Wikipedia defines relationship marketing as “a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions.” As a practice, relationship marketing differs from other forms of marketing in that it recognizes the long-term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. While relationship marketing focuses on attracting and retaining a long-term buying relationship with customers, traditional marketing is company-focused and product-based. In Relationship Marketing, more products are personalized according to the preferences of the clients. The company will set a price based on the relationship with the customer. Direct marketing to the customer is favoured, thus reducing the role of intermediaries and there is individual communication and dialogue with customers. For any company or business that practices Relationship Marketing, it must carry out a series of important activities that include:
- Focus on partners, customers and products.
- Put more emphasis on customer retention and growth and not just customer acquisition.
- Cultivate cross-functional teams that have multiple talents within the organization.
- listening and learning from customer feedback to stay up to date with their needs.
- be willing and able to adapt to changing customer needs.
BENEFITS OF A RELATIONSHIP MARKETING APPROACH:
- Happy customers will become loyal customers.
- Loyal customers will become repeat customers.
- Loyal customers will try new products.
- The company/business will be seen as a valued partner rather than a cost center. Therefore, the potential for increased revenue.
- Reduction of marketing expenses. Based on studies, it is cheaper to retain a client than to attract a new one.
- Potential to increase referrals from your customers. Invaluable word-of-mouth endorsements from satisfied customers will result in new business at no cost. Loyal customers will recommend the business to others, thus expanding the customer base and profitability.
- A growing inventory of positive testimonials.
- Customers will be willing to pay more for services/products if there are price adjustments because they are loyal and trust the services/products.
- Loyal customers will voice their problems with the products/services, which will allow the company to improve its products/services.
- The ultimate benefit will be an increase in sales, market share, and dominance.