Managing Customer Relationships in a Recession

Posted by Jeff Hershey on April 14, 2008, 6:05 PM EDT

I recently came across an article titled “Using CRM to Win in a Recession” from CustomerThink.com.  The article has a list of tips relating the importance of focusing on CRM during a down economy. The list makes some strong points but I have a few thoughts of my own to add.

Regardless of economic conditions, the fact remains that improving the customer experience is an important competitive differentiator between your company and its rivals.  In this day and age, improving the customer experience means both understanding your customers' needs and giving them the tools to interact with you on their terms. During a recession, it is more important than ever to effectively improve these aspects of the customer experience. A good CRM system is essential for such an effort. In this case, CRM should be defined broadly to include tools that allow customers to engage with you and for you to engage with customers, not just tools that allow you to track customer behavior.

In addition, a recession demands that your activities become even more efficient and targeted. By using a CRM system to identify low impact efforts and eliminate them, you will free up more time and resources for higher impact activities focused on higher value customers.  Further, by optimizing your front-office processes and workflow, you will be able to get more productivity from your current staff during a time when your competitors are forced to reduce their workforces.

Another key component of good CRM practices during a recession is leveraging improved customer insight.  When the economy starts to fall and customer spending decreases, it is more important than ever to maintain the best relationships possible with each of them - whether you have 50 customers or 50,000.  A good CRM system can help you track and use information to identify customers who are likely to defect before they do so or to segment out the highest value customers that you absolutely must keep under any circumstances.

Finally, I think it’s important to note that whether the US economy is about to enter an official recession or not, CRM should always be utilized to increase profitability.  Most wouldn't recommend waiting for a downturn in the economy to start improving relationships with your customers. However, if you have been putting off a CRM initiative, the possibility of a recession should serve as a reminder of the importance of being able to identify and cultivate those customers who will keep your business profitable.

Jeff Hershey