Why Businesses Need a CRM Strategy

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SAN FRANCISCO – As the recession bites deeper into companies’ earnings, they should leverage social networking and other Web 2.0 technologies to enhance customer relationship management (CRM) systems to make them more effective, said Paul Greenberg, president of research firm 56 Group LLC.

“CRM is a strategy, not just a software or technology or processes you use to operate your business,” Greenberg, an acknowledged expert on CRM said in a keynote speech at SugarCON, the annual SugarCRM user conference here Wednesday.

Just tracking customers’ buying patterns is not enough because that does not show whether or not the customer is really loyal to the business. “Often people keep on buying from the same company out of sheer inertia,” Greenberg said.

The companies that will do well in this recession are the ones who keep customers engaged with them. Greenberg recommended that companies look at creating customer advocates through community building, blogging, social networking and other technologies.

Advocacy goes beyond customer loyalty, Greenberg said. “They talk about you, you’re part of their life. That’s a new business model called community retailing.”

For example, clothing and shoes retailer Karmaloop, which sells both name branded items and products from independent designs, looks at community building and advocacy as its return on investment, Greenberg said. “They say we sell to our community, our community will sell to itself and our job is to expand that community through user generated content.”

Karmaloop lets independent designers upload videos about their products, puts out an e-zine about independent designs, has community forums, a Web television show and a social network designed to be a trendsetters network, participation in which is by special invitation only, Greenberg said.

It also has street teams, who account one percent of its nearly million-strong community. Members of these street teams both buy clothing from Karmaloop and sell for the company in exchange for incentives such as discounts and free clothes, Greenberg said. These teams drive 15 percent of Karmaloop’s total revenue through purchases and word of mouth, Greenberg said. They accounted for $4 million in sales in 2006 and $40 million in 2008.

The key to a full CRM approach is to go beyond the technology and treat customers as partners, not objects of a sale, Greenberg said. Large companies can conduct Webinars, provide e-books, run corporate blogs, create communities, and send out targeted e-mails to customers on how to handle specific issues in life.

Small companies can send customers links to articles of interests, run blogs and podcasts, and make phone calls to key customers.

This article was first published on InternetNews.com.