Customer retention: getting a CRM program off on the right start. (Marketing News).

Customer relationship management (CRM) is difficult to execute successfully without first establishing a reliable customer retention strategy (CRS), says Jay Kassing, president of sales and marketing at The Centrax Group, Chicago.

"Anyone who has struggled with CRM must have skipped this step," he says. The Centrax Group provides marketing MCIF and sales CRM solutions.

Understanding the similarities and interplay between CRM and CRS helps financial institutions begin the process of retaining their most valuable assets--their top clients, he says. For most institutions that initiate a customer relationship program, CRM and CRS mirror each other for the first year to year-and-a-half because the focus must be on retaining existing clients. Only when a solid CRS is established does it become possible to think about broadening the client base and launching a full-fledged CRM plan.

Here are tips that Kassing offers to banks on creating a CRS:

1. Start by performing a profitability review of all products and services. This move helps to assure buy-in from the CFO and from relationship managers down the line.

Those people in the institution dedicated to searching out the top clients must effectively share their information with the frontline employees. In addition, by asking the right questions, frontline employees can ascertain whether "elsewhere" money (dollars at other institutions) is inherent in a particular client. It is equally important for the frontline employees to share their information up the chain of command. That is why, when it comes to retention, it is imperative for employees to recognize a top client when they encounter one.

2. Assign a value code to each customer. This action helps to ensure that top clients don't slip through the cracks, or better still, that they can be given the recognition as important customers. Once the top five, 10 or 20 percent of clients are identified, relationship-building resources can be allocated in a more efficient manner. "At some level, this type of segmentation is just as George Orwell described in "Animal Farm"--all clients are created equal, but some are more equal than others."

3. Write personalized letters to valued customers. Once a top client has been identified as such, the simplest and least intrusive method for communicating is through personalized letter writing. Ideally, letters should be written by frontline personnel who have had direct contact with the clients. An alternative is to establish an employee whose sole purpose is to make contact with clients and to let them know how important their business is to the institution. Calling is another way to stay in touch with clients and remind them that the institution is there to help them. Customer appreciation receptions and client-hosted parties gather the most valuable clients in one location so that they may be introduced to the institution's staff, products and services.

4. Offer rate incentives to top customers. Consider a strategy to offer high-profit clients, who may have just one product with your institution, an exceptional rate on their next product. Even if the institution only breaks even on this new account, it adds to the number of products a client has with the institution. It also makes the client less likely to leave, and more willing to hear about the next new product.

5. Develop an employee buy-in strategy. The internal buy-in is more likely to occur when an employee feels confident in asking the client the appropriate questions that may ultimately lead to additional services rendered by the institution.

Frontline employees should be properly versed in the products and services that the institution has to offer and must also understand how those products and services stack up against the competition. In turn, the knowledge gained by an inquisitive employee must be shared with the institution to give other employees who may encounter that client in the future a heads-up. This kind of communication will lead to better service for all clients. And as your staff begins to recognize the value of CRS, employees will be able to provide a crystal clear picture of an institution's most valuable customers.