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.
- Understanding relationship marketing
- Examples of relationship marketing
- The importance of relationship marketing
- Expanding Your Business Opportunities with Relationship Marketing
- How Relationship Marketing Expands Your Business Opportunities
- What Else Can Relationship Marketing Do for You?
- Key takeaways:
- Connected Marketing Concepts
- Affiliate Marketing
- Ambush Marketing
- Brand Building
- Brand Equity
- Brand Positioning
- Business Storytelling
- Content Marketing
- Digital Marketing
- Growth Marketing
- Guerrilla Marketing
- Inbound Marketing
- Integrated Marketing
- Marketing Mix
- Marketing Personas
- Multi-Channel Marketing
- Multi-Level Marketing
- Niche Marketing
- Relationship Marketing
- Sustainable Marketing
Understanding relationship marketing
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.
Examples of relationship marketing
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 importance of relationship marketing
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.
Expanding Your Business Opportunities with Relationship Marketing
The effects include keeping you in business for a long time, increasing your sales and profit margin, and marketing your products through word of mouth for free.
An off-shoot of the triple effects is that relationship marketing fosters trust, and loyalty, two key elements you’ll need to expand your business opportunities.
After all, if your original product and services are not trusted, and you lack a loyal customer base, expansion, would be a bad idea.
How Relationship Marketing Expands Your Business Opportunities
Having the above in mind, the question becomes, what are the ways relationship marketing can help you expand your business opportunities?
Note that the latter does not necessarily mean going into a business, or creating a product other than the one you are known for.
It covers branching out into a new market with the same product. For example, if your products get designed with a certain age demographic, or locality, relationship marketing lets you know when your business is ripe to move beyond where you are, which brings us to our first point.
Provides Information on What People Need
Every business is tailored towards finding a need and meeting it.
Whether you sell insurance, produce beauty products, or you are in the hospitality business, the bottom line is you are following the economic principle that human wants are insatiable.
In times past, people go into business and expansion without knowing if those they are producing for need their product.
The information was not available because they relied on the traditional means of marketing.
However, things have changed, and relationship marketing, lets you know what people are interested in buying. It enables you to understand what’s sellable, what consumers are talking about. It’s the secret to the success of prominent corporations, and how Apple knows that its customers would buy its new iPhone, and when best to release it.
It Makes Available, Useable and Credible Feedbacks
Getting and using feedback is one of the bedrocks of most successful businesses. In business expansion, you need feedback, which is one thing that relationship marketing gives you.
Feedback lets you know a lot of things; it’s how you get to find out what people need, and are willing to pay money for.
Never underestimate the power of positive feedback. With it, you know the ripe business opportunities, and when and how to key into it.
If for instance, your business is not doing as well as it should, relationship marketing would give you an insight into the reason.
And what more you can do to complement and make it better. Sometimes, it’s not about breaking into a new market, but improving what you already have.
Gives You Insight on the State of the Market
Business opportunities abound, but a person without insight might miss them.
But don’t fret, because with relationship marketing, you will have tons of ideas on the state of the market, and the business to invest in, that guarantee you a return on your investment.
The insight will also let you know the sustainable business plan to follow. What to do to ensure your expansion is in and for the right market.
It equally provides you with workable data that does not only cover the readiness of the market, but the people.
It Gives You Insight on Customer Expectations
Firstly, needs and expectations are two different things; both are important. While needs cover products and services, expectations deal with the delivery.
Bringing it down to how it expands your business opportunities; insight into customers’ expectations lets you know what’s lacking in terms of delivery, and how you can capitalize on it.
Think about brands, like DHL, that offer courier services; they capitalized on relationship marketing to know that not all companies can deliver their products.
Also, they understood that people expected the existence of a company whose sole purpose is to deliver goods around the world and they get it.
What Else Can Relationship Marketing Do for You?
The knowledge gotten from relationship marketing is endless, with infinite opportunities.
However, in addition to the four mentioned above, here are some other ways relationship marketing contributes to business expansion opportunities:
- It gives you an in-depth knowledge of the target market, and audience.
- It gives you an understanding of the core values of the target market.
- It brings to light people in a different locality who wish they had your product. Referrals, which is one of the advantages of relationship marketing, will deliver this to you.
In conclusion, there are some things you’ll never know without the right information.
When Jeff Bezos started Amazon, all he wanted was to create a platform for people to buy books with ease, but with relationship marketing, he branched out into delivering online services for different products.
- 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 marketing strategy since existing customers cost less to retain and spend more money over the long term.