It is crucial for marketers to not only attract new customers but also retain existing customers. It is worth-mentioning that acquiring a new customer can cost you five times more than keeping the existing customer. If companies are unable to increase their customer base, they will be unable to survive in the long-run.
Relationship marketing plays a crucial role in this ambiguous situation. According to a business writer, Murphy and Mark, a 2% increase in customer retention can decrease costs by as much as 10%. Increase customer retention by 5% can increase business profitability between 25% to 75%. Companies with limited resources, being a marketer, what will they prefer, attract a new customer, or retain the old ones?
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What is Relationship Marketing?
Relationship marketing is a marketing strategy that concentrates on long-term customer relationships. Rather than focusing on one-time sales, it emphasizes customer retention, satisfaction and loyalty, and long-term engagement. The primary aim of customer relationship marketing is to develop emotional customer connections to the brand that can increase long-term sales transactions.
With the growing internet and social media platforms, relationship marketing has gradually evolved. Companies can now track, analyze, and utilize vast amounts of customers’ information and can serve them on a more personal level.
Relationship Marketing Vs. Traditional Marketing
The transactional marketing approach focuses on one-time sales. This marketing technique targets the whole addressable market that includes existing, potential, and non-customers. With the 4P’s communication strategy, marketers convince its customer to choose the brand at least once. With the availability of a sound transitional and relationship marketing strategy, customers may repeatedly purchase the same brand.
In simple words, companies should use a traditional marketing approach to build product awareness and a positive attitude to acquire a new customer and relationship marketing to maintain a long-term relationship to make repeat purchases.
Benefits of Relationship Marketing
Consistent Customer Experience
Businesses with access to all the touchpoints can easily share information and address the customer’s needs on a more personal level. It is mandatory to address all the relevant issues in a product or service. By doing this, you can increase not only the level of trust but also improve customer experience.
Customer Reviews and Feedback
Your loyal customers are a great source you can use positively for your business. If you have an effective communication strategy and you resolve customers’ queries, issues, and complaints. When you address customers’ complaints and questions, you can ask for unbiased feedback, review, and even video testimonials. Positive reviews always attract new customers.
Loyal Customers are your Marketers
Loyal customers mean they enjoy a consistent experience and are willing to share products or services information when needed. They become your free marketers and advocates. Mostly, stratified customers recommend the products or services with family, friends, and peers. It means that they influence the consumers’ decision-making process and want them to buy or use it.
Consumers are Part of Business Decision
One of the benefits of relationship marketing is your willingness to consider honest suggestions from customers. Companies develop prototypes, send them to loyal consumers, and ask them for honest reviews. The footwear and clothing industry is a good example where athletes and experts are a part of the product development process.
Implementation of Relationship Marketing Strategy
Relationship marketing is looking to improve customer communication and interaction to increase brand loyalty. The medium of communication may vary, for instance, in person, phone, email, or social media, but the overall objective remains the same.
Customer Service is an integral part of the relationship marketing strategy. That means that a company should offer consistent personal support to solve the customers’ problems. Relationship marketing is all about improving the enteral business operations. Most of the time, customers will not return if they have a terrible customer service experience.
If a company wants long-term customer relations, it should maintain its internal business operation and manage its customer service needs.
Content marketing is a strategy that creates and distributes valuable content to attract and retain customers. It helps companies build brand loyalty, provide information that must be of interest to the target audience, and engage customers to buy the product in the coming days. The basic idea of content marketing to give something valuable and, in return, get something valuable.
The use of social media has increased over time. However, most consumers expect easy-to-understand and tailored information about a product or service and looking for the opportunity to influence a brand via social media posts and reviews. With the help of social media, you can not only create two-way communication but also tracks customer activities and engagement. As a result, you can provide tailored information based on customers’ activities.
Marketing relationship is a two-way process; if a company wants to establish a sound connection with its customers, it is vital to ask for feedback, for example, their experience with the brand, their likes, dislikes, suggestions, and Wishlist. The information a company collects in a two-way process is inevitable if you want to improve your relationship marketing strategy.
If you want to build long-term customer relationships, do not forget to use email marketing. The crucial part of an email is that it is cost-effective and gives you control. Who you want to target? You can send your marketing message to individuals or groups. The success rate depends on the valuable and relevant information to the right person at the right time.
Examples of Relationship Marketing
The Swedish furniture company has a loyal customer base globally. The company changed its ubiquitous catalog font. As a result, Ikea received tons of complaints from its customers. This Swedish company handled the situation very well and changed the font in the next catalogue.
Frito-Lay’s launched a campaign “Do Us a Flavor”, where they asked their loyal customers for new chips flavors. To shortlist the flavors, customers can vote on it through social media and shortlisted flavors gets into the Lay’s flavor lineup. The suggested customer receives a handsome cash prize. The company did this to achieve the goals of engaging its customers and creating a long-term relationship.
People love relationships, and brands should focus on that in the first place. The Zappos Call center staff spend more than average time with its customers. The goal of longer conversation is not making a sale but building strong relationships. What is the result? 75% of the total repurchase rate comes through its call centers.
Most businesses spend their money on advertising, but Zappos philosophy is that money should be invested in customer service so that it will encourage the customers to do word-of-mouth marketing for Zappos.
When we talk about big companies, most people might have experienced poor relationship marketing, but the same is not the case with Amazon. It is a dominant player in the eCommerce marketplace that has fully focused on relationship marketing and delivers personalized recommendations based on user’s browsing and buying history.