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By: Wilmington Trust
Starting a company can be a nerve-wracking experience. Growing and becoming client-focused can prove even more difficult. How do you determine in which clients to invest valuable time and which may be beneficial in the future?
One key is to develop, or purchase, a good Customer Relationship Management (CRM) tool to help you understand the relationships that your organization maintains. CRM systems are designed to appraise existing relationships, determine the value of each, and work to strengthen those that are promising.
CRM systems are available with a variety of capabilities and price tags. Many larger companies choose to invest thousands of dollars in complex, often customized CRM systems. Some of the characteristics of these systems include automated data feeds, integrated profitability calculations, and advanced reporting capabilities. They are usually purchased from, or custom-built by, a specialty software developer. However, a more affordable option is to develop your own relationship management system by using any kind of software that can manage rows and columns of information in a speadsheet.
The first step is to load basic client information, such as name, address, phone number, and the like. Next, begin classifying the information. Common classifications include the type of relationship (client, prospect, vendor) and the status of each relationship (active, inactive, at risk). These relationships should then be categorized in terms of company size, industry, and products or services used. Other items that may affect the relationship should also be included, such as sales history, returned items, and referrals.
Once this is done, classify each relationship according to its current value. Keep these classifications simple, and use between three and five categories. For example, using an A, B, C, D, and E rating system (A for superior, E for poor), allows you to see at a glance your relationship plan for each client. You may want to contact "A" clients monthly, "B" clients quarterly, "C" clients semi-annually, "D" clients annually, and, for "E" clients, you may want to recommend them to a competitor. This can be a smart move when there is little hope of building a profitable relationship with the client. Deciding on a relationship plan should depend on your business and the level of client contact you wish to maintain.
In addition, labeling client potential (low, average, high) will assist you in determining the method of interaction to use. You may decide to reach high potential clients via face-to-face meetings or telephone calls, and low potential clients via e-mail. Shaping this category depends on your system of sales and advertising.
Once every relationship has been classified, ranked, and loaded into the database, the next step is to make the information available to everyone who needs to access it. Train them to use the database and the information effectively.
CRM systems have exploded in popularity. Businesses understand that it is cheaper and easier to keep existing clients happy than to attract new ones. For any company, the goal is to have a CRM system that makes clients feel that the company's service is better than that of its competitors. In order to accomplish this, the users of the system, your employees, must commit to using and updating the system as needed. Many companies find that this is the most difficult part of the program. Sales people, for example, have traditionally guarded their turf, refusing to share information on client relationships that they have developed. A way to temper this is to implement organizational structures and incentive plans that serve the CRM effort rather than undermine it. Compensation and bonuses, for instance, could be tied to client satisfaction, rather than mere sales quotas. By developing a method to measure client satisfaction, such as surveys or tracking on-time deliveries, your incentives are more focused on retaining clients, as opposed to just acquiring them.
Finally, a CRM system allows you to provide solutions for your clients, rather than just sell products. In doing this, you should become the first company that your client thinks of when a need arises and you may even help identify a need the client didn't know he or she had. This is what relationship management is all about.
Updated: January 1, 2013
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and particular needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.
© 2013 Wilmington Trust Corporation.