In the past, a customer was defined by a transaction, simply
put, they were what they bought. Once they handed over their money in exchange
for a good or service, our relationship as a company with that customer
ended. This type of marketing is known
as transactional marketing, where the
business focuses on maximizing its sales efficiency through increasing the volume of individual sales.
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In the modern world, global competition has become much more
intense and as a result of this increased competition, customers have gained
significant buying power. Therefore, businesses have been forced to look for
more sustainable sources of competitive advantage, better separating themselves
from their competitors. This has led to
the introduction of relationship
marketing. Relationship Marketing involves developing a deeper ongoing relationship with your customers
post-transaction, where the business
focuses on their customers’ loyalty.
There are various practices of relationship marketing that companies
use in today’s society:
- Loyalty
Programs – Rewarding their consumers with points for every transaction that
can be accumulated into cash value towards a purchase. i.e. Shoppers’ Optimal
Points
- Email Marketing – Sending out frequent emails notifying customers of promotions or store-offerings. i.e. American Eagle’s All Access Membership
- Social Media Marketing – With the explosion of social media, it has made it easier for businesses to create a 2-way communication channel between its customers; i.e. blogs, Facebook, Twitter, mobile apps
- Information Technology/Databases – Although expensive and difficult to implement, companies can implement technology systems that track employees’ purchases; used to gain a better understanding of which operational components add value and which do not, making your company more efficient.
There are
various benefits associated with relationship marketing initiatives, both
economical and reputational. Companies
can realize higher profit margins with long-term customers, in fact, according
to surveys, the top 16% of the company’s customers account for 105% of its
profits with the bottom 28% eroding profits by 22%[1]. Furthermore, these loyal customers provide
stable cash flows and generate word-of-mouth referrals to other prospective
customers. For a more detailed
explanation of the advantages that can come from implementing relationship marketing click here, this website provides statistical proof.
Hope this blog has provided you with a better understanding
of Strategic Customer Relationship Marketing!
Thanks for reading J
Darcy Davis
Good job! In the whole classes from our marketing programs, we are taught again and again to build a firm long-term relationship with customers. It would be a bigger challenge in web marketing as the fact that we keep dealing with long distance business without interaction directly. However, we also could offer much more powerful service to satisfy them by the Internet.
ReplyDeletegreat information and a good read! building relationships with customers is one of, if not the, most important things a business can do. having customers come back is what keeps a business going and it costs less to maintain customers than it does to gain new ones.
ReplyDeleteA lot of information, great job. It is not easy to build relationship with customers, but with this information, if one apply them, it could easier. But it worth establishing such a relationship because it is costly to get a new customer.
ReplyDeleteTurning your customers into raving fans! Great video. This video shows the important of customer relationship. I learned many good idea about customer relationship from it. Thank you.
ReplyDeleteGreat blog entry Darcy Davis.
ReplyDeleteI feel that strategic customer relationship is very important and should have a high priority when looking at building relationships. I liked how you outlined some of the key ways to attract customers using ideas such as loyalty programs. Seeing those different strategies and being able to compare them makes it easier to apply them to different situations.
The way companies interact with customers has changed significantly over the years. There has been so much progress made in regards to how businesses view customers. Instead of seeing the potential of a consumer as a one time transaction, companies tend to encourage their customers to return and build a relationship with them.
ReplyDeleteI will speak from experience will loyalty programs and the rewards points I earn at Shoppers. I LOVE SHOPPERS! I would rather go there than save and go to Walmart any day. I love my points and I NEVER forget my card. I also use my HBC Rewards points card at the Bay. Both of these cards have created a positive and loyal relationship for me.
ReplyDeleteIt is apparent today that company's that do not offer cards like the two examples I just used are loosing out. Customers are looking for these types of intensives to buy and seeking out stores that offer loyalty programs.
You touched on the most important point, which is the long-term customer and its potential. This category is vital for a company, and with more frequent loyalty programs and expanded customer databases the marketer can easily establish a relationship. And we all now, that once you win over a customer's loyalty, he will return to and promote your brand.
ReplyDeleteGreat work.
Companies over the years have really started to get in touch with there customer base. Marketers dont only follow your one time transaction, but can calculate an esimate on what you usually spend a year. Understanding this gives companies incentives to really establish long term relationships with there customers. Having a loyal, long-term customer will help sustain a long, fruitful business venture.
ReplyDeleteI agree completely. Relationship marketing took precedent when it was understood that it is cheaper to retain current customers than find new ones.
DeleteGreat Post!
Good post Darcy. You 'hit the nail on the head' when you mentioned how important it is to maintain customer and have long-term customers. If it wasn't for long-term customers businesses may not be in business as it is hard to always have new customers coming in. I know that I have shops I frequently go to, because of how I am treated, this could be due to these shops good CRM.
ReplyDeleteLoyalty programs is a best way through which a business can build strong relationships with their customers and attract a lot of potential as well as new customers as customers know if they purchase a product from a place where their is a loyalty program going on, they would come back again and again and purchase things , as customers know in the end they would get back something in returns for all the purchases they make! Customer relationship marketing is the key from which a business can build reputation and attract customers.
ReplyDeleteExcellent post! I agree that within todays tough market, competitors really need to find a way to stand out to consumers. How they treat their consumers and the realationships that they have with them can be crutial for business. Companies in the past have only seen consumers as purchasers and like you stated, ended the relationship at that. But now companies are trying to gain and build loyal customers and relationships with their consumers.
ReplyDeleteWell done Darcy! Loyalty programs are the best tool (to me) for relationship marketing. As consumers, we tend to buy more from the brand that "pampers" us or rewards us with points, or rebates, discounts etc. The success for a long term prosperous businesses to know how to build a long term relationship with every customer.
ReplyDeleteHaving a good reward program is key. It gives customers the idea that they are a valuable asset to the company. It helps to strengthen relationships and gives the feeling of individuality among a flood of competitive markets.
ReplyDeleteGreat post!
Mr.Davis, a simply excellent post. Loyalty programs are one of the best strategies when it comes to relationship marketing. Personally, I really enjoy loyalty programs and I will buy a specific product/service if there is rewards for my loyalty. For example, at Supercuts, I will get a free haircut after I go there for a certain number of haircuts before. I am being rewarded for my loyalty, and that's why I keep going there. Businesses have to consider this for their success.
ReplyDeletegood post..Today, most business in the world recognises that customers are the core of the business. The new objective for marketers involves understanding the needs of their customers and the markets that they serve. with good relationship, business will gain loyalty and trust from your current customers and that will help to bring potential customers by " word of mouth" of the current customers.
ReplyDeleteMoreover,In my perspective, this topic Strategic Customer Relationship Marketing is very significant due to the fact that companies now emphasize more on the customer satisfaction rather they focus on the sales transaction. I gain a lot of knowledge while I am reading that. More importantly, technology opens a lot of opportunities that really increasing companies to make the best methods for customer relationship.
ReplyDeletemany courses at Mohawk college have talked about CRM, this is because it is a very important aspect to use in developing relationships with customers,which in turn, these customers will allow a company to generate more revenue.
ReplyDeleteCRM gives businesses many advantages such as the ability to personalize relationships with their customers.
Crm can also help an organisation to discover new potential customers.
Relationship marketing is the true way to connect and have a customer remain loyal. Myself I am a sucker for a a loyalty program. And I know as a seller at my employer I actively try to engage and create a relationship myself in order for the consumer to get the best overall experience. Trust is so hard to earn that when it is established it remains true. Which is why CMR is so important which you discussed. Good job Darcy.
ReplyDeleteYour stat about the top 16% of the company’s customers accounting for 105% of its profits was shocking to say the least, I always knew that establishing good customer relations was integral in any business but i never knew it was that vital. Overall a great read.
ReplyDeleteGood job Darcy.
Successful organizations must show their clients and customers how much they appreciate their business. Bukoo Gifts offers best Customer Loyalty Programs that build relationships with your clients. Show them you appreciate their business and are willing to invest in keeping their business. Also, utilize Bukoo for referral gift programs, and give your customers and clients thank you gifts for sending business your way.
ReplyDeleteThere are various practices of relationship marketing that companies use in today’s society: http://www.jihoy.com/
ReplyDelete