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Relationship
Marketing |
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Relationship Marketing
Relationship Marketing is targeted at
building stronger and long lasting relationships with clients
and other companies. The business is done with a strategic
orientation, where the relationship is improved with existing
customers rather than finding new customers. It is meant to
cater to the needs of individual customers. Its major part
involves studying the need of the customer and how it changes
in different circumstances.
Relationship marketing applies techniques
like marketing, sales, customer care and communication. The
relationship is not only enhanced but its life period is
increased by these strategies. And as the customer realizes
the value of relationship, they are drawn closer. This
marketing not only focuses on building relationship and
attracting customers to their products and services but also
how to retain them.
A raw form of Marketing came into
existence in the 1960s. But, organizations were still facing
difficulty in selling products, so a system was developed to
sell low cost goods to larger group of customer. Leonard Berry
and Jag Sheth originated this marketing, in 1982. It was
started in B2B markets and industries, which involved long
term contracts for many years. Over the period of time,
various marketing strategies were improved and relationship
marketing was one of them.
Relationship marketing is applicable
where the customers have many options in the market for the
same product or service and the customer is entitled to make a
selection decision. In such a kind of market, businesses try
to maintain their clients by providing comparatively better
products and good service and hence, achieving customer
loyalty. And once it is achieved it becomes difficult for
competitors to do well in the market. The customer turnover
wasn’t paid attention on as the main attention was on customer
satisfaction. This kind of marketing was initially named as
defensive marketing. Offensive marketing is the marketing
strategy where not only new customers are attracted, but also
the sales are stepped up by increasing the purchase frequency.
This kind of marketing concentrates on freeing dissatisfied
customers and acquiring new customers.
According to a research, the cost of
retaining an old customer is only ten percent of the cost of
getting a new customer, which makes sense to not to run around
to get new customers in relationship marketing. And according
to another research done by cross-sectional analysis, says
that, a five percent improvement in customer retention is
responsible for twenty-five to eighty-five percent of the
profit. Usually high cost is incurred when getting new
customers, so if sufficient number of existing customers is
retained, there will be no need of acquiring new
customers.
Once the customer trust is gained his
chances of switching to other company becomes relatively less,
he buys goods in bulk, he buys other supplementary goods and
he starts neglecting average price variation. This maintains
the unit sales volume and there is an increase in dollar-sales
volume. The existing customers will be like a living
advertisement. If he is satisfied with the company he will
recommend it to his friends and
acquaintances.
Since the existing customers are familiar
with the process, it will take less time and money to educate
them about the procedures putting fewer burdens on employees
also and making them feel more satisfied with their jobs. The
customers are divided into groups based on their loyalty. This
procedure is known as relationship ladder of customer loyalty.
The groups in ascending order are prospects, customer, client,
supporter, advocate and partner.
Due to the advancement in computers and
Internet, software has been developed to facilitate customer
relationship management. With the help of this software the
tastes, activities, preferences, and complaints of customers
are tracked. Almost all the companies have this software in
their marketing strategy, which benefits the customer as well
as the company.
Thus the main aim of relationship
marketing is to construct and maintain relationship with
committed clients who are meant to bring profit to the
company. The other benefits achieved are confidence building
and social benefits.
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