What is relationship marketing?
In marketing, the most important resource that is usually overlooked in the frenzy of gaining media popularity is ‘relationships with customers’. Success and profits are based on long term relations with target audiences and thorough customer satisfaction. Thus relationship marketing is a business strategy different from other kinds of businesses where instead of stress on individual transactions, the primary focal emphasis is on building long term relationships with customers. The businessdictonary.com defines relationship marketing as ‘promotional and selling activities aimed at developing and managing trusting and long term relationships with larger customers’. It goes on to say that ‘customer profiles, buying patterns, and history of contacts is maintained in a sales database and a service representative is assigned to one or more major customers to fulfil their needs and maintain relationships’.
It is important to understand that the key component in businesses and marketing is engaging in a good portion of your time in nurturing customer relationships. It is dealt mainly with maintaining an approach related to keeping an affiliation with the existing customers rather than time spent on gaining new ones. Industrial Statistics have revealed that an existing customer is just about 10% of the cost of acquiring new ones. Thus importance and attention must be given to ‘customer retention’ than acquisition of new ones.
Relationships must be maintained with those customers who are trusted to bring profit to the organization. This building of relationships is a long process as care is taken to provide appropriate solutions to the customer by making effort to understand their every need. A wide range of marketing tools, communication, sales, customer care techniques and processes are used to identify customer needs.
Findings and Research on Relationship Marketing
Leonard berry of Texas A&M (1982) and Jag Sheth at Emory along with the marketing theorist Theodore Levitt of Harvard (1983) conducted a research, broadened the scope for marketing and were the first to use the term ‘relationship marketing’.
Jimnovo.com is a ‘how to market’ website, says that there are two key points in pursuing relationship marketing.
1. Life cycle- determines the marketing approach utilized with the customer
2. Trigger- depends on the customer behaviour or the ‘customer life cycle’ which triggers marketing approach
Adrian Payne, Martin Christopher and David Ballantyne (1991) of cranfield university have formed the ‘6 markets model’ that is said to be central to relationship marketing.
▪Internal markets- this theory says that there must be usage of marketing techniques within the organization where employee, department or team is a supplier and as well as a customer for products and services
▪Supplier market- this marketing strategy which will improve quality and reduce costs engages in ensuring long term conflict free relationships of all parties. Every party understands the others needs and does not exceed the others expectations
▪Referral markets- a market that may take months to develop and implement but does ensure returns. It is the market that stimulate referrals
▪Influence market- This market is focused on a variety of sub markets like standard bodies, lobbyists, bankers, government regulators, venture capitalist, stockbrokers, labour associations among others.
These 4 markets along with customer market and recruitment market are activities that are usually carried out by the public relations department. The ‘6 markets model’ claims that marketing to these 6 markets is a responsibility of every organization for successful relationship marketing.
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