Customer Relationship Management (CRM) has become increasingly popular in recent years and many businesses funnel large proportions of their expenditure into this discipline. CRM campaigns that specifically focus on customer interaction and consumer confidence have become an integral area of operation for many businesses.
But there is another discipline that many businesses overlook and it is one that can provide improved long-term profits if implemented correctly – Product Relationship Management (PRM).
PRM’s primary focus is the product and how it will provide continuous long-term profit. Yes, a business needs to persuade consumers to make that initial purchase, but once it makes a sale a business should not be chasing customers for further business — it should make the customer do the chasing. This is where PRM has an advantage over CRM.
CRM problems: Maintaining customer contact
CRM promotes the benefit of a healthy customer base and the importance of maintaining contact with these customers. Whether this is by email, post, or phone, the emphasis is on continuous promotion. After all, if a customer bought the last product they may well show interest in other products a business has to offer.
The problem with this system is the unpredictability of human behaviour. People move house, change their email address, and get a different phone number. So as efficient as a business’s CRM may be, there is no factoring for personal detail changes by customers.
So are businesses blowing their budgets hiring CRM experts, when they should be channeling their efforts towards supplying products that offer the potential of a continuous long-term revenue stream? CRM may not be the definitive answer to long-term financial profit, but PRM may well be.
PRM: Increasing a product’s afterlife
One of the biggest advantages with adopting a PRM strategy is that is allows a product to encourage its own future sales. This could be from something as simple as new must-have product accessories. However, the most profitable and successful PRM techniques are based around products that:
- Include perishable components that will require regular replacement.
- Have components that are manufacturer-specific.
- Offer regular upgrades and fixes to keep the product in top condition.
- Have warranties requiring the use of original manufacturer parts, or the use of approved technicians for any repair work.
If a business implements PRM into its marketing strategy, it should be looking to sell products that fit one or more of the examples above and ensure that it stocks and promotes any related products that consumers will require in the future.
For example, inkjet printers need ink. Many printer models will only accept replacement ink cartridges from their respective manufacturers and this means owners of a particular printer are forced to buy specific ink cartridges. The original printer sale may not have yielded a high profit margin but the continued sale of replacement ink encourages numerous profitable future transactions.
The same applies to replacement parts for products. Many products will use unique parts that can only be supplied via a manufacturer. These will be sold at premium cost. Customers are forced to buy these products when required, especially if they wish to ensure a warranty is not invalidated.
CRM drives businesses to chase customers and keep them informed through interaction and correspondence. PRM can force customers to return to a business because they need it. This is the main difference between PRM and CRM.
Can PRM and CRM co-Exist?
The simple answer is yes. A smart business will integrate the two principles into one plan, increasing efficiency and long-term profit generation.
CRM can be used to attract new customers and keep them satisfied. PRM will supplement this strategy by ensuring those customers keep returning for future purchases and transactions. Every time a customer returns, his or her contact details can be verified and updated.
Businesses may lose contact with customers through CRM alone, but PRM can help drag them back. Lost customers become contactable once again and a new CRM process can begin. It is almost a perpetual cycle: CRM encourages a purchase, PRM encourages continued transactions, customer contact details can be confirmed, and CRM continues unhindered by a loss of contact.
Daniel Offer is a partner in the Facebook messaging application Chit Chat for Facebook