In this Issue:
- Forward
- Customer Segmentation in CRM Strategy
- Shameless Self Promotion
Who else wants more profitable business relationships?
It just is not practical to build strong relationships with every customer, sometimes you need to be selective about whom you serve. In this issue, you will learn about the four areas of customer segmentation for a solid customer relationship management (CRM) implementation.
You do not need a fancy CRM software package to put these points to use in your company, apply them where ever you manager customer relationships. You will increase your market share and reduce your acquisition costs with these practical strategies.
If there is a business relationship topic I haven't yet addressed for your company, please reply with your comments. What solutions can I provide you today?
Sincerely,
Justin Hitt
Strategic Relations Consultant, Author & Speaker
https://iunctura.com/
By Justin Hitt, Strategic Relations Consultant, https://iunctura.com/
Customer Relationship Management (CRM) software can help automate market segmentation, but you must know yourself and your customer to be effective with it. With smart data collection and integration, you can turn what you know into greater market share and stabile profits. Customer segmentation is a critical factor of success in your CRM strategy.
The four key areas of a CRM based customer segmentation strategy are data collection, analytical measures, system availability, and testing assumptions. The areas form a circular system starting with data collection and ending with the testing of assumptions, with each cycle gradually improve focus on profitable customers.
Start by defining useful data elements that identify customers most likely to purchase your product or service. Do not make the mistake of collecting every detail hoping that some of it will be useful. up front define groups of data that identify buyers, this will generate a better return for your efforts and create a clearer understanding of your customers.
Gather details at each interaction by concentrating on only three questions relevant to that exchange. Your customers are busy, so do not waste their time with lengthy surveys when you can ask a few targeted questions at a point of interaction. When these questions are on a topic related to the customers objectives they would frequently share useful information you could not get anywhere else.
Listen to customer concerns noting key facts under the customers� record. Frequently customers will tell you exactly what you want to know, but often end-users ignore this information because it is not relevant to a particular role they play in the company. Using call scripts or interaction guidelines will improve the documentation of useful points. With a properly implemented CRM system, these seemingly irrelevant facts are available to others who interact with the same contact.
Look at transactional information for trends that pertain to groups of customers and companies. Many customer segmentation models are available, but the most under appreciated is the Recency-Frequency-Monetary (RFM) model. This model looks at a customer's recency of purchase, frequency of purchase, and the dollar value of purchase per a certain type of product or service. A customer's historical behavior is often an indicator of their likeliness to purchase within a certain area again.
Create easy to apply filters and selection models to extract customers for specific efforts. CRM makes filtering customers against specific criteria simple; the problem is many companies do not build models based on what they know about their customers. Start a library of specific filters that represent your best segments of customers, code these filters into your CRM software for use by sales and marketing.
Use filters and knowledge about customer actions to automate the processes. If certain conditions represent the likelihood of future actions to be taken by a customer, program your CRM system to identify these analytical conditions and take an appropriate action. You should automate work flow the support an interaction with a customer or a prospect, at least scheduling calls based on changes in a customer profile.
Key information about each contact must be available at every interaction. You cannot build a strong customer relationship without a clear picture, and supporting facts when a customer is ready for you to use it. Customer expect you to be organized enough to recall their last contact with you, or even answer questions about their account with passing them through a phone maze to the right� department. You can accomplish this by placing access to a CRM system at every interaction point.
Your sales, marketing, and support departments must have access to the same system. Your CRM software should stand as the core of any department that interacts with a customer or prospect if you want to have any success with it. This reduces the costs of collecting critical information necessary for accurate segmentations. Aggregate data from specialized support, sales, or marketing systems to provide a complete customer picture for each.
Make your system easy to use so it encourages the documentation of data collected. Too often end-users neglect to enter critical information about customer interactions in a CRM system because it is difficult to use. You can customize most systems to remove irrelevant fields and streamline work flow to better match current processes. Provide regular end-user training as it applies to specific functions within your company.
Keep your data clean at all costs, you cannot make valid decisions on incorrect assumptions. Include filters that identify possible data errors, take advantage of information management tools that keeps your data as accurate as possible. Clean data reduces marketing costs and makes sales people more productive by providing a more accurate picture of on real prospects. Use input filters and tools available to your CRM system regularly.
Test any segmentation assumptions against historical data sets before rolling out physical tests. Transactions of your current interactions can validate or adjust your current assumptions. CRM software makes it easy to test assumptions against models in historical data; you can save both time and money by just looking over your segments in light of your objectives. This type of software makes it is easier to make adjustments in a few filters before physical tests.
Expand what you know about customers with third party data. Often appending industry, buyer psychographics, or financial information to existing records can help identify other traits of profitable customer segments. Do not assume you know everything about your buyers, seek quality outside data to future test your assumptions. While this is useful, stay within the bounds of your useful data sets to prevent more analysis than action.
One of the advantages about today's CRM solutions is most of these segmentation strategies are possible without the number of specialized database managers required in the past. Individual end-users can test preliminary filters before investing in more formal implementation company wide.
These strategy lets you start with the things you already know about buying customers, then add additional information as it is relevant to your company�s objectives. You will discover more about your customers to build a clear profile of who will purchase your offer increasing your margin size. CRM provides a tracking system that support task automation and can reduce your costs as your market share.
How effective are the customer segmentation strategies you implement today?
© 2003 Justin Hitt, All rights reserved.
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Justin Hitt helps executives build stronger business relationships that ethically increase profits. Learn more about coaching and training programs at https://www.insidestrategicrelations.com/
Did you miss an opportunity to meet with me at George Mason University on 3 October? If yes, you missed an opportunity to learn about creating additional value for customers, even increase customer lifetime value, at each interaction point.
To those who missed this chance to get inside strategies that really create profitable relationships with customers, employees, and strategic partners�phone based consultations are available via Ingenio, for details visit https://www.ingenio.com/Justin+Hitt (select call now button for rates.)