6 Key Elements of Customer Relationship Marketing

Customer relationship marketing (CRM) is a very current and relevant way of thinking about marketing. It is relevant because of the Internet and the impact it has had on the way companies conduct marketing.

In this article, I’d like to discuss six of the key conceptual elements that underpin the CRM approach.

Element 1: Customer Differentiation

As its name implies, CRM is a customer-centric approach to business. With this approach, a company intends to differentiate its offer of products or services by customer profile. Instead of a more conventional approach, where a company differentiates itself primarily by its products or services.

Element 2: Long-term emphasis

The goal here is to build a relationship with a customer over a period of time. This approach fits very well with many Inbound Marketing strategies that are used on the Internet.

This ongoing relationship has both cost and revenue benefits. On the cost side, it is almost always less expensive to market to an existing customer than it is to find a new one. The reason is simple; they already trust your organization.

Element 3: Continuous transactions

This is somewhat related to item two above. Instead of looking for single transactions with customers, aim for multiple transactions. This can be in the form of cross-selling, up-selling, etc. Or it may be that you become a preferred vendor for a certain niche product or service.

Sometimes this is a financial necessity, as the cost of obtaining a first transaction is so high that repeat sales alone make the process worthwhile.

Element 4: Two-Way Communication

A central element in building meaningful customer relationships is their ability to stay in touch with a business. With the advent of social media, email and SMS, this is even easier. This technology allows communication to become more of a two-way process. And it is the customers who are just as likely to initiate a communication as the organization.

This is a great way to get real feedback on people’s wants and needs. And it relates well to item one above; create customer-centric products and services.

Element 5: Retention Approach

With the CRM approach, a business focuses more on how to retain customers rather than just how to acquire more customers. Aiming for a low churn rate is seen as highly desirable, and is very often a profitable way of doing business.

This feature again ties in well with the power shift between buyers and providers that the Internet has created. Buyers are no longer dependent on supply companies to find out what is available. They can go online and do their own research and share stories with other people who have used a product or service.

Element 6: Securities Participation

By trying to share a set of values ​​with their customers, companies can build strong relationships. These strong relationships translate into a clear brand identity, which transcends the ability of organizations to simply buy loyalty with advertising or special offers.

Summary

In short, CRM is a major shift in marketing practice from mass marketing to one-on-one marketing. The focus has shifted from acquiring many new customers to retaining and building more business from a smaller base of high-value, loyal customers.