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What is Relationship Marketing?

Relationship Marketing

Relationship marketing is defined as a strategy designed to create and improve customer loyalty, interaction and long term engagement. Strong, positive customer relationships are an important part of any business. There are certain relationship marketing techniques that many companies follow to keep their customers satisfied.

Relationship versus Transactional Marketing

Relationship marketing is more about keeping the customers you have than looking for ways to bring in new ones. Techniques used to acquire customers rather than to retain them is referred to as transactional marketing. Profits, products, and advertising are all a part of transactional marketing. Customer relationship marketing techniques are instead, strictly focused on the customer’s experience. Neither should be confused with the other, although most organizations will blend them to create a highly effective marketing strategy.

Knowing Your Customer’s Needs

One important relationship marketing strategy is being able to understand your customer’s needs. This requires a distinct relationship with the customer, treating them as an individual rather than as a number, and getting a specific sense of their likes and dislikes. In a clothing store, for example, you could directly mail a customer about a sale on the kind of clothing they regularly buy. In a food store, it would be specifically promoting the food item the customer often buys. This allows you to not only to successfully market your business’ items, but build a rapport with the customer that makes them feel comfortable and keeps them coming back.

Categorizing the Customers

Being able to place your customers into three separate categories is another effective technique. The first category includes the loyal customers who shop at your business on a very regular basis. The second category is the customers who come in often but not as frequently as the first category. The third consists of the new customers. This allows you to know how to target the customers as far as promotions and deals go. Offering very loyal customers reward points and other benefits will ensure that their loyalty continues into the future.

Below the Line Marketing

There are two forms of marketing: above the line and below the line. Above the line is a regional, national, or global form of advertising on television, radio, or the Internet. Below the line is a more personal form of advertising, sent out through mail, e-mail, or phone. Below the line marketing is one of the most common relationship marketing techniques. It helps to build a feeling of personalized communication with your individual customers. It shows that you’re actually reaching out to them and treating them as individuals.

Benefits of Relationship Marketing

There are several benefits to having a great relationship marketing strategy. A 5% increase in customer retention can result in an increase in your annual profits from anywhere from 25% to 150%. Customers take less issue with prices when they are ensured satisfaction with their product, even if there may be a slight price increase. Companies can also benefit greatly from word-of-mouth marketing, as customers who’ve had very positive experiences at a particular company are likely to spread the word or recommend the business to those they know.

These are just a few of the benefits that your company will experience when you improve and maintain your customer relationships. Having a solid relationship marketing strategy can make a significant difference to your business.