Profitability Index Method
Segmenting Customers for Profit
Five Reasons To Pay Attention To CRM Software
Identifying Profitable Customers
Customer Relationship Management (CRM) Definition
Customer relationship management, or CRM for short, is the process by which a company identifies customers based on profitability or sales, and markets to them specifically. By identifying the best customer, the company has the ability to provide a unique offering to that customer or customers. This means repeat visits by that customer and a relationship that should be sustainable even through bad economic turns.
Customer Relationship Management (CRM) Meaning
Customer Relationship Management means that a company possesses the knowledge and capability to not only identify a target market or segment, but it is also able to provide a unique offering to maximize benefits for both companies involved. There are several steps involved when evaluating the customer relationship and providing the offering as follows:
1) Define the ideal customer - most companies do not take the time to evaluate who their best customers really are or what they might look like. Instead they go by something like a percentage of revenue calculation, but don't take into account the amount of resources or time a large high maintenance customer may be using up and therefore digging into their profits.
2) Target marketing & sales to your ideal customer - once you have identified your ideal customer, your sales and marketing activities should be targeting those particular customers. For example, if you identify entrepreneurs as your ideal customers, you should target your marketing and sales activities toward places that attract entrepreneurs.
Once this is done there are two options that a company can pursue in order to gain profitable sales as follows:
option A: Tailor your products to better serve your ideal customer - many companies develop new products or services and then ask their sales and marketing teams to go sell them without evaluating market needs. Your existing customers are the easiest to sell to so make sure that your core business and any new products you add are aligned to serve your ideal customer profile.
option B: Define your unique value for your ideal customer - In a down economy, the companies that survive are the ones that can show their unique offering or value and in a recovering economy those are the companies that thrive. Figure out what unique assets your company can bring to your ideal customer and help your sales and marketing team communicate them to prospects. Companies that stand out are those that can build customer relationships and provide a meaningful service and value to their ideal customers.