Do you struggle to build customer relationships despite having powerful CRM technology? Do you feel your business isn’t making the most of its CRM software?
You’re probably not using the right CRM model for your industry, business needs, and products.
My name is AJ. I’ve used CRM systems for several years, and they were the leading reason I scaled and sold my business so quickly.
After years of creating CRM models for my business, I made this guide for small business owners to do the same.
What is a CRM model? Let’s learn more!
Key Takeaways
A CRM model is your company’s foundation for managing relationships through the entire customer life cycle.
A customer management model encourages cross-departmental communication and centralizes customer information to create a better shopping experience.
IDIC, QCI, Payne’s Five Process, and CRM Value Chain are the most popular CRM models.
The better you understand your customer base’s values, needs, and shopping behaviors, the better you can target them via marketing campaigns and sales efforts.
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A customer relationship management (CRM) model is the framework for how your business manages customer relationships.
This framework covers every aspect of a customer’s journey through the sales funnel, from acquisition to retention.
Generally, CRM models have a similar flow, which includes the following steps:
Learn about your customer baseGrouping or segmenting your customersContacting your customersUsing what you learn to adjust your internal processes and optimize your CRM model
There are a few kinds of CRM models (which I’ll cover later in this article). Still, these models revolve around the customer experience.
As you likely already know, CRMs are excellent tools to gather data and discover patterns within that information. With a CRM, your company can access valuable information that ensures you make data-driven business decisions rather than guesses.
Other things your CRM can assist you and your team with include the following:
Marketing automation Discovering potential customers Data organizationAutomating routine tasks (sending emails, reminders, etc.)Creating a company-wide calendar
CRMs are powerful tools, and a CRM model ensures you and your employees utilize these tools effectively!
The primary purpose of CRM models is to help your business better understand how it can reach, convert, and retain customers.
Customer retention is vital because it is cheaper for a company to retain customers compared to finding new ones.
Additionally, a customer relationship management model makes it easier for your employees to learn about your customer base.
Understanding your customers’ preferences and buying habits results in the following business metrics:
Higher customer satisfaction ratesIncreases in salesIncreases in repeat customersMore brand loyaltyStreamlined sales processEfficient business strategy
Simply put, a CRM model ensures your company uses customer data efficiently, creating the best experience for each customer.
There are numerous benefits to utilizing a CRM model.
One of the most significant advantages is that these models centralize your customer data and coordinate your team’s efforts.
That way, you ensure everyone is on the same page in creating the best customer strategy and shopping experience.
Also, centralized data prevents data silos, segmented information groups unavailable to specific individuals or departments.
Customer relationship management (CRM) systems collect in-depth data about potential and current customers. And CRM models utilize the information to create a better customer experience.
Further, some of the other benefits of implementing a CRM model include the following:
In-depth customer portfolio analysisIncreased salesBuild customer trust fasterEncourage cross-departmental collaborationImprove customer profitability
A customer relationship model gives your company a competitive advantage (when used correctly)!
Now that you’ve learned what a customer management model is and why your company needs one, it’s time to learn about popular frameworks!
Four CRM models are popular in the business world.
Throughout my experience, I’ve utilized each of the models listed below at some point.
Which one is right for your business? Let’s find out!
The first model I’ll cover is the IDIC CRM model, developed by the Peppers and Rogers Group.
This model is a general framework for implementing a CRM system in various situations. So, while this model may not work for companies that demand industry-specific CRM implementation, it’s perfect for general needs.
IDIC stands for the following steps of CRM implementation:
IdentifyDifferentiateInteractCustomize
Below I’ll further explain each of these steps and the actions you must take for successful implementation.
The first stage in the IDIC CRM model is identification, meaning you must identify your customer base.
How do these customers shop? What marketing strategies do they find most appealing? What are their demographics?
There are numerous ways businesses can collect this information. Some pieces of information you need to collect include the following:
Customer nameAddressPurchase history at each stage of contact across the company
At this point in the IDIC model, the goal is to collect as much information on each customer as possible. As a result, you can create better customer relationships because you understand their needs, wants, and purchase behaviors.
The next step in the IDIC model is differentiation. The goal of this stage is segmenting or separating your customers based on their current and predicted lifetime value.
It’s vital to remember that every customer in your sales funnel doesn’t bring equivalent value; some are more valuable than others.
Therefore, when you differentiate your customer base based on their value to the business, you can rank sales efforts based on who is most likely to buy your products or services.
As a result, you can tailor your interactions to each segment so they’re a good fit for each part. You can enjoy optimal profitability when you personalize messages to each group.
The third stage in the IDIC model is the action stage, meaning you start to interact with your customers!
At this point, you and your team have analyzed and categorized potential and current customers. Therefore, the “Interact” stage is when you develop personalized interactions.
What do I mean by personalized interactions?
One example is creating loyalty benefits for valued customers who have purchased products or services from your company. Loyalty benefits encourage retention and repeat transactions.
Also, you may notice some customized interactions are more successful than others. It’s essential to tweak your strategies as you learn what works and what doesn’t.
The final stage of the IDIC model is customization.
It’s critical to take careful notes and analyze the results of the first three IDIC model stages because you can examine them to create more personalized, one-on-one services.
Essentially, you want your customer interactions to feel as personalized as possible, meeting (or exceeding) customer expectations.
Also, you may not target a customer segment correctly the first time. That’s okay!
What’s important is adjusting your business processes, ensuring they get better and more tailored each time!
The QCI (Quality Competitive Index model) is commonly described as a customer management rather than a customer relationship model.
That said, the Quality Competitive model focuses on three activities, which include the following:
AcquisitionRetentionPenetration
Starting with an acquisition, the QCI model initially focuses on a customer’s external environment.
For example, this model considers a customer’s pain points, business goals, and additional factors that impact whether they are ready to buy or interact with your sales reps.
As you can see, this stage impacts the customer experience already.
In turn, the customer experience affects customer proposition and management activities (proposition focuses on what you offer the customer).
Procurement processes involve several steps to acquire and retain customers. Therefore, strategy development is crucial because you want to understand your customers better than anyone else.
This CRM model considers the people and technology involved to keep the entire system running, an aspect other customer relationship management models don’t include.
Adrian Payne and Pennie Flow developed Payne’s Five Process model. This CRM model focuses on cross-functional CRM processes.
This CRM model includes two significant components, cross-functional CRM processes and key elements of CRM implementation.
Further, Payne’s Five Process model includes the following functions:
Strategy developmentValue creationMultichannel integrationInformation managementPerformance assessment
Additionally, the four elements that are necessary for successful CRM implementation include the following:
CRM readinessCRM change managementCRM project managementEmployee management
A CRM readiness assessment is something your business should conduct before CRM strategy implementation. This assessment shows how prepared your employees are to implement a new CRM software.
Further, CRM change management is necessary because implementing new CRM software involves fundamental, cultural, and operational shifts.
Therefore, you must have strategies to prepare your employees for the shifts that are about to occur.
Investing in CRM project management ensures as you implement new strategies and the complexities of your company grow, you have the know-how and resources to handle them.
Lastly, employee management and buy-in are critical for a successful CRM implementation. Your CRM software is pointless if your employees don’t use or understand it.
Ensure your employees understand your CRM strategies and processes. When they do, your team is more likely to engage with customer-centric company culture.
The QIC CRM model believes that without the previously mentioned processes in place, your CRM will not succeed.
The final model I’ll review is the CRM value chain model.
The chain model is a high-level system that Michael Porter developed, identifying the processes a company utilizes to create a product or service for the customer.
The CRM value chain model aims to identify and emphasize the essential activities of businesses, improving the processes to gain a competitive advantage over other companies.
Customer relationships are the focus of the CRM value chain model. For example, the CRM value chain model notes each stage and activity needed to build relationships and promote customer loyalty.
The CRM value chain model is separated into the primary and support stages (which I’ll explain next)!
The primary stage of the value chain model consists of five primary processes to ensure the strategy works. These processes include the following:
Customer portfolio analysisCustomer intimacyNetwork developmentValue proposition developmentRelationship management
Customer Portfolio Analysis
Customer portfolio analysis involves analyzing your customers based on how much value they will bring to the company.
By completing this analysis, you can better understand your customers and meet their needs and expectations. Retaining customers is easier because you develop techniques to maximize their lifetime value.
Customer Intimacy Process
Customer intimacy involves evaluating and engaging with customers to collect customer information.
You should never stop collecting customer data, as each stage in the sales process presents valuable information you can use for customer development.
Remember, a primary focus of your business strategy is learning about your customers so your marketing and sales efforts are effective and efficient.
When you prioritize the primary stage of the CRM model, you can increase customer satisfaction and long-term business revenue streams.
Network Development
Your company’s network includes the following people and entities:
PartnersSuppliersCustomer serviceInvestorsWholesalers
You must use customer data to generate more value at each network level. That way, you ensure your entire system is optimized for customer relationship efforts.
The best business strategy is one where everyone involved in creating a customer’s experience is on the same page.
Value Proposition Development
Value proposition development involves utilizing the customer information and interaction data within your CRM and creating value for your target customer base.
During this stage, you must aim to shift a customer’s attention away from what you’re selling (products or services). Instead, you want them to become aware of the value your company gives them.
Additionally, this stage involves cutting unnecessary process costs within your customer strategy. Again, this ensures you create the most value for your customers.
Relationship Management
The last stage of the value chain model is building customer relationships. During this stage, you want to consider the entire customer lifecycle.
For instance, relationship management processes involve analyzing your strategic processes and organizational structure.
As a result, your company can manage customer acquisitions, retentions, and development cycles efficiently.
The support stage contains certain strategic processes that ensure the elements in the primary stage can function properly.
For example, the five supporting conditions that you must have to implement the processes I mentioned in the primary stage include the following:
Leadership and cultureProcurement processesHR management processesIT and data management processesOrganization design
Again, creating and continually tweaking these behind-the-scenes conditions is essential for a successful CRM value chain implementation.
Customer data is the lifeblood of CRM models.
Without customer data, companies can’t make informed decisions about where they want to take their business strategies. Thus, understanding your customers through data is essential.
For example, a company can use customer information to create targeted marketing campaigns that are more effective and efficient than those without customer data.
Similarly, you can use customer data to improve processes and increase your customer lifetime value.
Targeted marketing campaigns help your customer base feel like you care about them individually (an important factor in purchasing behavior).
As a result, you attract more potential customers to your brand and continually develop relationships with them to encourage purchasing your products or services.
Customer portfolio analysis is a process that companies use to identify, segment, and target customers based on their value.
By analyzing customer data, such as purchase history and demographic information, you can better understand your customers’ needs and create targeted campaigns to attract similar customers in the future.
Moreover, this process involves understanding how much time and resources you want to invest in customer development.
Customer portfolio analysis helps you make informed decisions about where to focus your resources and how to maximize the lifetime value of each customer.
CRM models ensure your sales and marketing teams have specific steps to follow while acquiring customers and building relationships.
The most common CRM models include IDIC, QIC, Payne’s Five Process, and Value Chain.
Value creation and understanding your customer base is critical to building long-term relationships with your audience.
Which CRM model fits best with your company? Let us know in the comments section below!
And good luck finding CRM software and a process for your needs!
The post CRM Models: A Guide for SMB Owners appeared first on Small Business Bonfire.
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