Relationship marketing is less transactional than traditional marketing strategies. It's not laser-focused on closing one sale or making one. 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.
This implies a focus on the lifetime value of the customer rather than on the single transaction. In this article, we would like to explore the essence of relationship marketing strategies and investigate the differences between relationship marketing and transaction marketing.
Understanding Relationship Marketing Strategies Customer retention has become increasingly recognized as the key to long-term success of companies. In the past, that was not the case. 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. 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? 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.
- Relationship Marketing
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.
Direct Recruitment — The direct mail marketing firm sends out handwritten birthday cards to clients and associates every year. This simple, personal touch helps clients feel like Direct Recruitment cares about them as people rather than simply consumers.
American Airlines — The airline maintains a comprehensive frequent flyer program that rewards customer loyalty with the promise of free flights, upgrades, and discounts. Dell — Dell computers created a special online store for high volume corporate customers. By tailoring the ordering process to the specific customer's needs, Dell was able to expedite many of the hassles corporate technology buyers face. Providing a higher level of service leads to increased loyalty.
Vyvanse — The makers of the popular ADHD drug created an extensive online portal that included videos, forums, expert articles, and mobile apps to help those who suffer from ADHD. Rather than relying on the strength of the product alone, the drug makers created a place for users to gather and interact that was linked back to the company.
Sites like Facebook and Twitter make it fast and easy for companies to communicate information to their customers. But in order to make this a long term relationship, the company has to get their customers to become regular followers of their social media profiles. As the chart shows, most customers do not elect to follow a company out of mere curiosity.
Companies can increase their social media followers if they offer incentives like coupons or insider information. Relationship marketing can involve revising major aspects of the way a company conducts business.
This can be expensive, time consuming, and have serious consequences for both customers and employees.
Relationship Marketing Strategies – Understanding Relationship Marketing
The only way to carry out a relationship marketing strategy in a thoughtful and effective way is to follow a comprehensive marketing plan. Companies must first look at demographic and historical data about their customers to understand who they are, what they buy, and how to provide for them over the long term.
The company must understand why a consumers returns for repeate business. There is the tendency to think that customers return because the company has served them well, but maybe they return to a store because it is the closest to their house, or the only one in the area that stocks the product they want to buy. Analyzing the nature of customer loyalty is the best method develop a working relationship marketing plan. With a wealth of customer data in place, the company can begin to segment these customers and develop unique marketing strategies for each segment.
A customer who appreciates a product's value has different qualities than one who has had a helpful customer service experience.