The Pareto principle suggests that 20% of customers contribute to 80% of sales, highlighting the importance of customer retention and customer loyalty, especially from the key segments. Loyal customers benefit from a business as they make routine purchases, tend to try additional products and services, refer other customers, and are almost “immune” to competitor attractiveness. Furthermore, a 2018 PWC survey on U.S. consumers stated that brands associated with positive customer experience can enjoy up to a 16% price premium on products and services. As customers require continuous attention, SMEs in Malaysia should implement Customer Relationship Management into their business strategy to build customer loyalty in the long run.

Customer Relationship Management (CRM) is the process of acquiring, maintaining and developing profitable customers. It focuses on creating business attributes that add value to customers and build long-term relationships with customers; it is the technical backbone for managing the customer journey. A successful CRM will increase customer satisfaction, which will lead to greater customer loyalty. Customer satisfaction also helps to reduce new consumer search costs, improve the company’s reputation, and increase the brand’s influence on customer purchasing behaviour.

SMEs are spoilt for choice with the variety of CRM solutions provided, and it will be easy to capitalise on them after you have evaluated your business needs. Just keep in mind that CRM can be performed as a combination of three main concepts: people, process, and technology.

People

A consumer-centric business starts with consumer-centric leaders. SME owners must first adopt the mindset of “putting customers first”, then apply it to the overall tone and priorities of the business. Compared to big corporations, SME owners have more opportunities to engage closely with customers, which can improve their ability to understand customer needs.

Owners should also engage regularly with frontline staff to nurture belief in the ability to achieve the highest levels of customer service. When owners are off field, they can utilise other consumer touchpoints, such as social media and website to engage with their customers.

Members of the organisation should strive to be innovators and seek inspiration from customers to create solutions that add value. Beyond product innovation, this transformative behaviour could also lead to other new growth opportunities, where some may even change existing customer behaviour. This is ever so important especially since consumer behaviour constantly shifts with the ever-changing economic landscape, environmental, and societal values as our country continues to evolve and grow. SMEs must ensure that customers’ needs are put first and all touchpoints should sing this same tune.

SMEs should also include consumer-related practices into their organisational culture. Businesses can motivate their employees by developing a remuneration system that rewards consumer-centric behaviour. Besides, SMEs should also commit to providing training for employees to improve customer connection and adapt to their evolving needs. Apart from improving the team’s interpersonal communication skills and problem-solving skills, the team should also be upskilled to learn how to use digital CRM software. Additionally, employees can also be empowered to improve customer satisfaction by delegating to them the capacity to price-adjust without approval or to offer a lenient policy on returns.

Process

Businesses should review and transform their current business strategies and processes to become more consumer centric. As a starting point, SMEs can look at the Customer Lifecycle theory as a reference to identify areas in which they could reinvent or update; the customer lifecycle is comprised of five stages: Reach, Acquisition, Conversion, Retention, and Loyalty.

• In the first stage, Reach, business processes are focused on generating awareness and identifying potential and profitable customers. The CRM processes involved are to understand the customers (needs, interests, preferred communication channels, and messaging tones), segmenting the customers into groups, and allocating distinct marketing campaigns tailored to these demographics.

• In the Acquisition stage where prospects become leads, processes involved are to encourage customer engagement with the brand through information and the optimisation of consumer touchpoints.

• In the third stage, Conversion, processes are to instil confidence on the quality of the products as well as reducing friction for customers to complete their order.

• In the fourth stage, Retention, processes are about post-purchase engagements to maintain an active relationship, which includes after-sale services, obtaining feedback, and enticing customers to return for new products.

• In the last stage, Loyalty, the processes involved are reward programmes and personalised promotional deals.

A focus on the customer should be encouraged, integrated, refined, and reinforced in every necessary part and level of the business. For example, creating products and services based on consumer needs, designing organisational structure based on CRM initiatives, and implementing customer satisfaction KPI (such as measuring customer retention and customer lifetime value). These CRM processes should be streamlined together with the right technology and people to truly make it work.

Technology

Along the Customer Lifecycle, there are three types of CRM tools to help digitise these processes: Operational, Analytical, and Collaborative.

• Operational CRM streamlines the sales, marketing, and service processes through automation; it also records and manages customer data.

• On the other hand, Analytical CRM is the one that turns data into business value, such as statistical data analysis, customer profiling, and employee performance tracking.

• Lastly, the main function of Collaborative CRM is to streamline processes and workflows across the organisational structure, which includes automating routine tasks and the flow of relevant data.

However, building a CRM system from scratch may be too costly for SMEs, thus SME owners should opt for CRM software packages that are much more affordable. These CRM packages offer specialised solutions such as customer insights, contact management, social CRM, and many others that SMEs could implement into their overall CRM strategy. It is important that business owners conduct their research on the market offerings to compare their price and quality, as well as the compatibility with their current business model and systems. To minimise the costs and risks of implementation, CRM solutions should be added in several small steps to ensure both their integration with current IT infrastructure and the possibility of future extensions.

With the rise of e-commerce, the Internet is both a promising tool and an enabler of increasing competition. In general, SMEs should make their customer experience as engaging and interactive as they can across all channels. SMEs should always engage regularly with their customers in social media; creating interesting and relevant content on a constant basis is difficult but rewarding in the long run. Automated chat responses and FAQ buttons should also be set up on social pages, website, and WhatsApp, to prevent losing potential customers during off-times.

In sum, as the current business environment becomes more competitive and consumers become more demanding, SMEs must transform to be more customer-oriented and invest in CRM and other business solution tools like cloud infrastructure, HR solutions, or digital banking, to aid them in creating unique and meaningful customer experiences. In a time when businesses are more digitalised than ever, human connection becomes increasingly valued, so SMEs must go back to their drawing boards and develop their very own mix of people, processes, and technology.