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What Is Relationship Marketing And Why It Matters In Business
Relationship marketing involves businesses and their brands forming long-term relationships with customers. The focus of relationship marketing is to increase customer loyalty and engagement through high-quality products and services. It differs from short-term processes focused solely on customer acquisition and individual sales.
Relationship marketing starts with a business understanding their client base. Who are they and what do they buy? What are their values and long term needs?
Like any successful relationship, it is important that businesses use demographic and buying behavior data to understand their customers on a meaningful level.
In the context of relationship marketing, understanding customers means gaining clarity on the nature of their repeat business. Why do certain customers return again and again?
Most businesses assume it is the quality of their products. Yet the real reason may be that their store is the closest to a customer’s home. Alternatively, their business may simply stock a range of products that can’t be found anywhere else.
Whatever the reason, it will vary from person to person. As a result, businesses should segment their audience based on these reasons to develop an effective marketing strategy for each.
For example, a customer who enjoys the usefulness of a product is different from one who buys from a business because of their philanthropy. Each must be marketed in different ways so that the relationship is maintained and strengthened over time.
Swedish furniture maker IKEA has a large, global, and very loyal audience. But after changes to the font used in their brochure drew widespread criticism, the company became fearful of alienating their customer base. Consequently, they immediately returned to using the old font.
Manufacturer of popular ADHD drug Vyvanse went above and beyond for their customers by creating an online portal for families suffering with ADHD.
The portal features a discussion forum with videos and articles from industry experts.
From a marketing perspective, the portal allows Vyvanse’s loyal customers to interact with each other and form a long-term relationship with the brand.
In perhaps a more visible commitment to long term relationships, ArmorSuit offers a life-time warranty on all of their smartphone screen protectors.
While this may not be the most lucrative deal for the company, ArmorSuit does strengthen their customer relationships and get people interested in other products which don’t carry lifetime warranties.
The acquisition of new customers for any business can be costly and time-consuming. In some cases, acquiring a new customer costs a business five times more than retaining an old one.
Furthermore, customers who are familiar with a brand spend more money. Research by Bain & Company found that an increase of just 5% in customer retention ability increased company revenue by 25-95%.
When businesses strive to create authentic relationships with their customer base, they can focus their marketing efforts on where it matters most.
Authentic relationships that are paired with quality goods and services get customers talking about a brand with their friends and family. In effect, marketing budgets are decreased since loyal customers promote the business for free.
Relationship marketing seeks to foster customer loyalty, interaction, and engagement with exemplary products and services.
Customers have different reasons for entering into long term relationships with brands. Therefore, marketing departments must develop strategies that speak to each customer individually.
Relationship marketing is a cost-effective marketingstrategy since existing customers cost less to retain and spend more money over the long term.
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