CRM Software Identifies Which Customers to Lay Off

Despite recent recovery in the global stock markets, many company leaders still worry that they may have to cut expenses and overhead to stay ahead of earnings expectations. Call centers and customer service operations often seem like low hanging fruit for budget-minded managers eager to automate the customer experience and eliminate extra headcount. Fortunately, many savvy companies have turned their call centers and sales operations into sacred cows, especially when CRM software can help streamline operations and steer more revenue into an organization.

Laying off employees may not be the answer, but there are other people that might find themselves getting the ax this year -- customers. Instead of recommending staff reductions, some customer relationship management experts urge company leaders to consider using CRM software to discover which clients they should fire. CRM systems can analyze whether certain clients demand more than their fair share of company resources. For instance, one customer might demand sever discounts on goods or services while spending a significant amount of time with sales or support teams. Consultant Fred Wiersema recommends using CRM systems to the distinction between "stretch customers" and "lagging customers":

• "Stretch customers" challenge teams to identify and serve upcoming markets. They represent the leading edge of a trend and offer opportunities to test new techniques. By definition, they require more time to cultivate, but pay off in the long run.
• "Lagging customers" take up staff time but provide little meaningful revenue and no strategic advantage. Using CRM systems to separate lagging customers from stretch customers can save companies a significant portion of their marketing and support budgets each year.

While company leaders at Best Buy aggravated consumers by attempting a similar strategy at retail, inside sales professionals can use more subtle tactics to gather the data necessary to determine whether a client's worth keeping. CRM software that can assess a customer's strategic value can pay for itself this way, usually within a few sales cycles.