Database Reference
In-Depth Information
For instance, in a B2B environment, a leading supplier of aggregates and industrial materials
harnessed its CRM systems to help build loyalty and retain customers. However, the company
faced the challenge of rapid growth through acquisition of synergetic businesses. The company
grew from $140 million in revenues and 7 locations in 1997 to $360 million in revenues and 21
locations in 2000. Now, it was distributing throughout the United States. With the addition of
many new products to its product portfolio (through the acquisitions), the company wanted to
be sure that it was maximizing its cross selling opportunities and that the salesman had as much
information about the different products and each of the customers as possible. This was because
the company could no longer depend on the sales representatives
knowing it all
at any instance
of time.
1.2.1.3.1 Information Is Relationship
Companies cannot have relationships with the customers unless they
know
them, that is,
unless they have detailed information on them. Companies have a wealth of knowledge in
the files and records that customer-facing employees have on customer interactions. The best
way to leverage this knowledge is to free it from the shackles of experience, institutionalize it,
and transfer it in real time to all employees, so that they are empowered to build relationships
with customers.
As stated earlier, companies are finding it harder and harder to differentiate on factors that
prevailed in the 1980s—product quality, operations, logistics, and business processes. Across the
last decade, the quality of products has improved, many companies have undertaken business
process re-engineering (BPR) with reference to the enterprise processes, and many businesses have
also streamlined their supply and distribution channels. In this environment, it has become essen-
tial for companies to identify new ways to attract new customers, to maximize the value from
each existing customer, and to retain the most profitable ones. Studies show that maintaining
loyalty can increase customer profitability between 25% and 85%. Knowing who your customers
are and what they are buying is a major step toward ensuring their loyalty without necessarily
increasing the costs.
The approximate value of a customer can also be estimated easily based on the information on
the defection rate and the profitability of customers by year. Since
1
Attritionrate
=
Averagelifeofcustomer
it is evident that profits are determined not by sales but by the retention rate.
A major step in this direction would be to realize that whereas customer relationships are not
all about information, all customer-related information is certainly about customer relationships.
And everything else being the same, there is a huge potential in leveraging on the totality of infor-
mation that is gathered from all the interactions that the company has with each customer. This
is achievable by
1. Knowing the customer better than the competition does
2. Employing that knowledge to create better and more personalized interactions in future
3. Incorporating or embedding the costs of switching to competing solutions into the current
customer relationships
