or cheap. Before jumping into a new system that has to integrate to your online store get some advice from the developer of the site or from the service provider if it is a SaaS solution.

    John

    Reply
    • A good point well made, John. Advice I would say applies to just about any integration project; seek advice early and from all relevant parties in order to save on heartache and wasted investment. Our Solution Providers are always a great place to start for the uninitiated.

      Reply
  • John,
    monitoring of customer behaviour (pageviews) is usually done via inserting a small segment of code, same way Google Analytics does it.
    Integration with the shopping cart is done differently, ie via back-end as you explained.

    Reply

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