Delight your Customers with Relationship Marketing

The relationship marketing (RM) concept is not new. Companies had been doing it for a long time. Getting a new customer for the company is always much costlier than retaining them. But keeping is not as easy as it may seem. Customers need to be satisfied with the product or the services.

This satisfaction creates a sense of trust, which helps them in buying repeatedly.

You must have heard about the “Loyalty Programs” of various companies. It is RM.

Relationship Marketing Definition

Marketing guru, Prof. Philip Kotler says ‘Relationship marketing is the process of building long-term trusting win-win relationship with customers, distributors, dealers, and suppliers. 

It promises and delivers high-quality efficient services and fair prices to the other party overtime. 

Also, it results in strong economic, technical and social ties between the marketers and the customers.

According to the American Marketing Association, “relationship marketing is marketing with the conscious aim to develop and manage long term and trusting relationship with customers, distributors, suppliers or other parties in the marketing environment”

What is Relationship Marketing?

The objective of any organization is to make a strong connection between its offerings and the customers. These connections, often emotional ones, generate more business as WOM (Word Of Mouth) promotion. 

We have to understand here that RM is almost opposite to transactional marketing of older times when increasing sales was the only criterion. And the customer acquisition cost (CAC) was significantly higher. This yielded a dismal ROI.

Many times, this leads to mis-selling, too. Because the sales department only wanted to increase the numbers, ignoring the customer satisfaction.

Brand switching is imperative with customers. Organizations understood that without stopping the customer churn, they will never make it.

Hence, it was important to address their grievances. Deficiency in services should be minimized.  

A customer leaves a brand not because they didn’t like the product per se, but there was no one to listen to the problems, no one cared to satisfy the queries raised.

Now, with social media, if a customer posts one negative comment pertaining to dissatisfaction, it can wreak havoc and ultimately will impact the bottom line.

Why Relationship Marketing is important?

Customer Acquisition is Cheaper

According to business authors Emmett C. Murphy and Mark A. Murphy, acquiring a new customer can cost five times as much as retaining an existing customer.

That means if I am investing $100 to gain a new customer, I will have to spend just $20 to retain one.  

Needless to say, 5 times is too good a number to be worked upon. Business runs on margins, better the margin, better the profit. If done properly, RM can take the profit off the roof with minimum effort.

Better Conversion

When existing customer relation is good, those customers tend to provide leads. When the company contacts those leads, the chances of conversion are much better than say, cold calling.

In business to business (B2B) sector, deal closure takes around 100 days, according to a study.

Here, as the lead is already aware of the product or services through WOM from existing customers, it was observed that those leads close the deals in a much faster way.  

Customer Lifetime Value (CLV)

Very crucial indeed. 

Dr. Kotler defines customer lifetime value as “the present value of the future profit stream expected over a time horizon of customer transactions.”

So, the longer the customer stays with the company, more the profit. Hence, it is always advisable to make all the efforts possible to make them stay longer.

Moreover, once the existing customer becomes the brand advocate, they can bring in more business for the organization, that too, with no marketing efforts.

Lesser Marketing Spends

Research says the chances of selling a product to an existing customer is over 50% whereas with a new customer it is just less than 20% on average.

If done properly, this also paves a way to achieve a competitive advantage. Brands’ relationship with its customer become so strong that there is the lowest amount of churn and obviously increased profit. 

Value Addition

Several buyers are ready to pay more if they have a better experience with the product or they are happy about the after-sales service. 

It was seen that companies try to lower the prices in order to get and keep customers, but a great relationship will give the company a chance to sell at a premium prices and still retain or increase its customer base.  

Relationship Marketing Types

There are multiple types of RM, depending on the stages.

Basic Marketing

As the name suggests, it is the most fundamental one. Here, the traditional method is followed. The goal is to drive a prospecting customer to the sales funnel to become a customer for that company.

A personal touch is not prominent in communication, and communication itself is not that extensive.

It is the first stage because a company is in the process of acquiring a customer.

Reactive Marketing

This is a second stage, where a brand reaches out to the recently gained customer to understand his point of view in terms of interaction with the brand, how was the buying experience.

Brands are also interested in knowing feedback, suggestions, reviews, and so on. Broadly speaking, what went well and what didn’t.

Accountable Marketing

This is the third stage and one level up from the previous one. The brand is now eager to let its customer know they care.

The feedback it received in the second stage is responded to positively. It is another way of saying that customer feedback is important and they listen to the customers.

Proactive Marketing

This is where men differ from boys. It is the fourth stage in which ties become stronger.

A brand works proactively according to the suggestions and feedback to make the product or services better. Communication becomes important and frequent. Brands want to learn from the customers.

Partnership Marketing

The final stage is where a brand is now eager to develop the product according to the voice of customers.

They bring in a third party that specializes in the particular requirement that customers wanted to be incorporated.

A collaboration between customers, the brand, and a specialty service provider/developer. 

Strategies of Relationship Marketing

Engage customers

Customers should be engaged at all times. Personalize the communication, whatever medium it may be. These days, however, email communication tops the list in making the customers feel important with a personalized touch. Treating them as individuals with emotions rather than just a transactional opportunity. 

It should be kept in mind that messages should be sent at an interval that they should not feel invasive. It irritates customers even if messages are informative.

Also, at times, a brand should also talk about “giving”. Like coupons, discounts, personalized offers. Creating a “look-alike” model often is helpful here, as customers can be segmented based upon different Customer Lifetime Value (CLV).

Use of technology (CRM solutions)

Softwares like Customer Relationship Management (CRM) plays a vital role in collecting data and presenting them appropriately whenever needed. The software collects demographic info, purchase history, feedback, complaints raised, returned items, shopping cart items and the likes.

Based on this information, a customer can be contacted without annoying them with the same questions every time. 

Another example, if a customer has collected a few items in the shopping cart but could not execute the order, they can be contacted to know what went wrong and how they can be helped.

A CRM is also helpful in personalizing messages using data like birthdays, anniversaries to send them special offers and discounts.

Customer Service

Now, this can’t be emphasized more. Even if the product is superior, a company still has a good chance of losing the business if they are not providing great customer service.

Customer service increases trust in the company at the same time decreases dissonance (a psychological factor that arises after buying and a feeling that other brands would have been better).

For example, an order gets delayed, resolves the issue promptly, compensates with a discount for future purchases. This gives a positive signal that the company cares about its customers.

Loyalty should be rewarded

A loyal customer gives you more value. Now it is your turn to give them back with personalized touch. Or showcasing a few of them in the company’s newsletters.

Monetary benefits for the customer and/or the family in terms of vouchers, coupons, redeemable points, giving priority in the upcoming sales, etc are some ways which delight customers.  

Examples of Relationship Marketing

Robotic Process Automation

These days, with the help of RPA (Robotic Process Automation) brands deploy chatbots. These “bots” are up and running 24×7. They are the face of the organization so that a customer can be in touch at any point in time.

Whether it is product-related feedback or complaint or post-sale support, these bots collect preliminary information and pass those on to the concerned department or persons. That department then attends the issue and resolves them.

The concept of working hours and waiting for the same is over. Excellent use of technology.

Dormant Customers

Another good example of RM is waking up dormant customers. Some customers are not active anymore who once were.

With the help of RM, a brand can revive those relations by being in touch with them. A great icebreaker would be to give them coupons or vouchers for being their customer. After all, getting a brand-new customer is way costlier than existing ones, albeit dormant.

Up-selling and Cross-selling

We all know how a bank treats us when we go to open an account. They try their best to offer the premium account rather than the standard one.

Also, they try to sell insurance products, investment products, and a plethora of other kinds of stuff. Yes, they are nothing but up-selling and cross-selling, respectively.

Social media

Companies now have a dedicated department that handles their social media channels.

Almost all the brands have Facebook Twitter Instagram, YouTube pages where they post new products, engaging advertisements, promotional videos, offers and discounts, educational and informative videos.

This is a great way to be in touch with existing and prospecting customers too.

Conclusion

A healthy relationship is the foundation of a substantial business. As the saying goes, “we are because of our customers” is 100 percent true.

We have ways and means to strengthen the relations with our customers. With technology, social media, there are many and innovative ways by which a company can reach out to its customers.

Similarly, customers are also eager to reach out to the brands they love, brands they trust.

It is imperative that brands should thrive to maintain and elevate the level of relationship marketing.