As more and more customers expect a personalized experience, a growing number of businesses have had to shift their focus from transactional marketing to relationship marketing. The reason for that is because they found that building a relationship with customers usually results in increasing retention, average order size, sales and ultimately, profits.
There are many benefits to relationship marketing: Not only does it increase the likelihood of referrals, but a solid relationship marketing strategy can help make rolling out a price increase easier, because it makes your value proposition clear, simple and emotionally connected to your customer’s wants and needs.
A successful business aims to foster good relationships with clients as opposed to to trying to sell at any cost.
Relationship marketing also creates an opportunity for genuine feedback that will most certainly help you improve your product offering and make your small business more adaptable to change.
Transactional vs. Relationship Marketing
While all marketing focuses on increasing revenue and profits by gaining new clients, the differences between transactional and relationship marketing are profound.
Whereas transactional marketing focuses on short term benefits by centering strongly on price and maximizing profits for each transaction; relationship marketing’s key focus is brand loyalty and aims to develop deep, enduring relationships with all people or organizations that have a direct or indirect impact on the success of a business’ marketing activities. Below are the main differences between these 2 marketing approaches:
|Relationship Marketing||Transactional Marketing|
|FOCUS||Customer Retention||Single Sale|
|ORIENTATION||Product Benefits||Product Features|
|TIME HORIZON||Long Term||Short Term|
|CONTACT WITH CLIENTS||High||Low|
As you can see above, relationship and transactional marketing take different views of the role of the client. So while a purely transactional strategy is more short-term driven and is best suited for one-time purchases with no expectation that the customer would return for repeat business; the relational approach aims to encourage customer loyalty and return for future purchases by creating a long-term relationship between the customer and the business.
Advantages of Relationship Marketing
Having a solid relationship marketing strategy in place helps differentiate your company’s level of service and attention as well as fosters business development since it emphasizes more communication with your customers. With research showing that it is roughly 5 times more expensive to acquire a new customer than to retain one, building stronger relations with your clients will benefit you and your business in many ways:
- Increase word of mouth referrals.
- Build customer loyalty to the business and return for future purchases.
- Improve marketing efficiency by reducing churn.
- Clients more willing to pay more for your products / services.
- Customers provide valuable feedback and ideas.
In addition, Customer relationship marketing will help you identify the customers who are more likely to be of higher value to your business. Especially when you consider that many studies have shown that 80% of your company’s future revenue will come from just 20% of your existing customers.
Relationship marketing is also advantageous to your clients since their needs become a primary focus. By knowing that you truly care about them, they will feel confident that they will receive a better service and that any of their concerns are quickly addressed.
How to implement a Relationship Marketing Strategy
Now that you have a better understanding of relationship marketing and its benefits, you want to make sure that you have a solid strategy in place that strengthens your relationship with your clients. That way you will be in a better position to achieve increased customer satisfaction, retention, and new customer acquisition. All of which will ultimately have a positive impact on your business’ bottom line.
To help you get started on the right path toward a more customer-centric approach to marketing, here are 5 specific ways you can use:
CULTIVATE YOUR CUSTOMER RELATIONSHIPS
Providing a superior customer experience is key to a successful relationship marketing strategy is increasingly becoming the critical differentiator between market leaders and followers.
BUILD A CONSISTENT CUSTOMER EXPERIENCE
You want to make sure that you put every resources at your disposal to ensure customer’s needs are addressed; especially when he or she is experiencing challenges with your product/service. Swiftly resolving issues builds trust and enhances customer satisfaction.
MAKE IT PERSONAL
Put that special touch by making your clients feel special. Issue a unique discount voucher for your regular customers by using their name as the redemption code and let them know it is exclusive to them. You can also send non-promotional material such as a note or card on special occasions such as birthdays, anniversaries, children’s birthdays, graduations, etc.
ENCOURAGE HONEST FEEDBACK
If you know where you stand, you can stand stronger. Create an opportunity for genuine feedback from your clients, ncourage constructive criticism and suggest ways clients can help your business perform better. This will make your client feel most certainly help you improve your product offering and make your small business more adaptable to change.
DELIVER ON YOUR PROMISES
Nothing turns a customer off more than a business that does not honor its commitments. If you want to keep your customers, set yourself fast response time standards and stick to them. If you think you will not be able to honor your promises, be pro-active and let the client know beforehand.
By having a better grasp of relationship marketing and how to implement it in a way that best suits your business objectives, you have taken the first step in making a successful shift from traditional marketing to a more client focused strategy. This will help you build the foundations for a solid relationship between you, your business and your clients, with the ultimate goal of attracting and retaining customers that will contribute to your business’ long term success.