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
