Acquiring a new customer is 5 to 25 times more expensive than keeping those you already have. A business that consistently shoots for new acquisitions as their primary sales objective, will inevitably fall short with modern consumers. The less you prioritize people, the less they will buy from you.
Modern customer relationship management is about forming long-term relationships and treating the buyer as a unique individual. The more a brand focuses on customer experience, the more likely buyers will do business. It also creates a higher level of brand loyalty, which means, if/when you mess up, people are much more forgiving.
A customer that is fully engaged exhibits 51% higher revenue and sales than an actively disengaged customer. In order for a company to succeed, you must provide a deeper emotional connection. This is where the business strategy of relationship marketing is highly applicable.
What is Relationship Marketing?
Relationship marketing was developed to foster consumer loyalty. Unlike customer acquisition that focuses on short-term goals and individual sales, relationship marketing is aimed at enhancing customer lifetime value and providing information directly suited to their needs and interests. This involves a marketing plan that focuses on customer retention and satisfaction over transactions.
Did you know that 20% of your current customers will account for 80% of your company’s future revenue? Additionally, customers who are fully engaged always spend more. It’s a natural progression in the buyer journey. This entire strategy is about nurturing customer loyalty and paying attention to your existing customers.
Different Types of Relationship Marketing
Marketing efforts have changed drastically in the past few decades. Now, in order to build relationships, the entire process happens in stages; each with a higher level of commitment. There are different levels of relationship marketing that include:
This is the traditional form of relationship marketing in which a brand works to entice the customer to buy. The focus is on the product or service being sold and how great it is. This is a form of direct selling with no follow up after purchase and no further communication or feedback requested. This style reels people in with a simple message, price, or promotion. It’s a sell for the sake of making money, and nothing more.
At this level of commitment, a brand actively seeks feedback from customers. Whether it is a compliment, complaint, suggestion, or product idea, a business is open to it with reactive marketing. There is some effort here to build a relationship with the customer when the situation or opportunity arises. This is not a typical digital marketing technique. It is inbound marketing focused on purchase reactions.
This level of relationship marketing is about promising and delivering. It continues the buyer’s journey after purchase and puts a spotlight on retention strategies. This involves checking with customers after they purchase and offering related products as they arise. Loyalty programs are also a strategy used in accountable marketing.
Like a friend calling to see if you need anything, accountable marketing is about having confidence in what you offer and actively providing solutions to problems—sometimes before people even know they have them. This is also the time to ask for customer feedback and make the appropriate actions accordingly.
This is a form of relationship marketing where a brand keeps consistent tabs on its customers to build effective relationships. It’s not a one-off sale or a tempory interaction. The strategy is very personal. It pays close attention to customer wants and uses data to understand purchasing behavior.
A lot of companies choose email marketing as a way to perform proactive marketing. The data is then used to produce more engaging marketing campaigns. The accumulation of consumer information allows a business to relate to a multitude of situations in an authentic way.
One prime example of proactive marketing is virtual assistants like Alexa. They keep close tabs on what a customer desires and then make suggestions at opportune moments.
This is a form of relationship marketing with a high level of collaboration. Two businesses work together in a mutually beneficial and promotional relationship towards a common goal. It could be for a specific campaign, product, or set amount of time. It enables both companies to increase brand awareness and improve sales. Partnership marketing is a great strategy for small businesses or startups.
One prime example is the partnership between Microsoft and Nokia. Microsoft develops the Windows operating system that runs on Nokia Lumia devices. It’s strategic relationship marketing between a software and a hardware company where all parties win.
Transform the way
your finance team works.
Bring scale and efficiency to your business with fully-automated, end-to-end payables.
Why is Relationship Marketing Important?
The foundation of your customer base depends on it. Relationship marketing is important for business because it better defines an audience and gives you the ability to stay in close contact with customers. These are the people who offer invaluable information that can steer your business in the right direction.
By understanding how people use a new product/service and observing unmet customer needs, a business can offer additional features to create a deeper level of satisfaction. This further strengthens the relationship.
This tactic is about repeat customers and focusing on the long haul. You want these people with you for the ride. Let them know. This type of marketing helps to earn referrals too because when your customers are happy, they tell other people. It boils down to building relationships that encourage customer loyalty and keep people coming back.
The most successful brands are the ones who work hard to know their audience, and speak to them like friends.
The Top Benefits of Relationship Marketing
There are many advantages to focusing on personalization in your customer interactions. Relationship marketings can:
- Increase customer satisfaction
- Improve retention rates
- Enhance word-of-mouth marketing
- Lead to higher conversion rates
- Augment collaboration and communication
- Lead to positive reviews
- Creating lifelong brand advocates
This type of marketing, which relies heavily on word-of-mouth promotion, is the opposite of transactional marketing. That system ignores the ramifications of a relationship and goes straight to making a sale. Developing a robust relationship marketing strategy is the first step to building strong relationships with long-term customers.
This is not about maximizing the efficiency of sales. Quite the opposite. It’s fundamentally about showing people a brand is more than a business. It’s an entity that values customers and strives to give them what they want. Relationship marketing is as simple as showing loyal customers you genuinely care.