How to use customer loyalty to improve CRM

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Fred Reicheld, who invented the net promoter score (NPS), describes it as “the one number you need to grow.” He’s not entirely wrong.

NPS can provide you with a window into your key relationships and a clear idea of how happy your customers are.  

But the process of building relationships, cultivating loyalty, and turning buyers into true promoters is multi-faceted. So, to get the most out of NPS, you need consider how it fits into your wider CRM strategy.

Wider perspectives

In 2016, CRM has shifted towards capturing data and collecting insights on customer sentiment and behaviour (including customer loyalty).

NPS is just one of the tools facilitated by modern CRM systems that can help you do this. The single question NPS survey asks customers how likely they are to recommend your brand on a scale of 1 to 10.

‘Promoters’ are those customers who score 9 or 10, ‘detractors’ are those who score between 0 and 6, and those in between are known as ‘passives’.

Your brand’s score is calculated by subtracting the percentage of customers who are detractors from the percentage who are promoters.

The knowledge of where your customers sit on this ten-point scale is invaluable. On one hand, it allows you to target known promoters with personalised deals that are more likely to translate into a sale, thereby simultaneously boosting both revenue and loyalty.

On the other hand, it raises your awareness of passives and detractors, prompting you to either rethink how you approach them, or simply shift the focus away from them, in favour of promoters.

Driving NPS up is a necessity, but it should be done with a view to making necessary improvements at scale

However, to successfully act on these insights, you must treat your CRM strategy as a ‘barometer’ for customer relationship health: an holistic and multi-channel means of measuring customer attitudes and behavioural patterns – and predicting their future requirements.

Using data-driven CRM technology coupled with modern tools like NPS, you can gain greater visibility into how your current approach to customer relationships is improving – or indeed damaging – satisfaction and loyalty.

Crucially, you must also prioritise existing customer relationships. Acquiring new customers is both a necessary and worthy goal, but successful CRM is not entirely about acquisition. It’s about the continuous growth of relationships – and ultimately sales – within your existing customer base.

Making your existing customers happy is the most reliable route to profitability –  but only with regular insights into a customer’s mood and disposition can you identify lucrative cross and upselling opportunities.

A segment of one

In recent years, personalisation has moved to the forefront of discussions about customer loyalty. Writing for Econsultancy, marketing specialist Kym Reynolds describes personalisation as “creating a segment of one”: if you can make every customer feel like your only customer, you’ll increase loyalty and prolong your relationships.

Of course, this is quite a tall order, and it’s here that NPS should be used in tandem with multi-channel, data-driven sentiment analysis.

Through emails, social media, phone interactions, and more, you are likely accumulating more customer information than you know what to do with: if you can separate this into discrete sets of actionable information, you’ll only benefit.

Over time, an individual’s customer service communications become highly suggestive of their likes, their dislikes, and their overall personality.

Where NPS gives you a broad snapshot of how your customer base is feeling, a more detailed picture requires an understanding of metrics such as churn, retention, and repeat purchases. This will give you a more comprehensive view of your customers’ overall health and a solid foundation for effective CRM.

When you deliver a highly specific, highly personal service to each of your customers, you forge stronger bonds with your customer base as a whole.

Identifying promoters and detractors is one thing, but turning the latter into the former requires careful thought. Use CRM systems to unify disparate customer experience metrics and get a sense of each customer’s dispositions and priorities, and review the relevant data regularly.

If a potential problem is identified and dealt with, you can turn a detractor into an avid promoter; if an opportunity to upsell to a happy promoter appears, you can take the initiative, make some money, and strengthen your relationship at the same time. 

The bigger picture

Technology can certainly help with loyalty, but it’s really about making the proper investment in your customers: committing the time and resources to understand the full scope of their concerns and address them wherever possible.

Driving NPS up is a necessity, but it should be done with a view to making necessary improvements at scale. Are you upselling or cross selling wherever you can?

Is poor customer health costing you opportunities? Have you made the appropriate preparations for service disruption? To continuously maintain and improve your key relationships, you need to find the answers to these questions.

When you can expand your perspective, embrace transparency, and diversify your approach to relationship management, you’ll make it easier to engage with both individual customers and your entire customer base.

Give them a reason to stick around, and they will.  

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