It's no new news that we are doing business in a mixed up world. Small businesses are trying to appear big to gain credibility, and big businesses are trying to appear small to gain customer intimacy. With today's customer relationship management (CRM) technology, big businesses are succeeding at capturing what used to be an advantage exclusive to small businesses: personalization.
These are strategies that enable businesses to deliver relevant, personalized communications and promotions to customers. They're essential to competing in today's market and tend to result in higher customer retention and revenue.
The foundation of any successful personalization strategy is customer segmentation — creating customer profiles and identifying key trends and commonalities among core customers. Customers are then sorted into segments that reflect their purchasing history and selling opportunities. "Personalized" messages can then be sent to groups of similar customers, allowing you to efficiently and effectively deliver on a mass scale what appear to be individualized messages. Response rates tend to be higher to messages that directly relate to customers' past transactions and needs, rather than broad general messages.
Following are some general guidelines for creating and managing customer profiles that will enable you to implement a successful personalization strategy:
Beyond demographics and products purchased, you need to record other valuable data about your customers such as:
By comparing customer profiles, it is easier to identify customers with high and low profitability potential; and appropriate marketing activities per customer. Consider the following example:
|Details||Customer A||Customer B||Customer C|
|Date of last purchase||12/02/01||6/02/01||11/01/01|
|Average purchase value – net||$50.00||$60.00||$40.00|
|Annual HH income||$75,000||$90,000||$45,000|
|Family orientation||Married, children||Single, no children||Retired|
|Category readiness||First for new products||Slow for new products||Avoids new products|
From this comparison of customer profiles, we would mark Customer A as the highest priority since she is most likely to generate immediate revenue. Even though the purchase volume and household income are less than Customer B, Customer A's frequency of purchases is greater and thus represents a greater revenue stream. Customer C represents a customer who is not likely to become a frequent or high–volume purchaser in the near future and thus would be tagged as a low marketing priority.
In order to manage customer profiles, you must first be able to store and track the data. There are numerous customer relationship management (CRM) database programs designed for small business with prices ranging from the low (one thousand dollar ranges) to several thousands of dollars.
Clearly, the larger your customer base and product lines are, the more sophisticated system you will need. A small construction company may have 25 customers over a 5–year period, and thus could likely manage data with a simple system such as Outlook or Access. A large business with thousands of customers will need a more complex system that does everything but turn the lights out at the end of the day.
To find a system that fits your needs, go to www.buyerzone.com. You can describe your budget and needs in a simple to use form. You'll then receive responses from a handful of vendors that fit your specific profile.
When shopping around for a CRM system, be sure that it: