Trying to figure out what customer relationship management really is? You’re not alone. The term has been bounced around so much it remains a great source of confusion, says Howard Larson, owner of Larson & Associates. “What we are really talking about is building profitable customer relationships,” he explains. “From the days of the corner store to the global enterprises of the future, relationship marketing remains the backbone of building a successful business.” To get closer to your customers, Larson recommends adhering to these five principles:

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1. Continuously learn about your customers. When you know your customers, you can make sound business decisions. Collect and analyze information about your customers, and maintain that knowledge as you create customer profiles for your business. But don’t stop there: apply everything you know to building a customer valuation model. Knowing the value of each customer is essential for managing the relationship wisely.
2. Anticipate customer needs. Knowledge of your customers presents new opportunities for making the right offer to the right person at the right time. Analysis of customer profiles, especially using powerful analytics tools, can provide insight about who buys what from you when. Contact management systems can detect cross-selling and up-selling opportunities.
3. Interact with customers. Creating desirable relationships is not a one-way street; strong relationships result from interaction. Your customers appreciate being recognized, listened to, and understood. Let your customers know that you care about them in every communication.
4. Present a single face across channels. One of the ways to create value for your customers is to simplify how they deal with your organization. Take a holistic view of your customers, and consolidate information across the organization, regardless of geography, department, function, or product line. When you have a complete picture of each customer, you can design an interaction process from the customer’s perspective, thus increasing your value to them.
5. Retain the right customers. Have you ever fired a customer? One of the truisms associated with customer relationship management is that it is cheaper to keep a customer than to find a new one, but this idea can be taken a step further. To maximize value, organizations should focus on retaining valuable customers, not necessarily all customers. Be warned, however, that mistreating “low-value” customers, even if they’re hurting your business, is hard to justify in the court of public opinion.

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