Relationship Marketing
The term relationship
marketing was first coined in America in the early 1980s. Although it has no
single, agreed meaning, most definitions have common factors defined in the
dictionary of marketing terms of American Marketing Association (1995), “Relationship
Marketing is marketing to develop and manage long term and/or trusting
relationship with customers, distributors, suppliers, or other parties in the
marketing environment”.
Pathmarajah (1993)
defines relationship marketing as “the process whereby the seller and the buyer
join in strong personal, professional and mutually profitable relationship over
a time”.
The Relationship
Marketing refers to the activities undertaken by the firm to establish
and maintain the profitability and the long-term relationship with the
customers.
The
Relationship marketing differs from the Traditional marketing in the sense that
the former relies heavily on the customer retention and their satisfaction,
that results in the long-term relationship and the repeated sales, whereas the
latter emphasized majorly on customer acquisition and one-time sales without
giving much importance to building relationships.
Nowadays
companies have adopted the customized marketing strategies rather than the mass
marketing program. Providing exactly what customers want and maintaining a
proper communication with them increases the satisfaction level of the
customers.
E.g., The Dominos emphasizes on relationship marketing by
making the feedback calls to the customers, to know about the quality of their
pizza, once delivered.
The Characteristics
of Relationship Marketing:
Relationship Marketing
is about healthy relationships, which are characterized by concern, trust, commitment,
and service.
1. Concern:
Strong relation can
be maintained by knowing and understanding the needs of customers. Howsoever
the size of business either it is small retailer or big manufacturer all
enterprise need loyal customers and it can be achieved by showing concern
towards customers. Relationship marketers should be concerned about the welfare
of their customers.
2. Trust and
Commitment:
Relationship
marketing focuses on developing strong relationship between buyers and sellers
through trust and commitment. Trust can only be achieved if the strategy is not
only transactional but relational. Both buyer and seller have to understand
that strong trust full relation can only be achieved by avoiding focusing on
short-term benefits and investing into building long term relationship. And if
both can establish, maintain and preserved this trust objectives of both the
parties will be meet.
When commitment and
trust are executed together by managers, the outcomes are efficiency, productivity,
and effectiveness. But the real challenge often lies in ensuring demonstrating
commitment to the relationship and inculcating trust in partners.
3. Service:
Those companies which see service to customer as a cost and only are concerned about their market share will never be able to retain customers. Relation marketing is not a cost to the company; on the other hand, it is a huge return on investment that is worth every rupee and effort put in. One must always remember this sequence “service quality leads to customer satisfaction which leads to relationship strength, which leads to relationship longevity, which leads to customer relationship profitability.”
Benefits of Relationship Marketing
1. The
Relationship Marketing ensures the long-term retention of the customer.
When the company focuses on increasing the customer satisfaction by providing
exactly what the customer wants, then the customer is likely to stay longer
with the brand.
2. The word
of mouth plays a crucial role in marketing the product or services.
When the customer is satisfied with the brand, he will definitely refer it to
his family, friends, peers and colleagues. This will ultimately lead to the
increase in the revenue and the customer base of the firm.
3. Once the
strong relationship is formed with the customer, then even the rise in
the price of a product due to the change in the economic conditions,
won’t have a much effect on customer purchase. Thus, the relationship marketing
helps in retaining the customer even in the worst economic conditions.
4. When the
customer shares a healthy relationship and is happy with the brand, will
readily give its valuable feedback for the firm’s new product
or service launched in the market.
5. The
companies can gain the competitive edge over the other
competitors by offering a more personal touch to the customers. This can be
achieved if the company is,
·
Honest and
keep an open line of communication.
·
Maintains a
proper feedback channel.
·
Provides an
efficient service support.
·
Interacts with
customers online via social media.
·
Monitors the
image of the brand online and respond accordingly.
The
relationship marketing is the main component of the Customer Relationship
Management that focuses on creating the loyalty and long-term customer
engagement with the brand rather than focusing on attaining the short-term goal
of customer acquisition and sales.
The benefits of
relationships marketing are:
i. Focus on
providing value to customers.
ii. Emphasis on
customer retention.
iii. The integrated
approach to marketing, service and quality provides a firmer basis for
achieving sustainable competitive advantage; and
iv. The importance
of quality and service support is made absolutely clear to all staff.
Relationship Marketing is right for:
1. Businesses
with an existing customer base: To use
relationship marketing as part of your overall marketing strategy, businesses
must first have customers. Without an existing client base, you are seeking to
build brand awareness and acquire customers as opposed to driving sales from
previous customers.
2. Businesses
with robust marketing tools: Repeat
marketing depends on having a lot of data that determines customer interests
and behaviors. It also requires tools for tracking communication and previous
purchases so that future offers and incentives can be targeted effectively. For
businesses with limited budgets and few or no marketing tools, this will likely
be difficult.
3. Businesses
with repeatable products and services: Relationship
marketing best serves businesses that have products and services that customers
can buy frequently. For example, a company that sells high-end garage doors
isn’t likely to get much repeat business as it’s not a purchase that customers
will make often. Meanwhile, a clothing store can enjoy many repeat customers.
Relationship
marketing is a great strategy for businesses that have an existing customer
base that offer products or services customers may frequently purchase. It’s
also good for businesses that have the tools in place to handle the nuances of
effective, targeted communications that are part of relationship marketing
campaigns.
5 E’s of
Relationship Marketing:
i. Effective
ii. Efficient
iii. Enjoyable
iv. Enthusiastic
v. Ethical.
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