Research from Bain & Company indicates that as little as a 5% increase in client retention can provide companies with a 75% boost in profits.
In today’s intensely competitive global marketplace, an increasing number of best-in-class firms utilize CRM to drive performance across the enterprise and retain and add clients. Over a decade ago, some viewed CRM as optional or a “nice-to-have.” That’s no longer the case, though, as CRM is a strategic business differentiator and essential to the long-term growth and success of any organization, regardless of its size and years in business.
The cost of not adopting a CRM strategy and not investing in and consistently utilizing and maintaining a CRM system is significant! Negative results include:
- smaller profits per customer
- flat or declining revenues
- eroding market share
- lower margins than industry peers
- lower returns on poorly-targeted and executed marketing campaigns
- higher costs to acquire new clients
- longer sales cycles
- missed cross-sell or upsell opportunities
- declining customer satisfaction rates
- higher client attrition rates
- increased turnover of valuable employees
- lower shareholder value
- hindered employee productivity
- uninformed, error-prone, and untimely decision making
Oddly enough, some companies are still hesitant to invest in CRM. Sometimes they are reluctant to move forward due to conflicting and more pressing IT priorities, budgetary constraints, or preferences for home-grown proprietary solutions.
In many cases, these non-CRM adopters let complacency get in the way due to their past success. Still adhering to product and service-centric strategies and metrics, they refuse to adapt to the times and cater to the evolving preferences and increasing demands of their customer base. Thus, they still are running well behind, often stubbornly and sometimes even recklessly.
As Michael Porter, a Harvard Business School Professor and one of the world’s renowned experts on strategy and competitive advantage, elaborates:
“If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful. It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today when the flow of information and capital is incredibly fast.”
Merely relying on a stellar track record and a pristine reputation to produce referrals and new business may have some sort of payoff in the short-term, but it certainly will not lead to any long-term sustainable competitive advantage. Besides offering unique in-demand products and solutions, companies must differentiate themselves by embracing a client-centric focus and implementing CRM throughout all levels of the organization.
In other situations, a lack of consideration for CRM may derive from a misunderstanding of what CRM entails. After all, CRM is so much more than managing contact records and address books. It is about focusing on customers, building relationships, and capturing and tracking real-time data across multiple channels to better understand client needs and preferences so that they keep returning.
Furthermore, CRM involves transforming and streamlining business processes to generate lasting client value, retain and satisfy more clients, and ultimately grow revenues. That being said, companies can no longer afford to ignore implementing a CRM strategy and investing in a leading-edge CRM system. Unlike CRM, other legacy systems are no longer viable, as they cannot integrate with other core systems, they are not scalable, they cannot grow with your business, they cannot provide real-time information, and they cannot push data to multiple electronic devices. It’s clear that IT initiatives must be re-prioritized and budgets must be reallocated to include room for CRM.
In conclusion, firms delaying CRM strategic investments will continue to lag and lose ground to industry leaders. Don’t let that happen to you!