A quick beginners’ guide to CRM

Most startups focus at the beginning on how to attract new customers and forget to think about how to retain and interact with their current ones.

And yet, not only it is cheaper to retain a customer than to recruit a new one, your current customers also have more value than the new ones: they usually spend more, generate more traffic online and in store, and in the end, will be your best ambassadors to develop your brand.

You want to power your startup using CRM and you don’t know how to start? We give you five easy tips to help you through it.

[This article was written following a workshop hold by Léonore Dubayle, EMEA CRM Manager @Estée Lauder Companies for our consumer startups]

1. Create a relevant customer database

Let’s start with the obvious: you need to know who your customers are. For every customer who buys on your website or in your store, you need to have at least a contact address (a phone number, an e-mail address or a personal address). You will then progressively complete their profile with other information: birthday date, historic of orders, samples given, even interactions on social media … The more information you have, the more personalized interaction you’ll have with your customers and the more efficient your campaigns will be.

Hint: You need to train your staff to get as many information as possible: explain them the added value for them and for the customers and give them easy tools to collect the data (use IPad at the cashdesk or flashcode to scan samples for instance).

At some point, you will want to extend your database and to recruit new customers. Buying leads or creating contest might look like good ideas but they are actually not that effective: you will get fast new email contacts but they are seldom relevant and you may have trouble to convert them into actual customers. Partnerships with look-alike brands or media or referral programs are often better solutions to get relevant email contacts.

Finally, you need to regularly update and clean your database: update your customers’ information, delete name and emails of people who never opened an email etc. It will help you keep your campaign impactful and prevent you from falling into spam folder.

Hint: Google and Microsoft have developed tools that enable you to know if your emails are considered as spams.

2. Define your CRM strategy

Now you have your database. It’s a good start. But what are you going to do with it? We usually consider three types of CRM campaigns.

The transactional campaigns. Their main objective is to sell a product. You can send an email in case of an abandoned basket, after transaction or delivery or to replenish their favorite product. They are usually sent to actual customers in order to make them buy again.

The promotional campaigns. They may be considered as a sub-category of the transactional campaigns because their main objective is also to sell a product. Their target may be slightly different however as promotional campaigns may be more efficient on new customers (who need a first incentive to buy) or former customers who haven’t bought for a while. They can be used to announce new launches, pre-order, events, promotions or partnerships.

The relational campaigns. Their main objective is to interact with your customer to enhance their commitment to the brand and their loyalty. They may be as simple as a welcome email for prospects, a thank you note for a new customer, a birthday card or a link to the latest blog article.

3. Make it personal

People are more and more looking for personalized experiences and services: they don’t want to be anonymous anymore but want to feel special and unique to the brands they love. The same way they love being known when they enter a store, they will also be more sensitive to a specific message sent for them at the right time. Luckily, technology can now help brands not only to collect more data but also to use it in a better way.

Even with a small amount of customers, your first job is to segment your database.

At the beginning, the easiest way to do it is to use one single criteria. The most often used one is the recency of purchase (are your customers new, retained, reactivated or inactive?) but you can also use the amount spent, the ages, the channels of purchase or the type of products bought. Once an expert, you can use a mix of criteria (Recency + Frequency + Value for instance) or even predictive scores to rate customers on their expected behavior for next purchases.

Once you database is clustered, you can elaborate very specific campaigns you want to send to your different types of customers depending on their consumer behaviors. For instance, your best customers may not be very sensitive to a promotion offer but would love to be rewarded for their commitment: you could make them discover a new service or invite them to a special event. On the contrary, an average customer may need an incentive to buy sometimes and you could send them a promotion email. Finally, your new customers may need more information about your brand and products: pushing them some editorial content or blog article can be the most efficient way to definitely convert them into active buyers.

Don’t forget that personalization is also a matter of form. Easy and slight modifications can be done to make your campaigns look more personal: update the sender (you can use the first name of an employee), change some pictures or call your customer by his first name for instance.

4. Adapt your timing and channel

There is no universal rules regarding timing: you should make tests to find out what works best for you to keep a regular connection with your customers without boring them. Two emails a week, one letter a month and two text messages a month are usually accepted frequencies. You can also ask your customer how often they allow you to reach out to them.

What all people say, however, is that you should not wait too long before contacting your customers, especially your new ones. 75% of people who buy twice buy their second products within the 6 months following their first purchase: it is thus vital to have interactions with them regularly to keep them in the long run because as said in introduction, you better have active and loyal customers than new ones every day.

Furthermore, we talk a lot about emails but there are many other ways to talk to your customers that you can and should use. Letters for instance might seem old school but are actually very well perceived (especially when they are very personalized). Text messages may seem very intrusive but are also very effective. And you can also use social media to launch a conversation.

5. Measure the impact of your campaigns

You may not be able to track and calculate a ROI for all your campaigns (but they are some metrics you can always track as opening rate or click rate). However, you should know what has worked and what has not to improve your next actions.

One simple technique you can use is to implement control groups. For six months, isolate a small portion of your data base and don’t send anything to them (if you are afraid to lose too many customers, you can also isolate a different group at each campaign): by comparing your results on your two groups, it will help you to measure the impact of your campaigns.

Likewise, you can also do AB tests for each campaign: cut you segment in different groups and test different email objects, send them at different times etc.

Tips: when you sell your products in wholesale, you can also use your sell out data to measure the efficiency of a CRM campaign.

Bonus tip: what about loyalty program?

A lot of companies have implemented loyalty programs and it is often something asked on the field. Truth is: it can be actually difficult to keep it in the long run and to make it attractive enough, without mentioning that promotions can be a very vicious circle (once you start it, it can be difficult to stop).

Most of the time, there are other tools that you can use to engage your customers: update your merchandising, create limited editions, have special offers, invite people to events… These little surprises can have great impact on your customers’ loyalty and commitment towards your brand.

Want to know more about the positive impacts of a good CRM strategy? Read this article to find out how Adore Me, the lingerie brand, saw a 15% increase in monthly revenue, a 22% increase in average amount spent and a 100% increase in its yearly active customer numbers revamping its CRM and segmenting strategy.

And don’t forget that CRM is only one aspect of the entire customer experience: all along the way, you should always try to be proactive and give customers what they want before they know it.

Eutopia VC

Camille Kriebitzsch

Written by

Principal & cofounder @EutopiaVC

Eutopia VC

We’re Eutopia. A Paris and New York based early stage venture capital fund. We invest in consumer startups rethinking how we eat, sleep, dress, exercise and feel.

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