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.
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.Â
Expanding Your Business Opportunities with Relationship Marketing
For you to know how to grow your business with relationship marketing, you need first to understand or re-educate yourself on what relationship marketing is about.
Simply put, relationship marketing is a strategy that focuses on building long-term relationships with your customers that will, in turn, bring about a triple effect.
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.
Relationship marketing is also that brand of marketing that creates an emotional connection between your customers, and product, and it is far more effective than traditional means of marketing.
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.Â
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.Â
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 has recorded more testimonies and started more businesses than any other form of marketing, so capitalize on it, and use it to expand your business opportunities.
Key takeaways:
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.
Affiliate marketing describes the process whereby an affiliate earns a commission for selling the products of another person or company. Here, the affiliate is simply an individual who is motivated to promote a particular product through incentivization. The business whose product is being promoted will gain in terms of sales and marketing from affiliates.
As the name suggests, ambush marketing raises awareness for brands at events in a covert and unexpected fashion. Ambush marketing takes many forms, one common element, the brand advertising their products or services has not paid for the right to do so. Thus, the business doing the ambushing attempts to capitalize on the efforts made by the business sponsoring the event.
Brand building is the set of activities that help companies to build an identity that can be recognized by its audience. Thus, it works as a mechanism of identification through core values that signal trust and that help build long-term relationships between the brand and its key stakeholders.
The brand equity is the premium that a customer is willing to pay for a product that has all the objective characteristics of existing alternatives, thus, making it different in terms of perception. The premium on seemingly equal products and quality is attributable to its brand equity.
Brand positioning is about creating a mental real estate in the mind of the target market. If successful, brand positioning allows a business to gain a competitive advantage. And it also works as a switching cost in favor of the brand. Consumers recognizing a brand might be less prone to switch to another brand.
Business storytelling is a critical part of developing a business model. Indeed, the way you frame the story of your organization will influence its brand in the long-term. That’s because your brand story is tied to your brand identity, and it enables people to identify with a company.
Content marketing is one of the most powerful commercial activities which focuses on leveraging content production (text, audio, video, or other formats) to attract a targeted audience. Content marketing focuses on building a strong brand, but also to convert part of that targeted audience into potential customers.
A digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.
Growth marketing is a process of rapid experimentation, which in a way has to be “scientific” by keeping in mind that it is used by startups to grow, quickly. Thus, the “scientific” here is not meant in the academic sense. Growth marketing is expected to unlock growth, quickly and with an often limited budget.
Guerrilla marketing is an advertising strategy that seeks to utilize low-cost and sometimes unconventional tactics that are high impact. First coined by Jay Conrad Levinson in his 1984 book of the same title, guerrilla marketing works best on existing customers who are familiar with a brand or product and its particular characteristics.
Inbound marketing is a marketing strategy designed to attract customers to a brand with content and experiences that they derive value from. Inbound marketing utilizes blogs, events, SEO, and social media to create brand awareness and attract targeted consumers. By attracting or “drawing in” a targeted audience, inbound marketing differs from outbound marketing which actively pushes a brand onto consumers who may have no interest in what is being offered.
Integrated marketing describes the process of delivering consistent and relevant content to a target audience across all marketing channels. It is a cohesive, unified, and immersive marketing strategy that is cost-effective and relies on brand identity and storytelling to amplify the brand to a wider and wider audience.
The marketing mix is a term to describe the multi-faceted approach to a complete and effective marketing plan. Traditionally, this plan included the four Ps of marketing: price, product, promotion, and place. But the exact makeup of a marketing mix has undergone various changes in response to new technologies and ways of thinking. Additions to the four Ps include physical evidence, people, process, and even politics.
Marketing personas give businesses a general overview of key segments of their target audience and how these segments interact with their brand. Marketing personas are based on the data of an ideal, fictional customer whose characteristics, needs, and motivations are representative of a broader market segment.
Multichannel marketing executes a marketing strategy across multiple platforms to reach as many consumers as possible. Here, a platform may refer to product packaging, word-of-mouth advertising, mobile apps, email, websites, or promotional events, and all the other channels that can help amplify the brand to reach as many consumers as possible.
Multi-level marketing (MLM), otherwise known as network or referral marketing, is a strategy in which businesses sell their products through person-to-person sales. When consumers join MLM programs, they act as distributors. Distributors make money by selling the product directly to other consumers. They earn a small percentage of sales from those that they recruit to do the same – often referred to as their “downline”.
A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.
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.
Sustainable marketing describes how a business will invest in social and environmental initiatives as part of its marketing strategy. Also known as green marketing, it is often used to counteract public criticism around wastage, misleading advertising, and poor quality or unsafe products.
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
