Thirty-seven per cent of companies with a customer database say they have achieved higher levels of customer service. So the short answer is, yes, it does work. A specific focus on the customer will yield the benefit of extra profit. The trick is, however, to spend a disproportion- ate amount of time and effort on your best customers. Consultants McKinsey concluded that not all customers are important. They suggested that some 30%-40% of an average company's revenue is generated from customers who are unprofitable if judged on a stand-alone basis, while a study of retail banking concluded that 50% of customers generate no profit at all.
CONSULTANTS EARNING EXTRA PROFITS
CRM is more widely used in consumer than business-to-business campaigns. Research from the Direct Mail Information Service shows that 79% of con- sumer campaigns target people on an existing database, compared with 67% of business-to-business drives. Twenty per cent of consumer marketers will use rented lists, compared with 23% of business to business marketers. In both cases, the majority of marketers use existing customer lists as their primary source. In some sectors, customer marketing dominates direct mail, and all campaigns by credit card companies, banks and building societies and luxury goods companies only mail to names on their customer database. Finally, in the leisure and entertainment sector, 89% of companies used customer databases, compared with 88% in travel and 86% mail-order companies. The midmarket demand for CRM solutions is booming. According to Meta group, between 30 and 40% of growth in the market will be driven by companies with between 0-0 and 1000 users. If big companies consistently deliver good service, customers will get used to it, and so small companies as well as large ones have to take action to retain customers.