Customer retention: getting a CRM program off on the right start.

• Position: Marketing News - Tips for banks on creating a customer retention strategy

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...