What is Relationship Marketing?
Relationship marketing is a marketing strategy that focuses on interacting and establishing a lasting relationship between the business and it’s customers. Unlike transactional marketing, it offers businesses the opportunity to improve their services and get lifelong clients. It is part of the Customer Experience Management (CEM) framework that works on the principle that friendly interactions with customers will improve their satisfaction with the product, service or brand long term.
Classically, relationship marketing was done on a face-to-face level. Today, the World Wide Web has made it possible for businesses to reach thousands of their customers with ease, making digital marketing departments the weapons of choice for relationship marketing.
The marketers achieve this by:
– Using social media platforms to connect with customers.
– Having one-on-one online chats with customers
– Encouraging customers to give feedback on their service experience
– Running online polls and surveys about specific products and services
– Sending customized personal messages to customers to make them feel appreciated.
It may seem like a lot of PR with no end game, but it truly pays off. Below are some of the benefits a business stands to gain from adopting a relationship marketing strategy:
Relationship Marketing Helps You Retain Customers
This is the most important aspect of relationship marketing. Businesses are finally starting to focus on building a loyal customer base rather than making one-off sales to new customers. And relationship marketing is the most promising way of achieving this.
Customer loyalty has a great impact on business performance and growth. A study by Harvard school of business revealed that by increasing customer retention by 5%, a business increases its profit by 25 to 95%. This proves that companies stand to gain more by maintaining their current customer base, rather than hunting for new customers.
The role of relationship marketing in all this is to give the customer an experience that they would like to have again. By talking to them, listening to how they would like their service customized, and giving them assurance of the product and service, you make your service more than a business transaction. That is, they get more than the product they bought. This kind of service, and possibly not even the quality of the product, is what will make them come back.
Have you ever seen a small family restaurant with thriving business despite being located on the same block as a large franchise? Similarly, mom and pop shops that compete with massive retail stores like Walmart. Their success is most likely not about their products, but more to do with the service. They know their customers by name and even their families. And it is this small, but loyal customer base that keeps their business running. Incorporating relationship marketing into your digital marketing campaign can help you develop this kind of loyalty amongst your customers.
Builds Trust and Credibility
Currently, most industries are flooded with so many unscrupulous businesses that are out to rip off customers. Consumers have therefore become very skeptical of the businesses, especially when it comes to online service. Therefore, convincing customers that you are indeed a legitimate brand that offers quality service is a major part of marketing. And this can be easily achieved by relationship marketing.
Introducing yourself to your customers and explaining who you are as a person, and not just what you do at the company, can go a long way in gaining customers’ trust. This way they know they are dealing with a fellow human being who is ready to attend to their needs. Additionally addressing any concerns they have about your product or service gives them assurance that you care about their satisfaction.
Simple friendly interactions make customers feel comfortable with your service. This is called the “know, like, and trust factor “. Every human enjoys interacting with people they like and are comfortable around. And if given the option, they will choose to repeatedly get served by someone they know than experimenting with a stranger. It is an instinct hard-wired in the human psyche, and relationship marketing taps right into it.
Helps You Get Invaluable Feedback To Improve Your Business
What customers have to say about your product is very important for the longevity of your business. It is their compliments and complaints that will help you to identify areas that need improvement. With a technical marketing approach of terminating interactions immediately after closing a sale, you will never get to know your customer’s experience. But a relationship marketing strategy fosters an environment in which customers freely give their feedback.
The biggest advantage of customer feedback is identifying your customer needs. It is the sole purpose of every business to provide its customers with exactly what they need. This way, they are satisfied with the product and are likely to come back for more. And customer feedback, especially negative feedback, does exactly that. By critically analyzing customer responses, you can identify the areas that need to be worked on. It may be simple things like poor lighting in your waiting room, or your packaging could use a better design. All these you won’t know if you never ask.
Sometimes customers can give you innovative ideas that will propel your business. A good example is Starbucks’ MyStarbucksIdea campaign. This is a program that encourages customers to give ideas on how to improve services at Starbucks. The company takes note of these ideas and implements some. A customer suggested that the franchise should offer free wifi. The management considered this suggestion and implemented it in all its stores. Today Starbucks has ripped big from this idea. Customers stream in into the coffee shop knowing that they can have coffee while reading or working on the internet.
Additionally, requesting for customer feedback enhances the bond you have already created with them. The thought that you actually care about their opinions gives them a sense of importance and satisfaction. This is especially true if you request for the feedback in a friendly manner, rather than emailing standardized questionnaires.
Word of Mouth Referrals
The most effective marketing method is a word of mouth campaign. It is the best kind of marketing a business can have. It means customers are satisfied with your service to the extent that they are recommending it to their friends. Also, it is very effective.
A study was done on the effectiveness of word of mouth referrals on social media. It was found out that 71% of users are likely to make a purchase after reading a customer recommendation. The figure rises to 90% if the person recommending is a friend. This just demonstrates how effective a referral is. It is also common to ask a friend or relative to recommend a restaurant, hair salon, or even dentist when you are in a new place. And whatever they say is final. That’s how powerful a word of mouth referral is.
Getting to a point of receiving referrals is not that hard if you use the right approach. Most people give recommendations based on how good the service was. So by bonding with your customers and building relationships, you are making them believe in your service, and hence more likely to recommend your service to a friend.
Develop A Unique Brand Signature and Gain a Competitive Edge
The current business world is extremely competitive. Every company works on product improvement and invests heavily in marketing, especially digital marketing. This makes it hard for startups and small business to gain a share of the market. A good way to crack this is to adopt a relationship marketing strategy.
Good customer relations can be the sole factor that makes your brand stand out from all the rest. Truth be told, most products and services are pretty the same. If it’s cleaning, any cleaning service agency can get your house clean, the same for plumbing, food delivery, pet walking or any other kind of service. The outstanding difference will be the quality of the service. The pet care service agency that sends you messages on how to groom your pet, and updates you on any ongoing vaccination campaigns will most likely be regarded highly by pet owners. This is despite the fact that all agencies simply walk your pet in the very same streets.
This is an aspect of relationship marketing that has been successfully used by startups to gain market entry, especially in the service industry. You make it known that you are the only player in the industry that offers excellent one-on-one customer service.
Relationship Marketing Is A Networking Opportunity
Networking is an important aspect of business growth. You need to have friends in all sectors that may affect your business growth: from suppliers, marketers, real estate agencies, and even legal departments. Customers have a lot of knowledge on all these fields as they most likely work in one sector or the other. They start sharing such information when you develop a real bond with them.
This advantage is more applicable to businesses in the B2B (business to business) sector. All your clients are businesses that deal with suppliers and creditors on a daily basis. Developing a good relationship with such a client is likely to end up in a mutually beneficial friendship. They’ll let you know of a new supplier in town who also needs your printing services or office space that will be up for lease in the next few weeks.
Such networks can sometimes give you a breakthrough for your business. A case example is a pest control service startup that was solely focused on quality service and good employee relations. The company serviced the home of a realtor, did a thorough extermination of termites, and kept tabs with this client. They would regularly send their customers tips on how to prevent termites and ants invasion, and freely offer advice on any pest problem. Through this relationship marketing, they ended up being contracted by the realtor when he opened his real estate company. They would inspect and service all the houses being managed by his company. So it’s not always about what you know, but who you know.
Huge ROI – Little Cost Upfront
This is an advantage of relationship marketing over the classic transactional marketing. Marketing strategies that target new customers are often very expensive. You will have to buy advertising space on search engines and invest heavily in social media marketing in order to reach potential customers. And after all this, you still cannot be assured that they will convert to paying customers.
Research by Forbes insight and Sitecore demonstrated just how expensive transactional marketing is. The cost of acquiring a new customer is six to seven times the amount it takes to retain a customer. This clearly indicates that it is much cheaper to work on customer retention.
Relationship marketing is the cheapest way to achieve this. For starters, you have your clients’ contact information: their emails and phone numbers. Additionally, they are following you on your social media handles. It, therefore, costs you nothing to reach them. The only resource you need to reach such clients is your time, or hiring a digital marketer.
Conclusion
The long-term success of a business is dependent on its ability to inspire loyalty among its customer base, and relationship marketing is the secret weapon of every incredibly successful brand or marketing campaign. One-time sales may transiently increase sales, but their impacts are short-lived. This is why relationship marketing is slowly replacing the classic transactional marketing model. It is the only sure way of developing a meaningful personal relationship with your customers, thus improving their overall experience, and making it easier to retain them as lifelong customers. Unlike classical marketing strategies that increase sales in the short-term, relationship marketing helps you build a loyal customer base that will not only support your brand personally, but will also help grow it by referring it to friends and family. And all this can be achieved through simple interactions that make your customers feel comfortable with your brand and appreciated for their loyalty, simply for choosing your brand.