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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.
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 marketingstrategy 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 marketingstrategy 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 marketingstrategy 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.
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