Customer Relationship Marketing (Cambridge International A-Level Business)

The aims of CRM

• Customer relationship marketing (CRM) involves a business focusing their marketing efforts around building a deep understanding of customers, consistently meeting customer needs and developing long-term customer loyalty
• Marketing strategies and tactics are focused on four key areas

CRM strategies and tactics

Customer relationship marketing involves the acquisition, retention, expansion and reactivation of customers

Customer acquisition

• Attracting interested consumers and converting them into customers to achieve growth, make money and improve chances of business survival

• Businesses can acquire customers in many different ways, including

  • Building a strong brand identity
  • Delivering excellent customer experiences
  • Providing clear information
  • Offering special rewards, such as price promotions

Customer retention

• Customer retention involves encouraging customers to remain loyal to a business and its brands over time

• Encouraging loyalty is important for several reasons

  • Attracting new customers often costs more than retaining current customers

  • Loyal customers tend to be valuable repeat customers

  • Retained customers can refer new customers to a business

    • Word-of-mouth marketing is a form of free marketing for a brand
    • Happy customers talking about a business or brand in positive ways can help persuade people they know to become loyal customers as well

• Businesses can retain customers in many different ways, including

  • Customer loyalty schemes
  • Regular communication about new products or promotional offers
  • Targeted price promotions or other perks for existing customers

Customer expansion

• Customer expansion is the process of encouraging existing customers to increase the value and frequency of their spending on products and services over time

• Businesses can achieve customer expansion in several different ways, including

  • Upselling *by encouraging customers to upgrade to premium products
  • Cross-selling by offering customers a related product or service
  • Providing add-ons such as insurance policies, extra features or extended warranties

Customer reactivation

• Customer reactivation involves reaching out to customers who have previously expressed interest in or purchased a product but have since become disengaged

• Businesses can adopt a range of techniques to reactivate customers, including

  • Social media engagement
  • Targeted price promotions for returning customers
  • Direct mailings via post or email

Costs and benefits of CRM

Benefits of CRM

• CRM allows a business to build a detailed understanding of its customers’ needs and preferences

  • This helps the business to tailor its products, services and promotional activity more precisely, increasing the chances of customer satisfaction and repeat sales

    • E.g. A clothing retailer might use CRM data to send personalised offers based on a customer’s past purchases

• Retaining loyal customers is usually more cost-effective than attracting new ones

  • CRM focuses on building long-term relationships with existing customers, which reduces marketing costs

    • E.g. A mobile phone company offering exclusive upgrades to loyal users instead of spending heavily on advertising to new customers

Costs of CRM

• CRM requires significant investment in staff training and development

  • To deliver consistently good customer service, employees need to understand the CRM system and be committed to meeting customer expectations at every stage of the buying process

    • E.g. Hotel staff may need to learn how to use CRM software to remember guest preferences and deliver a personalised experience.

• CRM is unlikely to succeed without ongoing, expensive customer research

  • For CRM to be effective, the business must constantly collect, update and analyse customer data, which can be time-consuming and costly

    • E.g. An airline may need to invest heavily in customer surveys, feedback tools, and data analytics to truly understand traveller needs.