Consolidating and developing its relationship with its customers is vital for any business.

The stronger that relationship, the more likely customers are to remain loyal and the more likely to buy additional services or products on a regular basis. In terms of cost-effectiveness, it is easier and less expensive to win new business from existing customers than it is to win new customers.

By maintaining good customer relations, a firm also enhances its reputation for excellence of service and reliability.

The process of strengthening the ties between a business and its customers is known as customer relationship management (CRM).

The benefits

A good CRM programme will map out how a firm's customers behave and identify ways of better serving them.

Specifically, a programme can: detail what and when customers spend; evaluate their choices of product or service profile individuals or groups of customers for target marketing; and indicate how the firm's own policies can be altered to accommodate the needs of its customers.

There are a number of business advantages in doing this. These include: a greater ability to predict when certain customers are more likely to make purchases; refining products and services to suit specific requirements; opportunities to cross-sell; more effective marketing and better returns on advertising spend; knowledge and insights that can be used to shape more productive new business campaigns; higher levels of loyalty and repeat business among existing customers; and a proportionate increase in the value to the business of individual customers.

CRM programmes

To implement a CRM programme usually requires some form of specially designed software or application. Depending on its resources and its requirements, a business can outsource its CRM, buy a ready-made CRM application, invest in a bespoke package tailored to its own particular customer base, or, if the bespoke solution is too expensive, rent a customised package of CRM applications.

Most CRM programmes, no matter how detailed or broad they are, work in the same way. They collect the information necessary for arranging customers into groupings.

That information is stored in a database in such a way that it can be used by everyone in the business and can be easily updated. Once the information has been collected and filed correctly, it is assessed according to the objectives of the CRM programme - in order, for example, to identify purchasing patterns or valuable customers. This will allow a business to market its services with greater accuracy and to reward those customers who spend more or spend regularly.

A CRM programme can also be used to pinpoint areas where customers have experienced problems or have not received an adequate level of service. This will help a business rectify any failings, or adapt its services or products to better suit their customers.

It is important to bear in mind that a CRM programme can be time-consuming to run and sometimes can be better managed if it is introduced in parts or as projects.