Everyone tells us about the benefits of CRM as engagement, satisfaction, and brand. But what about the CRM benefits to the company? The profit in other words.
Statistics show us that the benefits of CRM (customer relationship management) can clearly be seen in our bottomline. The proof of CRM benefits is in our profit margins. Our ROI. So, perhaps we should guess again when we throw our hands up in the air at things those CRM professionals talk about? Things like customer engagement, customer retention, customer relationship management, and social media.
Here are the 5 Benefits of CRM on Your Profit:
1. Existing Customers Are 120% More Likely to Buy Again
This is where your sales efforts should be focused. If you ever find your business in need of meeting a sales goal, look to this customer segment first.
Some of you can easily object to the first benefits of CRM, saying only new customers buy. So why should we focus on retaining existing customers instead of finding new customers, despite the cost of retaining vs acquiring? It's because existing customers are 120% more likely to buy from you again.
Let's use Microsoft Office as an example, they have this philosophy down to an art. Every 2 years or so, they upgrade Microsoft Office again. Now, how many of their sales for the new product do you think are generated from existing customers?
2. New Customers Cost 5x More Than Existing Customers
The cost to acquire new customers is 5x times more than the cost to retain existing customers. Too many times as business owners or marketers, we only see the immediate results of new customers. When all the while, if we had just focused on retaining existing customers…we would see that impact in our bottomline.
There are millions of tools available to help you manage your existing customer relationships. We picked apart some of the new & best CRM software solutions emerging into the market for you to consider. These newer CRM solutions save time and money, so there is virtually no excuses anymore to not be praticing good CRM!
3. Email Lists Convert 75% Better
Believe it or not, all those little newsletter subscribers, facebook likes, and twitter followers convert up to 75% better then other new prospects. This includes everyone: leads, contacts, anyone who has shown the sligtest interest in your business. Engage these people. They might not always buy now, but you want to be the first business to come to mind when they need your product or service.
4. Reduce Customers Leaving By 5%, Increase Profit By 25%-125%
That is a very clear ROI to me. This of course, depends on the industry as where between that 25-125% your profit will increase. This is also dependent on a 5% decrease in your existing customers leaving. These numbers amazed me when I found them. I would have to say, this could be the single most largest thing you can do to boost your profit.
5. Increasing Customer Retention by 2%, Is Like Cutting Costs by 10%
So let's put all these benefits of CRM together now, and see if we can come up with how much we save. Let's say we have a customer defection rate of 15% each year. If we can manage to learn why customers are leaving us, and we solve that problem, we could likely reduce customers leaving by 5%. Let's say that had a profit increase of 50%. Now let's say we acquired more customers, and increased that segments customer retention by 2%, it's like we cut our costs by 10%. Then, we roll out a new product/service to our existing customer base, and it cost us 5x less to sell that product/service. Then, we put more focus on our email lists, and managed to convert a large number of those customers. How is our bottomline looking now thanks to the benefits of CRM? I'd say…pretty darn good.