“There is only one boss. The customer, and he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” Sam Walton
“Customer is king” is the well-known saying of the business world. The success of any business is directly dependent on the level of the satisfaction that the consumers have with the product or service and the future trajectory of growth or loss is decided by the escalation or reduction in the number of happy customers. A happy consumer is a source of extra business by becoming promoter of the business while on the other hand an unhappy consumer may take away the countless potential consumers with him.
“Companies and their brands need to reach out and speak directly to consumers, to honor their values, and to form meaningful relationships with them. They must become architects of community, consistently demonstrating the values that their customer community expects in exchange for their loyalty and purchases.” – Simon Mainwaring
One of the biggest differentiating factors among startups of same domain is the distinguishing services and satisfaction that they provide to their consumers. Why would people prefer to go to local vendor of grocery rather than a well-funded and growing startup is because of the relationship that the local vendor is able to manage by his nature, home delivery service, discount etc. Similarly, why would people prefer to buy clothing online when there are so many fancy showrooms are there in the city, is because of the discounts, reverse logistics management services of the startup etc.
“Your most unhappy customers are your greatest source of learning.” – Bill Gates
Customer satisfaction level is also a check meter of the operational excellence that startup has achieved till date. A single unhappy complaint is sufficient enough to show the quality of operational excellence of startup. Feedback of consumers is the greatest sources to find the loopholes and areas of improvement in the system.
Customer Relationship Management – The Leading Factor of Startup Success
Since the number of startups working in same domain is getting increased day by day, so the distinguishing factor among all those players is the relationship that they maintain with their customer. When consumer has options to select a product or service from different players, general survey comprehend that the selection criteria for consumers are trust, relationship and previous experiences with the service/product.
CRM has become one of the major focus areas for entrepreneurs to ensure the survival and long term success of their startup. The better you manage the relationship with your consumers, more are the chances of success. CRM strategies need to be planned from the planning phase of the startup and shall be regularly monitored and controlled since the day one of execution.
From customer relationship management point of view, we can divide the consumer base in two categories-
- New Consumers – that are either unaware of your startup or using some other service
- Existing Consumers – that are either using the product or service of your startup or have used it in past
The major objective of customer relationship management could be defined separately for both types of consumers –
- New Customer Relationship Management – to convince the consumer to use your product or service and convert visitors into buyers.
- Existing Consumer Relationship Management – to enhance the frequency of existing consumers up to their maximum limits and keep them engaged forever.
Customer Relationship Management – Strategies and Challenges
Assumptions for Case Study – Let’s assume that the existing setup is the market based model of grocery delivery service –
- The consumer base is mixed – happy as well as complaining.
- The competitors are aggressive enough to enhance their consumer base.
- Cost effective and consumer attractive CRM solutions need to be implemented in the existing setup.
To manage the relationship with new and existing consumers, following strategies are effective for startups –
New Consumers Relationship Management
The relationship with new consumers is started by letting them know about the startup concept and convincing them to use the product or service. The main contributor to attract new customers is the marketing strategies to reach, convince and motivate them. So all the marketing strategies should be aligned in the following way –
[A] Unaware Consumers – Consumers that are unaware for the product or service of your startup are the easiest target to attract. Targeted marketing to reach these unaware consumers is the best way to start and manage the relationship with this market volume. Social media, press, media any of the medium could be used to reach these consumers based on the addiction pattern of the targeted consumer.
Case Study – For our case study of Grocery Delivery Service, following CRM strategies could be implemented for Unaware Targeted Consumers –
- Bachelors – bachelors could be reached out by social media as they have the addiction of Social Media
- Housewives – housewives could be easily reached by television media, door to door marketing
- Office Personnel – office personnel could be reached by deploying canopies at right locations
- Press Media – press media could be used to reach out the remaining market base
[B] Consumers of Other Player – Relationship with consumers that are using other services or product is difficult to start and manage as they are aware of the pros and cons of similar kind of service/product. So the best way to start and manage the relationship with these consumers is by highlighting the benefits, features and attraction to these consumers in the marketing strategies.
Case Study – for our case study of Grocery Delivery Service, following CRM strategies could be implemented to target the consumers of other players –
- Targeting the loopholes of other players and incorporating the solutions in the setup
- Using cash burnt tactics to capture the market volume
Existing Consumers Relationship Management
The relationship with existing consumers is maintained by keeping them motivated to use your product or service every time as per their frequency of use. The main contributors to attract existing customers are the level of service, source of motivation and their additional demands. So following strategies should be deployed to maintain the relationship with existing customers-
[A] Consumer Complaints – One of the best strategies to keep relationship with consumers healthy is by providing them the best help to solve their problems with the product or service. Better is the service to consumer, more are the chances of healthy relationship with consumer.
Also, the Consumer complaints are the greatest source to learn the loopholes in the system. Eg- if consumers are continuously complaining about the timing of delivery, it implies that there is some problem with the supply chain management. If consumers are complaining about the payment failure, it highlights the problem in payment gateway and other payment mechanism.
So to manage the relationship with existing consumers, a proper channel should be deployed to solve the consumer complaints promptly.
Case Study – For our case study, call, mail, chat support system should be deployed to maintain the relationship with consumers.
[B] Consumer Behavior Analysis – Consumer behavior analysis provides the pattern of consumer demand and source of motivation. So consumer behavior analysis provides the proper guidelines to manage the relationship with consumers. Based on the consumer behavior targeted marketing strategies should be applied.
Case Study – for our case study, following information of consumer behavior is useful for CRM-
- Products being purchased the most
- The time and days pattern of ordering
- Source of motivation of service use – discounts etc.
Based on the consumer behavior results, targeted marketing strategies could be deployed to attract the consumers with specific needs.
[C] Consumer Recommendation – Based on the type of product, consumer should be recommended with the relevant products or services to enhance the relationship with him.
Products with long life have low probability of same consumer returning for the same product. For eg- Cell phones, consumer is not going to return very soon to buy another phone. So to enhance the relationship with consumer it’s better to send the suggestion of relevant accessories for the phone.
Product with less life like grocery product, consumer should be recommended with the pre-defined alert messages at the consumption of product.
Case Study – for grocery products, following recommendations could be made to consumers –
- New products introduced in the setup
- Alert message at the expected consumption of product
- Weekly, Monthly order management system
- Recommendation of better products – for eg- low cholesterol oil etc.
If we are able to make consumers dependent on us for managing his product need, the relationship would definitely get enhanced.
[D] Consumers Loyalty – Loyal consumers are the biggest marketing team of word-of-mouth marketing for any of the startup. So to manage the relationship with loyal consumers is important to avoid the loss of fixed market base and keep it increasing continuously.
Loyalty rewards are one of the best strategies to motive customer to use product again and again. For eg – free or discounted product/service after certain number of use.
[E] Consumer Demands – Modifying or changing the business verticals as per consumer demand is the long term relationship management strategy with consumers. Feedback surveys provide what consumer wants. Based on the results of these surveys, consumer relationship could be enhanced by changing or introducing the business verticals in existing setup.
So, for better CRM, consumers should be queried for the changes that they want in the system.
Case Study – For grocery delivery startup, following are the ways to know the consumer demands –
- Feedback survey to know the area of improvement
- Customer review on the service
Wish you luck for your startup. Stay tuned with FS Labs to know more.