Why startups often get CRM wrong

• 5min read

A guest post by Jessica Holzbach, Head of Customer Relations at Penta

CRM is often misconstrued or just written off as email marketing. As such, startups often forget to factor in true customer retention management into their marketing strategies, until they have too many customers that their current methods are not scalable.

Before I joined Penta, I was interviewed by a Berlin based fintech for its CRM Manager position. I took the shot only to find my doubts to be proven true: what they have in mind when they think about “CRM Management” is a fancier word for doing eMail marketing campaigns. No common definition of CRM However, this was not a problem specific to this one fintech. I started to look into different job listings, read through all the required job qualifications and realized that they vary widely, and there seems to be no common understanding of what CRM really is, in startups and corporates alike. Within the startup environment, CRM Managers are mainly e-mail marketers, while within corporates a Customer Relationship Manager just performs and improves the existing CRM software. In the aforementioned job listings, there was nothing mentioned about customer service, sales and after-sales, or marketing and customer centric end-to-end processes. Nothing about the whole picture of CRM – and I realized, it’s a common problem in the startup world today. Defining CRM - a philosophy not a department Putting all the fancy definitions aside, the definition that really stuck with me in the early days of my career, is also the most accurate one: get, keep & grow customers. It becomes obvious that this definition of customer relationship management overlaps into several traditional fields:
  • “Get” collides with Marketing and Sales,
  • To “keep” and “Grow” your CLTV (customer lifetime value) you have to excel at Service as well as IT and Analytics.
Therefore, rather than residing within a specific department CRM should be considered as a philosophy: look at the company through the eyes of the customer. You should analyze all your internal processes from a customer’s perspective, end-to-end. Every process is triggered by a customer and also ends with solving a customer's problem. Moreover, it is important that you define clear responsibilities within your organization, so that people and processes don’t collide. Without a clear understanding of CRM, start ups fail to scale When speaking to founders within the startup scene about the topic, I realized that due to a lack of seeing the big picture, a consequential mistake is to think that you can build a great CRM solution that serves your needs, in-house. For instance, starting off with an Excel file, transferring it into Microsoft Access and then trying to merge the data into a ticketing system might work when you have 1000 customers, but once they grow to 100,000 (or even 10,000) it will get messy, and results in poor customer experience. Clear and scalable CRM strategies are especially important for the fintech industry When you deal with sensitive data and an environment that is as heavily regulated as the banking industry and financial services, you have to be on top of the game and ask yourself the right questions from the very beginning:
  • How can you ensure that you will provide an individualised, customized but also safe and trustworthy experience to everyone?
  • How can you truly know your customers?
  • How can you provide products and services to your customers, right at the time they need them most, maybe even before they realize that they need it, without interfering with data privacy regulations?
Personalisation via strategic data points is key The secret sauce to excellent customer service is to deliver the same personalized experience as your favorite cafe where the waiter knows how his 50 regulars like their coffee, and what their favorite meal is. You can do the same, even if you have 500,000 customers if you have the right CRM strategy and a software that supports your vision from day one.
  1. Structure your data to give you a 360 degree view on your customers and their needs at any time.
  2. Make use of best practices on which data to look into and how to connect different kinds of information. In B2C it might be interesting to know the birthday of a customer, in order to wish them happy birthday, or to give them a special offer. In B2B it may be good to know what industry the company is in, in order to give them an experience tailored to their company’s needs.
The formula is simple: get new customers through a unique value proposition, keep them by offering personalized content, and grow them by adding services that they really need.
Jessica Holzbach is the Head of Customer Relations at Penta, a digital bank for SMEs in Berlin, Germany. You can contact her at jessica@getpenta.com or follow her at @jessica_hbach. For more information about Penta check out www.getpenta.com.

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