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How to use CRM to manage the dissolution of customer relationships

4th Aug 2015
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Competition for consumer attention is high for most 21st century industries, primarily thanks to the boom of online offerings and a growing multitude of customer choice. Although beneficial for the customer, high numbers of options can be extremely problematic for firms, mostly because the process of trying to ‘win over’ new customers can be very resource draining. According to Forbes, attracting new customers now costs a company five times more than keeping an existing one. What’s more, when you win over a customer’s loyalty, there is no guarantee that they will actually remain committed to the relationship.

With such a high level of competition, businesses often tend to focus the majority of their new business generation resources towards attracting net new customers, although research shows that 65% of a company’s business comes from existing customers. Although attracting new business is important in terms of strengthening a client portfolio and  increasing revenue, there is another element to customer relationship management, which organisations often tend to overlook – how to handle the cessation of a relationship.

The termination of a relationship with a customer can often be the result of dissatisfaction. If unhappy with a service or product, customers will typically switch to competitors in pursuit of a better experience. Accenture’s global consumer research study, which studied more than 10,000 consumers in 27 different countries between September and October 2011, found that only about 25% of consumers feel loyal to companies, with two-thirds signing up with a different service in just year, due to poor customer service.

However, there are also situations where customers have to leave a relationship involuntarily, perhaps with the intention of returning in the future. For example, they may have to move away from the area for a period of time, or in some cases, the business may relocate, even temporarily. For instance, take Heston Blumenthal who decided to relocate his award-winning restaurant ‘The Fat Duck’ to Australia for six months.

Moving the restaurant to Melbourne meant closing its West London base, and consequently the kitchen door on 1,000 customers per week.  Interestingly prior to the restaurant’s six-month closure, media stories urged consumers to book their last suppers and revealed the restaurant would be refurbished in time for its September reopening. So, whilst dining was temporarily put on hold as Blumenthal ran the  ‘The Fat Duck’ in Australia, British customers were encouraged to return and ultimately reestablish their relationship with the restaurant once its team was firmly back on English soil.

This is a good example of a company that respects customer relationships and understands the value of a long-term relationship.

In other cases, consumers may experience a fear of missing out, and opt to try out a different service after spending a significant amount of time with one supplier, particularly if they perceive a better ‘value for money’ offer elsewhere. For instance, take Marks and Spencer. The business was encouraging people to switch to its Current Account with the offer of a £100 Marks and Spencer gift card and store points with every pound spent. Although customers may not have been dissatisfied with their existing service provider, the package offered by Marks and Spencer could be tempting for consumers seeking added benefits.   

Alternatively, customers can sometimes experience feelings of ‘brand longing’ after spending time with an alternative supplier, and will consciously re-establish and resurrect previous relationships. These ‘phoenix’ types of relationships (in other words, relationships which temporarily cease, but are then reborn) can be of considerable value to businesses as a future revenue stream, if organisations actively ensure their ‘safe return’ and reward them for their loyalty.

The role of CRM

Customer relationship management (CRM) systems can play a significant role in highlighting and analysing the profile of not just existing customers, but those that have the potential to return and be active again. The information gathered can be invaluable as it allows companies to analyse and organise live and non-live customer accounts, and tailor future interactions accordingly to the individual, based on historic activity.

For customers, efficiency and accuracy is key. Put simply, if a customer is returning to a business they already have history with, they don’t want to start the relationship from scratch. Although a 21st century ‘digital first’ approach can provide a more efficient service, customers still appreciate businesses remembering their personal details, from their first name to previous telephone conversations they may have had with business representatives. 

As customers are constantly finding themselves regularly bombarded by brands with marketing driven information, ensuring contact with customers – ALL customers, prospects, present and previous – is vital and needs to be as consistent, personalised and as relevant as possible. Businesses rely on customer satisfaction to fuel long-term relationships and build brand ambassadors, which are vital to sustainable business success within the marketplace.

CRM software can help facilitate customer support and improve the quality and efficiency of future customer experiences, helping to rekindle old flames with long lost customers.This is vital, because in the modern business world, regardless of what your current relationship status is, it is always important to maintain good relations with customers - and this is especially true after a customer leaves. You never know when they may resurface - and they may even bring others back with them.

Stephen Pickett is professional services advisor at Experience Assist.

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