By CommenceCRM

Why Is CRM One of the Most Powerful Customer Retention Tools

CRM, concept image

Customer retention is a key aspect that all businesses should strive for, and yet not enough understand just how important it is to foster relationships with long-term buyers. Too many business owners don’t think beyond acquiring customers or keeping their existing ones.

Unlike acquisition, customer retention is harder to achieve. Converting new customers to loyal consumers requires personalization, smart targeting, and proper implementation. Thankfully, there are tools that can help you do these things, and more.

A customer relationship management (CRM) platform is one of the best customer-centric tools on the market that will help redefine the way you interact with your buyers.

So, why is CRM considered the best customer retention tool? With functions like lead scoring, email marketing, and analytics, decision making is easier and customer service becomes more streamlined. These things result in improved customer experience, which can convert buyers into long-term consumers.

Why Customer Retention Matters

Customer retention is the art of keeping existing customers and increasing their lifetime value by becoming their go-to source on goods and services. To outsiders, it might seem like acquiring new customers is more crucial than keeping old ones. After all, getting a new customer means acquiring someone new who can spend on your business, right?

While that’s technically true, you have to remember that customer retention and customer acquisition provide different values.

Acquiring new customers isn’t so straightforward – you are likely spending some of your resources on ads and marketing campaigns in order to target new leads and convert them to new users or buyers.

On the other hand, existing customers cost zero resources in exchange for their business. Think about it this way, if your average ad spend comes down to $100 per customer, a buyer who purchases your product or service for $200 will have an initial value of $100. If this customer buys goods and services worth another $200, they would have repaid their acquisition costs and given you $300 in profits.

Acquisition VS Retention: Which One Is Cheaper

Businesses can spend anywhere from a couple hundred to thousands of dollars on ads, which could drive some new traffic and revenue into your business.

As effective as this strategy may seem, keep in mind that profit and revenue aren’t essentially the same thing. If you’re not careful, your company could end up spending more than what the average customer is worth when acquiring new customers.

Customer retention isn’t just about saving on ads. Here are other reasons why you should consider making this your new top priority:

  • Long-term customers tend to spend an average of 67% more than they did during their first year. Existing customers will eventually trust you more and keep coming back for related products and services. In the long run, they’ll start buying products or services that had nothing to do with their initial purchase, increasing their overall lifetime value.
  • Loyal customers remain loyal for a long time. In a survey, 77% of customers said they remained in business with a company for more than 10 years. If a majority of your customer base consists of existing customers, you’ll have a consistent revenue stream while saving on acquisition costs.
  • Long-term buyers not only increase their own value but attract new buyers. Customers with an emotional relationship with a brand not only have a 306% higher lifetime value but are 71% likelier to recommend the brand with friends and family.
  • Retaining customers is one of the easiest ways to increase profits while cutting down costs. At least a 5% increase in customer retention leads to a 25% increase in profit.

Customer Retention Challenges

Creating a customer strategy isn’t straightforward, otherwise more businesses would be doing it. It all begins with knowing what the common roadblocks are.

Retention strategies differ depending on your industry, business size, and customer base, but the common issues that increase customer churn more or less remain the same:

1) Terrible Customer Service

Bad customer service is the quickest way to lose existing customers. Whether it’s unanswered inquiries or rude customer reps, bad customer service can easily convince your buyers to look the other way.

In such a saturated market, buyers won’t have a hard time replacing your company with another one that has better customer service. In fact, customer service is so important that some buyers base their decisions on interactions with the company alone. A survey reveals that 72% of customers remain loyal with a brand because of friendly reps. That’s not all; a whopping 93% of buyers are likely to make repeat purchases with the same brand following a great customer experience.

On the other hand, good customer service isn’t just about being nice to your customers. Your representatives’ ability to actually provide knowledgeable, helpful solutions, while being time-efficient are two hallmarks of amazing customer experience.

2) No Improvements On Products and Service

This is especially true for B2Bs. Over time, your customers will start looking for more complex solutions as they start to develop more comprehensive needs. If you don’t evolve with your customers, there will eventually be other businesses that can offer what you can’t.

Good customer service isn’t just about adding new value. Most of the time, customer retention can be improved simply by listening to what they’re saying based on goods and services that already exist.

Customer testimonials are a great way to measure customer loyalty. Using social media, polls, and email marketing campaigns, you can gauge customer satisfaction and understand how they perceive your service. If you have these channels open but still fail to provide improvements, your customers will eventually feel like you aren’t listening to them and move on with another provider.

3) You Don’t Show Appreciation

Customers want a dynamic relationship with businesses. This means that buyers want to work with businesses who know what they’re worth. If you’re offering a loyal customer of more than two years the same discounts and deals you’re offering a new buyer, your existing customers won’t feel appreciated, which may cause them to feel a little bit neglected.

Appreciation isn’t just about rewarding them, either. At the very least, some form of engagement between your brand and the customers is needed to sustain the relationship. If your interactions are strictly transactional, your customers won’t develop an emotional attachment to your brand, making it harder to convert them into loyal customers.

The Role Of CRM In Customer Retention

Customer retention is a multifaceted aspect of sales. There are so many factors that go into customer loyalty, which is exactly what makes it overwhelming.

Thankfully, there are tools that make managing relationships with customers easier. Nowadays, most customers are expecting personalized, targeted service, and it’s difficult to do that without the appropriate tools to make customer support more seamless.

A customer relationship management (CRM) software is a tool that can help you manage relationships with clients and stay on top of each person’s interaction with your business. This way, fostering relationships and converting individual customers to local buyers becomes more manageable.

Core Functions of a CRM

A CRM platform is a powerful tool for driving customer loyalty. Here are the common functionalities of a CRM software:

  • Lead Management: Lead management might be the most valuable aspect of CRM for most organizations. Too often, companies can have hundreds or thousands of unused leads that aren’t properly organized or categorized, simply because no one had the time to manage it. With CRM’s lead management functionality, you can better engage with the leads you already have rather than continuously collecting new leads to be further left unused.
  • Email Integration: CRM acts as a complete platform, allowing marketing teams to plan, schedule, create, and send out entire email marketing campaigns through the platform itself. This means a single platform can contain all the data the team might need, and also enable them to send emails with that data integrated on the platform in place. No more jumping back and forth from one app to the next.
  • Forecasting: Need to find out what your customers might need more of tomorrow? Forecasting with the use of CRM tools allows teams to forecast or predict what might be the next best steps in their overall strategy. Predictive analytics through analysis of historical data and potential trends lets your team get the most out of your CRM efforts, giving your business the best opportunities to grow.
  • Customer Service Automation: Real-time, responsive, and immediate customer service is no longer a feature these days; it’s an expectation that customers expect from the best companies out there. CRM equips your organization with the customer service automation tools it needs to compete with the best and to maximize customer retention and satisfaction, through quick responses and immediate answers.

CRM VS CMS: Which One Is Better?

A contact management system (CMS) is another tool used by marketers and sales reps to foster relationships with clients. In fact, online articles typically use CMS and CRM interchangeably.

While their general purposes overlap, their core functionalities are different:

Automation A CMS can automatically set up notifications for team members to ensure that no deadlines are missed. CRMs are more comprehensive in that they allow you to schedule email campaigns, follow-ups, and other interactions. You can also set “triggers” that will automatically perform pre-set actions.
Reports and Analysis CMS stores information on customers and can help you understand how to move forward. Reports can’t be generated. Comprehensive CRMs can generate reports and analytics with one click, which you can use to propel sales and marketing efforts forward.
Lead Management A CMS can store information on incoming leads, such as name, email address, contact details, and inquiry. Customer reps can have access to this data and use it to create targeted messages. Leads can be “scored” and segmented into different categories. With this, personalized email campaigns can be sent to each segment with messaging that is specific to them.


The easiest way to differentiate a CMS and a CRM is by thinking of a CMS as an internal tool and a CRM software as an external tool. A CMS is ultimately built to make internal processes easier. The database function is especially useful for businesses that deal with hundreds of clients, and who need a tool to safely store all information on those customers.

On the other hand, a CRM software is built for engagement. It not only stores customer information but also provides opportunities for practical application. From analytics to email marketing, a CRM is founded on interactions – you can track a customer’s buyer journey and get a full understanding of their interactions with your business, which can help you create the best email campaign to convert them into a loyal customer.

If you need more help deciding which of the two is better for your business, read our blog “What Is The Difference Between Contact Management and CRM”

How Does CRM Help With Customer Satisfaction?

The true impact of a CRM system and the value it brings to an organization can’t truly be evaluated until customer satisfaction is measured with the CRM in place, and in most cases, customer satisfaction gains a major boost due to the proper implementation of a strong CRM system.

Here are some ways a successful CRM system improves customer satisfaction and consequently customer retention:

  1. Find the most profitable customer segments: A CRM system allows the management or leadership team to get the clearest view of their customers. You can better visualize which customers bring in most business and which customers act more passively over their lifetime value. By focusing on the most profitable customer segments through the data provided by CRM software, organizations can maximize their focus on the customers who spend the most. CRM-driven metrics allow organizations to maximize their profits and help customer satisfaction by improving focus on customers who are happiest with the service or product.
  2. Create hyper-targeted marketing campaigns: Similar to the first point: with CRM software, you no longer have to rely on the traditional marketing campaigns that waste tons of money and reach out to tons of the wrong people. Not only do these prove to be less and less successful in the digital age, but they are also virtually impossible to track, making them very unattractive in a data-driven environment. CRM software allows organizations to track and compare their marketing campaign results, allowing marketing divisions to understand what works and what doesn’t. By tweaking these elements, your team can devise a marketing campaign that will make even your most reluctant customer interested.
  3. Handle customer channels: CRM software is perfect for engaging customers in the channels that most directly connect with them, and these channels vary depending on a number of factors — your industry, your audience, your location — so identifying the exact channels that work best for your organization is key towards maximizing customer outreach. Direct sales channels, retail locations, web channels, social media channels (and which platforms); all of these are possible channels, and CRM software allows organizations to examine which channels work most effectively for them, which channels are being underutilized, and which channels can be further exploited to drive up sales.
  4. Develop specialized value-driven products and services: When an organization properly utilizes CRM software into every aspect of their team and business, they can truly understand what their customers want and the best ways to not only keep customers interested, but to drive them to continuously bring new customers as a result of their customer satisfaction. One great but difficult way to do this is by developing specialized value-driven or value-added products and services. Once you connect with your customers, you can best understand what they want and need, and how your organization can properly pivot the product or services you offer to fulfill what they need.
  5. Create Consistent Experiences: The CRM experience is the consistent experience, and consistency is critical when building a brand that your customers will trust and remember. With a strong CRM software at your side, your organization can create a consistent customer-facing experience across all aspects of their interactions with the business, from automated customer requests to personalized letters and all the support in the verbiage and theme that they recognize as being your brand. Consistency leads to trust and trust leads to satisfaction and retention.

4 Ways to Use CRM to Increase Customer Retention

We’ve dissected the purpose of CRM software and discussed its role in maximizing customer satisfaction, but how do you actually use CRM in the real, practical world effectively? Here are some simple yet powerful ways you can use CRM to get the most out of your customer retention:

1) Personalize Customer Communications

Personalization is the name of the game, but it also requires the most time and effort. Personalizing individual outreach emails and marketing material to every possible customer can take more resources than your organization might have.

With a CRM system integrated with your existing data, these personalized communications can be done with a streamlined pace and ease. Maximize your engagement with customers with simple, personalized touches for very little extra effort from your marketing team.

2) Reach Out to Inactive Leads

Just because a customer is no longer active doesn’t mean they’ll never be interested again. It is much easier to re-engage an old customer rather than convert a completely brand new customer, which is why the value of CRM software in re-engaging these inactive customers is endless.

By connecting your marketing automation tool with your CRM software, you can come up with a quick plan to reach out with special offers to your inactive customers and make them active once again.

3) Study and Analyze Customer Interaction

These days, information needs to be faster than ever. Studying reports at the end of the month or even the end of the week isn’t fast enough to react in the way the world needs. Only with real-time data that is being studied on the nose at any given moment can an organization truly be as flexible and rapid as they need to be, and CRM software can give you the tools to do that.

CRM notifications can inform your teams when customers are on your websites or other channels, looking for an interaction. By strategically responding to these interactions in real timreal-timeer interactions feel more integrated and streamlined, and overall satisfaction explodes.

4) Centralize Customer Data

The larger an organization grows, the more difficult it can be to keep all departments running together as one for a unified goal and mission. Communication between so many different teams and team leads and making sure everyone is on the same page with the same facts and data is critical towards keeping the boat going in the same direction across the board. And one way to do that is by centralizing your customer data in a single location.

With centralized customer data through the use of the CRM as the organization’s central hub, your Marketing team, Sales team, and Customer Service teams can all have a unified understanding of your average customer profile, and, if necessary, every piece of unique customer data.

By making sure everyone on your team is starting everyday with the same information, your organization can most effectively strategize your next steps to best retain your customers.

Supercharge Customer Retention With CRM

Customer retention might be challenging, but you don’t have to go in blind. You can deploy your own customer retention strategies using just one tool: the CRM. Use this to reduce customer churn, improve customer experience, and ultimately convert your existing customers to loyal ones.

Book a demo today and improve customer retention rates with Commence CRM.