What is Relationship Marketing?
Relationship marketing is a strategy, process, and practice to make good, trustworthy, long-term, and beneficial relationships with all existing and potential customers to earn and retain the business. It aims at making a strong – even touching customers bond with the business organization’s goods and services.
The notion of relationship marketing is simple “build a healthy network of relationships with all key stakeholders and profits will follow”
It is one of the important aspects of customer relationship management (CRM). Also known as customer relationship marketing. Remember, when we are talking about relationship marketing, we are talking about building relationships with customers. But, today, it is not limited to building relationships only with the customers rather it focuses on building all the stakeholders of the business organization such as investors, suppliers, distributors, intermediaries, government, and so on.
The ultimate goal of relationship marketing is to build out a unique company asset, called a marketing network. Today, it is said that the competition is not between companies, rather it is between marketing networks. A marketing network consists of a company and all of its supporting stakeholders – employees, investors, customers, retailers, suppliers, and so on with whom it has built mutually beneficial business relationships.
It has emerged from the 1980s as a key concept in marketing literature and has been widely adopted by organizations in the contemporary business world. It shifts attention from the short-term transaction and immediate profit toward a process of creating customers value through building long-term relationships with customers. Relationship marketing is the opposite of traditional transactional marketing where the focus is on one-time sales and immediate profit but today’s relationships marketing is beyond just making a sale.
If relationship marketing is properly implemented it can result in strong economic, technical and social ties among the parties. It could possibly cut down the transaction costs and time.
Benefits of Relationship Marketing
In this contemporary world, the importance of relationship marketing is growing. It makes business organizations make their customers satisfied, build customer loyalty, and sustain in long run. A successfully implemented relationship marketing program can contribute a lot to both marketers and customers.
More Customers. The focus point of relationship marketing is the customer. With the various components of the marketing mix, it helps businesses to attract new customers with the means of such as advertising, quality products, fair price, etc.
Customer Retention. It helps to satisfy the customer’s needs and wants and make them loyal. It is said that a satisfied and loyal customer is always likely to repeat the purchase of that business firm’s goods and services. Simimiiry, a loyal customer also likely to share about the goods and services to the friends, family, colleagues, and other businesses. Hence, increases the rate of retention of existing as well as potential customers.
Strong Bond. No company can sustain itself in the market if no one can trust the company. It helps companies to build strong, even lifelong connections with all the parties that may affect it directly or indirectly such as investors, employees, suppliers, distributors, customers, governments, people, business partners, and other segments of society. A strong bond helps to maintain good alignment around the customers.
Fewer Efforts On Advertising. Business organizations have to make a lot of efforts on advertising and promoting goods and services to ultimately make a sales lead. This advertising gonna be too expensive. It helps to get satisfied and loyal customers and make brand value in their minds. Loyal customers tell their friends, family, colleagues, and others and they also tell others that eventually generate the sales by which companies do not have to concentrate more on promoting activities.
Best For Smart Marketers. It is adopted by most of the smart marketers in this competitive world not just to build a harmonious relationship with customers – additionally also with dealers, distributors, suppliers, and other stakeholders. It helps marketers to understand the actual need and desires of the customers and helps to develop committed customers for the marketers.
Sustainability & Profitability. It encourages understanding the complaints and dissatisfaction of the customers and makes all the company’s salespeople accountable to satisfy the customers. It says marketers or business firms take all the possible steps to retain their existing customers and understand their changing pattern of taste and preferences. This helps companies to sustain in long run and, ultimately, of course, relationship marketing increases the profits of the business firm that adopts this practice.
Customers Relationship Building
Customers are not automatically made, marketers or business firms have to develop them. Though developing more customers increases companies more revenues, the company has to spend more time, money, and effort on building greater customer loyalty.
Marketing veteran Prof. Philip Kotler has identified 5 different levels that marketers can apply to build a good customer relationship. It is also known as the 5 levels of relationship marketing.
1-Basic Marketing. In this first level of customer relationship building, the marketer just sells the products, he does not have to care about other aspects of customers.
2-Reactive Marketing. In this level, the marketer sells the products and encourages the customers to call if he or she has any questions, complaints, and comments to do.
3-Accountable marketing. The company’s marketer makes telephone calls to the customer after the sale to check whether the product is meeting their expectations, he also asks the customer for any disappointments or suggestions for further improvement in the company’s performance.
4-Proactive marketing. The marketer contacts the customer from time to time with suggestions about improved product uses, new products, or services available with the company.
5-Partnership marketing. The company works continuously with the customer to find out the ways to affect customer savings or help the customer perform better.
Most of the companies indulge themselves in the basic level of company investment as the market contains many customers and their unit profit margins are small. However, for markets with few customers and high-profit margins, most sellers will move toward partnership marketing.
Customer Value-Building Approaches
Now the question may raise what specific marketing tools can a company use to develop stronger customer bonding and satisfaction? It depends on company to company. According to Philip Kotler, many companies have introduced three customer value-building approaches in relationship marketing, which are as follows.
1-Adding Financial Benefits. According to this approach, a company provides discount rewards and various other financial benefits to regular customers.
2-Adding Social Benefits. Company salespersons try to solve the social problems of the customers if they have any. They call customers on a regular basis provide home service if necessary, provide suggestions, solve the individual problems of the customer, etc.
3-Adding Structural Ties. This approach focuses on providing customers with unique equipment of services such as marketing research, sales training, and software programs so that the customers can manage their own business in terms of distribution, inventory management, order processing, etc.