When leading firms justify or promote their investment in CRM, they often cite how their CRM software platform and firmwide client-focus strategic initiative help them achieve significant gains in revenue, efficiency, and client satisfaction. These naturally are incredible benefits and they definitely result in a dramatic competitive advantage compared to rival peers who are lagging and not adopting and leveraging CRM. In particular, increased revenue-related metrics usually highlighted include:
- average deal size
- sales per customer
- products per customer
- sales per rep or territory
An understated benefit of CRM, though, is how the system can actually reduce a firm’s costs related to the sales engagement process.
Thus, I wanted to explore how leading-edge CRM solutions with high-powered marketing, sales, and service functionality, can help reduce client acquisition costs and cost of sales.
CRM provides employees with more background and actionable data intelligence on their customers and prospects in a centralized location that is accessible anytime and anywhere. For instance, sales and marketing personnel have at their disposal real-time information on products and services owned across the enterprise, purchasing history, buying preferences, last offer dates, prior and upcoming interactions and meetings, potential product gaps in the overall relationship, and recommended solutions. Since all of this information on the client profile is relevant, segmented, structured, and easy to find, marketing campaigns can be more targeted, timely, and generate more buzz, interest, and responses.
Additionally, sales executives and account managers are more prepared, find it easier to be proactive and plan sales calls, and adhere to a more uniform, consistent sales process. They become more effective at establishing common interests and connections with new prospects, and they are empowered to have more intelligent, consultative discussions with their current book of business.
Administrative hassles, duplicated efforts, wasted time, and unreliable, free-form, non-integrated data are no longer a worry.
The wealth of rich, useful information in the 360-degree view of customers, prospects, and referral sources in one’s territory and the streamlined quote-generation and order input capabilities of modern CRM platforms enables the producer to be more productive and close deals faster. Overall, lead conversion ratios increase, and more cross-sell and up-sell opportunities are uncovered and won, which makes the executive and sales teams very happy!
Due to shortened and simpler sales cycles with both existing and new customers, client acquisition costs and cost of sales decline, and the more popular and highly coveted revenue and profitability metrics begin to skyrocket.
As many sales executives know, prospecting for new business is an arduous time-consuming journey with many ups and downs. Moreover, many coveted prospects can only be won through long, grueling sales cycles. Not only is it extremely challenging to find new business or win back lost customers, but it is also very costly. In fact, many acclaimed marketing thought leaders assert that it costs five times as much to acquire a new customer as it does to merely obtain repeat business from a valued existing customer. With that in mind, sales teams should revisit their prospecting strategies and focus more of their efforts on generating add-on business from their current clients, particularly the Top 20%.
Top producers at top-tier firms have long successfully built their book of business by adroitly spending most of their time and effort nurturing and growing relationships with the “Tier 1” Top 20% of their clientele. Rather than market to a mass of people or businesses, firms can utilize a more personalized, segmented approach with the assistance of a CRM system. By tracking purchasing patterns and trends along with revenue growth potential, companies can more effectively frame advertisements and attractive offers that actually meet the needs and wants of their most profitable current customers. In many of today’s leading CRMs, real-time executive dashboard reports, marketing campaigns, and/or targeted daily calling lists can be created which focus solely on clients in the Top 20% category with the highest lifetime value opportunity.
Sure, sales executives should still actively pursue new large dollar deals from external sources, but many huge opportunities within your current client base probably exist that are ready to close in the near future. Going the extra mile and providing extra attention to the Top 20% will enable sales reps to uncover such opportunities and eventually convert these existing customers to lifelong customers. Superior segmenting, profiling, and target marketing of customers will lead to higher cross-selling results, which in turn will ignite revenues and result in increased customer loyalty and retention.
In closing, the renewed focus on your Tier 1 existing valued clients drastically reduces client acquisition costs so your profits will increase, too!