Among the many definitions of the term: "Relationship marketing is a strategy designed to foster customer loyalty, interaction and long-term. Essentially, relationship marketing strategies are based on the notion that it is better and cheaper to keep an existing customer than to expend. Customer loyalty is crucial to your business success. For better customer retention, keep these six relationship marketing strategies in mind.
In the past, that was not the case.
Relationship Marketing | What is Relationship Marketing?
However, modern research has proven that customer retention is far more effective than trying to replace lost customers with new ones — which appears quite logical.
Firms therefore need to recognize the importance of retaining customers over the long term. There are different relationship marketing strategies. Differences between Relationship Marketing and Transaction Marketing Traditional marketing is based on the idea of transaction marketing.
That means, it is concerned with the exchanges between organizations and their customers. This in turn leads to a focus on the single transaction, and on acquiring new customers, either from the same market segment or from new ones.
The inherent assumption is that customers who have bought once will naturally buy again, unless they are dissatisfied for some reason. With the emergence of relationship marketing strategies, this view changed: The difference can best be explained using an example: Rather than trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services.
This is different than most normal advertising practices that focus on a single transaction; watch ad A and buy product B. Relationship marketing, by contrast, is usually not linked to a single product or offer.
It involves a company refining the way they do business in order to maximize the value of that relationship for the customer.
Respect that feedback and incorporate it into the company's business practices. Use any and all social media outlets to connect with customers. Have effective customer monitoring technologies in place.
Use clear policies to dictate how all company employees should interact with customers in both positive and negative situations. Leverage the value of warm leads — customers who have already expressed an interest in the company.
Have a comprehensive customer relationship management strategy. Conduct regular training sessions for all members of staff. Stay on the cutting edge of product offerings. Do not sacrifice quality for innovativeness. Maintain a high customer satisfaction rate in all areas of the company.
Make an effort to inform customers how much they are appreciated.
Relationship Marketing Strategies – Understanding Relationship Marketing
Relationship marketing mainly involves the improvement of internal operations. Many customers leave a company not because they didn't like the product, but because they were frustrated with the customer service. If a business streamlines its internal operations to satisfy all service needs of their customers, customers will be happier even in the face of product problems. Technology also plays an important role in relationship marketing. The Internet has made it easier for companies to track, store, analyze and then utilize vast amounts of information about customers.
Customers are offered personalized ads, special deals, and expedited service as a token of appreciation for their loyalty.
Social media sites allow business to engage their customers in an informal and ongoing way. In the past, it would have been impossible to keep useful records about every single client, but technology makes it easy for companies to automate their marketing efforts. See also Analytical Marketing Branding is the final component of relationship marketing.
A company can form a long-term relationship with a client if that client feels like the brand they purchase reflects who they are or who they want to be. Customers are less inclined to switch to a different brand if they think that switch makes a statement about their identity.
Who Employs Relationship Marketing?Relationship Marketing in a nutshell
Many types of companies have something to gain from developing long-term relationships with their customers. Smaller businesses often serve a steady stream of regulars, and make little effort to draw in new customers.
Imagine a small restaurant that sees a steady stream of business from the morning commute. Their daily presence is a large part of the business that restaurant does every day. Larger companies typically invest the most in carrying out sophisticated relationship marketing campaigns.
In some major companies, relationship marketing is a strategy that affects every department with a client facing purpose sales, customer service, shipping etc. Industry leaders constantly face competition from new companies who claim to provide similar goods with a higher-quality level of service.
Holding onto their existing customers is the only way they can maintain their position at the top of their industry.
This is true for businesses in all industries, from cell phones to baby food. When the company changed the font in their ubiquitous catalog, Ikea lovers took to the Internet to air their complaints.
Rather than alienate their customers for a trivial reason, Ikea changed the font back in the next catalog.