Wikipedia defines Relationship Marketing as “a form of marketing developed from direct response marketing campaigns which 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 long-term purchasing relationship with customers, Traditional Marketing is company-focused and product-based. In Relationship Marketing more products are customized to the customers’ preferences. 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 middlemen and there is individual communication and dialogue with customers. For any company or business practicing Relationship Marketing it must do a number of important activities including:
- focus on partners,customers and products.
- put more emphasis on customer retention and growth and not only customer acquisition.
- cultivate cross-functional teams that are multitalented within the organization.
- listening and learning from customer feedback in order to keep up to date with their needs.
- being willing and able to adapt to the changing needs of the customer.
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 viewed as a valuable partner instead of a cost center. Therefore, the potential for increased revenues.
- Reduced marketing expenses. Base on studies it is cheaper to retain a customer than to attract a new one.
- Potential for increased referrals from your clients. Priceless 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.
- An increasing inventory of positive testimonials.
- Customers will be willing to pay more for the services/products if there are adjustments in pricing because they are loyal and trust the services/products.
- Loyal customers will voice their problems with the products/services enabling the company to improve its products/services.
- The ultimate benefit will be an increase in sales, market share and dominance.