Relationship marketing is a special approach for building deeper connections with customers. This marketing focus on increasing brand loyalty, customer retention, and customer lifecycle value. Relationship marketing recognizes the effort that a successful business goes beyond one time transaction and achieves an enduring relationship with their target audience.
Its main objective is to make sure customers are satisfied with a company’s offerings. It entails the process of creating a genuine relationship with customers in a manner that makes them want to support the company going forward.
Relationship marketing means putting the prosperity of a company first rather than just concentrating on one-off sales and gaining new clients. This can be done in a number of methods, all of which offer current clients important information tailored to their particular interests, worries, pain points, and needs.
Benefits of Relationship Marketing to Companies
Relationship marketing reaps a number of benefits to companies, which can be discussed further as follows;
Increase Customer Retention
Relationship marketing makes customers feel as an important part of the company. This marketing focuses more on building relationships which reduces customer churn and increases the retention rate. No customers want to switch off the business who care about their customers. As a result, these clients are content to keep doing business with the company and make more frequent purchases of its goods and services.
Relationship marketing focuses more on building relationships with the customers. This approach helps companies in two ways; High employee retention and word of mouth marketing. Attracting new customers is an expensive and strategic step and it requires a very careful and measured investment. Similarly, marketing via other various mediums, other than word of month, can cost any company a fortune. In both the cases, the company saves the money and reduces the cost incurred. Such cost reduction further helps the business.
Improvement in the ROI
One of the best indicators of a company’s performance is its marketing ROI. Higher customer retention rates result in lower customer acquisition costs, which frees up more money for developing and executing a company’s relationship marketing strategy.
Existing customers are more likely to make additional transactions because they already appreciate the goods or services provided by a business. Companies can continue to see its revenue rise by enhancing the interaction and relationship-building process. Along with this, loyal customers promote the business and products for free leading to more new customers which will participate in new revenue generation.
Referrals and Higher Brand Awareness
Customers who are pleased with their purchases love to tell others about them, whether in person or online using social media. Customers frequently rely on recommendations and positive reviews to move forward with a buy. Brand recognition is also increased by referrals. People who previously may not have known about a company or the value of what they provide are now informed and are likely to look more closely at its products and services.
Provide Competitive Advantage
Today, it can be difficult to find methods to outperform the competition and maintain that position. Relationship marketing can be helpful in building devoted customers who support a company and convince others to do the same. This way, brands have a competitive edge over rivals because not all of them prioritize marketing to their current customers in this manner.
Customer satisfaction is an obvious benefit of relationship marketing. The ideal belief of this marketing is that satisfied customers market your product hence the primary focus of such marketing is the satisfaction of the customers. This marketing emphasizes more on customer needs and preferences which eventually lead to customer satisfaction.
Benefits of Relationship Marketing to Consumers
Customers can also benefit through relationship marketing as they tend to develop a certain level of bondage with the respective brand. The following points show the benefits of relationship marketing to a customer;
- Brands often cater to customers’ needs when they intend to build a long term relationship with them. This leads to exceptional delivery of services and products leading to satisfied customers.
- Relationship marketing focuses more on understanding customers hence, customers get tailored and personalized experience.
- The level of appreciation and value given to a customer by brands is comparatively higher when it comes to relationship marketing. Brand loyal customers can get exclusive offers and rewards and priority excess to new offerings.
- It’s easier for consumers to make purchasing decisions when they are committed to a particular brand. Along with this, customers can get privilege services on exchange, home support, return policy which again make purchasing decisions carefree.
- Relationship marketing motivates the culture of co-existence and co-creation. Brands and brand loyal customers together are involved in different co-creation processes. Brands take feedback and responses from the brand-loyal customers to develop or redesign products or processes. This further enhances customers’ experience with the brand.
Three Levels of Relationship Marketing
Capital One’s Approach to Develop Financial Relationships
Understanding the requirements, wants, worries, and interests of its customers is the first step in relationship marketing for Capital One. This is amply demonstrated by its distinctive TSA strategy. Travelers frequently grow impatient and irritated while waiting in lengthy TSA lines at airports. Seeing this as a means to foster relationships, the brand offers incentives to their customers when they choose to pay a TSA Precheck Fee via their Capital One card. With this single action, the company gains value while simultaneously addressing a common customer pain point.
Fenty’s Approach to Building Social Relationships
Fenty, the fashion and beauty brand founded by celebrity singer Rihanna, emphasizes inclusivity in its relationship-building efforts. Customers with light or dark skin tones are catered to in the development of beauty items. Savage X, her lingerie brand, features women of all sizes (XS to 4XL), encouraging customers to be more body positive. Members of Fenty’s membership program get first dibs on chances for VIP-only sales and new product launches. They also get access to exclusive material. As a consequence, Fenty has developed into an inclusive brand with global relationship building, setting it apart from the competition.
Starbucks Approach Towards Structural Relationships
When it comes to attracting and retaining consumers, Starbucks is frequently regarded as a pioneer. The company frequently invites customer input on a range of subjects, such as fresh concepts for goods, services, or events. The relationship is then strengthened and expanded using this input. Additionally, Starbucks interacts with customers on social media and sends emails to particular consumers about the introduction of new products or exclusive promotions. User-generated content (UGC) is also frequently shared by them on their website and on social media.