Safeguarding Your Business against a Recession with Improved Customer Relationship Management

In my last Business Currents article, iMarketing During a RecessionOe Smart Marketers Ride the Wavei, I shared the unique and inevitably current opportunity for smart marketers to sustain or gain market share and revenues during an economic recession. Itis true that maintaining or increasing your esmarti marketing efforts could pay tremendous dividends now and especially when economic times start to turn back up. To take this advantage one step further, as customers are at the core of all of our marketing efforts, now is the time to scrutinize your existing customer strategy and revisit how you are managing your customer relations.

CRM Revisited

Customer Relationship Management (CRM), as referenced in the April 2007 issue of Business Currents, maximizes the value of the customer relationship to the customer, for the customeris benefit and the companyis profits. Itis about using customer information and engaging in dialog. CRM is a process of acquiring, retaining and growing profitable customers. Lifetime value and share of customer (or optimizing all of a customeris purchases with your companyis products/services) are key to CRM. Itis finding ways to add value to the customer relationship in the customeris terms. And, it is a business process and requires buy-in from the top as well as sharing of information throughout the entire enterprise. As the going gets tough, the focus on retaining and acquiring customers gets more intense. Itis no surprise that CRM technology solutions sales (to facilitate customer relationship management) are up from last year. Following are a few ways you can better manage your customer relationship management strategy — starting now. Recalculate Your Customer ROI The customer ROI equation is a simple and effective way to quickly measure and help optimize your customer relationships. Simply stated; add more customers, increase customer loyalty and decrease your cost to serve the customer.

+ ROI = + Customer Acquisition + Customer Loyalty n Cost to Serve Customer

So, how well are you managing your Customer ROI these days? Are you aggressively pursuing new, profitable customers? Or are you simply trying to hold on to the ones you have? Are you providing new ways to add value to existing customers and stimulate loyalty? Or is it status quo? Are you intelligently finding ways to decrease the costs to serve customers? Or are you barely hanging on with the increased costs your business is incurring while trying not to pass those along to your customers? Toyota recently executed a lean CRM makeover incorporating elean principlesi to cut costs serving the customer. This involved cutting out non-value-adding activities from their customer operations. According to Graham Hill of CACI Customer Solutions Group, lean CRM involves an understanding of what customers really value and then systematically working through the value delivery chain so that it is the customer who drives the whole process. Hillis experience developing Lean CRM at Toyota showed that it can reduce time to market by 50%, increase customer purchases by 100% and reduce costs by 50%, all by getting rid of costly non-value-adding activities n a great way to gain a competitive advantage, in not only tough economic times, but any time.

Reassess Your Customer Profiles

As business changes during an economic recession, so too might the face of your customer. First of all, do you really know who your customers are these days (their demographic profiles)? Are your customer segments still in-tact, and/ or have new ones emerged? Itis likely that those who were previously profitable are no longer, and some optimistic evolution may be apparent. Keep in mind that during a recession your customers do not go away. Instead, they become more conservative and more intent on value than ever before. Focus is usually directed to making the products they already have last longer. So, now might be a good time for you to do a survey and better understand the profile of your customer as well as identify who makes up your most valuable customer segment (by profitability, frequency of purchase, share of wallet, etc.).

Understand Your Customeris Behavior

Understanding your customeris behaviors is imperative these days for setting a proactive recession-proof customer strategy. What are they buying? How often? How much? All are good places to start. Are customers buying more small products/services from you or fewer larger products/services? How has the sales cycle (the time from prospect to close) changed, if at all? Who are your best customers (in terms of profitability, numbers of orders, money spent, etc.)? In case you hadnit noticed, competition is most fierce during these times. Therefore, itis wise to know how loyal your customers are. A good way to test this is to ask the question: Would you recommend our company and/or products/services to others (on a scale of 1 n 10)? Why/why not? Knowing what your customers are responding to is also important. Is your messaging and packaging resonating with your target audience? Keep in mind that during shifts in customer behavior, new opportunities emerge! Chrysler is addressing the behavioral change in auto purchases due to the increase in gas prices of their customers, head on, with a promotion that promises guaranteed discounted gas for 2 years as an incentive. By proactively reacting to the behavioral change with marketing, Chrysler is trying to maintain and/or increase sales while gaining a competitive advantage as a first mover with this promotion.

Improve the Customer Experience

Customers will make exceptions to more conservative spending if their perceived value exceeds expectations. By improving the customer experience, you stand the chance of increasing the gap between your company and its rivals as well as maintaining or growing business. Are you over-satisfying your customers with their customer experience? Are you making it easier for them to do business with you/your company than with your competition? Are you tracking customer behavior and accommodating their needs? I recently had a client ask if they could pay for a 12-month project up-front and receive a discount for doing so. Where the overall revenue to my company would be less due to the discount, accommodating their needs in this case made sense as it provided better cash flow for my business and allowed me to accommodate my clientis needs in appreciation for their business.

Take Control of Your Customer Strategy

Donit panic, but itis URGENT to take control of your customer strategy and relationship management today. It should not take long to re-calculate your customer ROI, reassess your customer profile, understand your customeris behavior and improve the value you are providing to the customer. In the short term it will provide business peace of mind, and along the way, increased sales, improved market share and a clear competitive advantage.

Sources: 1. Hill, Graham, Using CRM To Win in a Recession,, March 5, 2008 2. Hershey, Jeff, Managing Customer Relationships in a Recession, Concursive Fusion, April 4, 2008 3. Johnson, Tera, presentation on iMarketing in a Recessioni 4. Green, Lewis, BizSolutionsPlus iLead with Your Heart: Sell Happiness and You and Your Business will Flourishi. 5. Godin, Seth, iMarketing in a Recession,i Blog, 02/2008. 6., Definition of ishare of mindi.

Angelo Biasi is General Manager of SMART Marketing Solutions, LLC, a leading full-service integrated marketing company in Naples, FL. Angelo has an MBA in Marketing from the University of Connecticut and has taught Marketing at New York University for over five years. For more information or to learn more, visit or call 239.963.9396.

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