The
Business Case for ECRM
Companies can improve profitability through the effective use of eCRM
systems and principles. Sales are higher due to:
- Higher customer conversion rates; this occurs through improved targeting
and merchandising
- Better customer feedback and understanding of needs; this leads to
improved product configuration and proposition development.
- Improved customer retention of loyal and profitable customers through
improved services such as cross and up-selling and customer lifecycle
management.
Costs are also lowered as a result of:
- More efficient, targeted marketing.
- Reduced customer acquisition costs through higher conversion rates
and customer referrals
- Customer self service efficiencies
- Use of lower cost channels such as e-mail etc.
A driving force for eCRM is lost profit opportunities through inadequate
CRM. Due to the specific costs and benefits associated with identifying,
acquiring and retaining profitable customers, the primary aim of CRM is
to improve customer retention. Consider the following:
- Some companies can boost profits by almost 100% by retaining just
5% more of their customers.
- In traditional markets a dissatisfied customer will tell 8-10 people;
in an electronic market this is more likely to be 85 people
The Bottom Line -- Customer retention and loyalty, which are driven
by customers' experiences with all contacts they have with a company,
are absolutely key to driving long-term profitability and success.
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