CRM (Customer Relationship Management) Software and Its Importance
April 3, 2025
CRM or Customer Relationship Management is a system that caters to the management of a firm’s interactions with past, present, and future customers. The CRM software integrates the entire customer relationship cycle by automating sales, marketing, customer service, and technical support. CRM software is a solution that automates the disparate and discreet aspects of the…
The Benefits of CRM Solutions There are many benefits of CRM or Customer Relationship Management software. They include automation of the upstream and the downstream sales and marketing processes. Further, by implementing a CRM solution, businesses can integrate their routine and administrative tasks associated with cold calling, customer management, and pre-sales as well as after…
Customers are the most important part of business. There cannot be any business without them. Only satisfied customers will be interested in buying and they will also refer other customers to buy. By measuring customer satisfaction a supplier can maintain a quality and long term relationship with customers and secure their future business and financial…
Acquisition equity is the potential monetary value of acquisition for the organization. It provides the stage for customer equity data to be encapsulated in the financial database of organization. Measuring acquisition equity is indigenous and simple process to implement, the only hurdle is the collection data before this calculation is made. Computation comprises of following general steps:
Understanding the above steps, let’s take a practical example and compute the acquisition equity stepwise.
Step 1: Assume the total number of prospects as 100 in a fixed time period of 1 month.
Step 2: After calculating, the marketing cost comes to $ 10, campaign cost $ 5 and servicing cost as $ 5 for whole selling stage. Hence the total cost for contacting one prospect comes out to be $ 10 + $ 5 + $ 5, which is $ 20.
Step 3: Now out of 100 customers 10 became actual customers hence the RR (response rate) comes to 0.1 or we can say that the conversion rate is 10%.
Step 4: Suppose after the customer purchases any product for the first time, the revenue comes to be $ 500. If the profit margin is 30% then the actual profit gained will be $ 150. This profit turns out to be $ 1500 for 10 customers for the first purchase.
Step 5: Through this, acquisition equity can be calculated by subtracting total revenue after customer’s first purchase i.e. $ 500 with the total marketing, campaigning and servicing cost i.e. $ 20. This will come out to be $ 20 - $ 500 = (-) $ 480.
Step 6: Finally for calculating the average acquisition cost for all the customers will be (-) $ 480/10 = (-) $ 48. This is the acquisition cost for 10 customers for that organization.
On paper, the above steps and calculations can yet be converted into formulas and equation. These equations will look like,
Cost of acquiring a customer Ca = Pc/Pa
Where,Total Customer Investment CI = Pcp
Where,Profit per customer/Cost of acquiring customer P/C = m/Cp/a = am/cp
Where,Organizations usually get surprise by expensive customer acquisition, hence the comprehensive understanding of knowledge of acquisition cost and calculating cost ratios and business profit would help the organization to enhance and create business strategies in an efficient manner. By benchmarking these calculations the marketing process can be performed smoothly and strategically.
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