Relationship marketing
Relationship marketing emphasizes customer retention and
satisfaction, rather than sales. It differs from other types of marketing as it
recognizes that is long term value form customer relationships, and extends its
methods of communication beyond just advertising and sales promotion.
With the growth of
social media and the internet relationship make has evolved, it has made it
easier for companies to track the likes and dislikes of their customers, where
they live and how often they buy products.
Satisfaction
The Relationship marketing relies upon the communication and
acquisition of consumer requirements solely from existing customers in a
mutually beneficial exchange usually involving permission for contact by the
customer through an "opt-in" system. With particular relevance to
customer satisfaction the relative price and quality of goods and services
produced or sold through a company alongside customer service generally
determine the amount of sales relative to that of competing companies. Although
groups targeted through relationship marketing may be large, accuracy of
communication and overall relevancy to the customer remains higher than that of
direct marketing, but has less potential for generating new leads than direct
marketing and is limited to Viral marketing for the acquisition of further
customers.
Retention
A key principle of relationship marketing is the retention
of customers through varying means and practices to able to ensure repeated
trade from pre-existing customers by satisfying requirements and needs of customer
, making a mutually beneficial relationship. Can use a technique to
counterbalance the new customers and opportunities with current and existing
customers as a means of maximizing profit and counteracting, which new
customers gained in older direct marketing oriented businesses and older ones
are retained by relationships. This process of can be less economically viable
than just retaining all or the majority of customers using both direct and
relationship management as new customers requires more investment.
Companies using relationship marketing well redirect or
allocate large amounts of resources and attention towards customer retention. Markets
with increasing competition it may cost 5 times more to attract new customers
than it would to retain current customers. As direct or "offensive"
marketing objects requires much more extensive resources and threats form
competitors.
Customer retention efforts involve considerations such as
the following:
1. Customer valuation – describes how to value customers and
categorize them according to their financial and strategic value so that
companies can decide where to invest for deeper relationships or need to be
served differently or even terminated.
2. Customer retention measurement –a company's
"customer retention rate". This is simply the percentage of customers
at the beginning of the year to the ones still at the end of the year. This could
be increase in retention rate from 80% to 90%, by doubling of the average life
of a customer relationship from 5 to 10 years. This ratio can be used to make
comparisons between products, between market segments, and over time.
3. Determine reasons for defection – Look at the root
causes, not just mere symptoms. Other techniques include the analysis of
customers' complaints and competitive benchmarking (
4. Develop and implement a corrective plan – This involves
actions to improve employee practices, using benchmarking to determine best
corrective practices, visible endorsement of the management, adjustments to the
company's reward and recognition systems.
Application Relationship marketing and traditional marketing
is not mutually exclusive and there is no need for a conflict between them.
Most firms blend the two approaches to match their portfolio of products and
services. As most products have a service component to them and this service
component has been coming more need today.
Types of relationship marketing
Internal marketing Relationship marketing also stresses what
it calls internal marketing. This refers to using a marketing orientation
within the organization itself. It is claimed that many of the relationship
marketing attributes like collaboration, loyalty and trust determine what
"internal customers" say and do. According to this theory, every
employee, team, or department in the company is simultaneously a supplier and a
customer of services and products.
Referral marketing is developing and implementing a
marketing plan to stimulate referrals. It can take months before you see the
effect of referral marketing,.
Marketing to suppliers is aimed at ensuring a long-term
conflict-free relationship in which all parties understand each other’s' needs
and may exceed each other’s' expectations. Such a strategy can reduce costs and
improve quality.
Influence markets involve a wide range of sub-markets
including: government regulators, standards bodies, lobbyists, stockholders,
bankers, venture capitalists, financial analysts, stockbrokers etc. These
activities are typically carried out by the public relations department, but
relationship
Live-in Marketing is a term used to describe a variant of
marketing and advertising in which the target consumer is allowed to sample or
use a brands product in a relaxed atmosphere over a longer period of time.
These are only a few of different kinds of relationship
marketing to give idea of what they do and how relationship marketing works.as
you can see relationship marketing is concerned with building relationship with
customers and supplier, to either gain
return customer or have a better supply chain to offer better value to
customers.
