Description: As getting new customers in becoming tougher for businesses every year, relationship marketing has become more important than ever. Relationship marketing refers to the technique to retain customers and use them to promote their brand.
Moving forward, there is cutthroat competition in the market in almost every line of works. With so many options at their disposal, customers are no longer as loyal as they used to be.
However, it is still the case that marketers love loyal customers. This is not just because they buy a certain product or service repeatedly, but also because they inadvertently become ambassadors for the product itself.
This process of creating a base of loyal customers and consumers is called relationship marketing.
What is Relationship Marketing?
Relationship marketing is defined by the principle of developing a long term relationship between a business and its customer.
A long term relationship between two parties is only possible when both receive certain benefits. For customers, this benefit may simply be enjoying the product or service bought, or a monetary benefit specially provided by the company.
For the company, the long term benefits of relationship marketing are many. Having a set of loyal customers doesn’t just help a company monetarily, but also creates a band of passive promoters for the company.
There are essentially five pillars in relationship marketing.
In partner marketing, a company seeks partnerships with third-parties to promote products or gain prospective customers or leads. The company usually pays a commission to the third party for such a partnership.
When a customer refers to a company’s product to another person without any monetary incentive, the process is called referral marketing. Referral marketing is considered the ideal form of relationship marketing by marketers as it involves no monetary exchange between company and customer. In effect, the customer acts as a promoter for the business.
As the name suggests, employee marketing involves using employees as marketers to promote the product. This type of relationship marketing is another form of self-promotion, usually done to create a positive brand image of the company.
The type of relationship marketing where customers get monetary benefits for promoting a company’s product is called affiliate marketing. Done mostly by e-commerce websites, affiliate marketing involves customers receiving monetary benefits every time they successfully promote a product.
Influencer marketing is a more powerful form of affiliate marketing. Using the popularity of certain famous individuals (actors and actresses, sports professionals, industry leaders, etc), companies promote their brand to a large segment of people.
Companies have to pay the influencers for promoting their brand, but the benefit far outweighs the cost as people are more likely to be inspired by celebrities than simple brand promotions.
Significance of Relationship Marketing
When the competition to attract customers is as cut-throat as it is today, relationship marketing becomes essential. Having a loyal base of customers is not just beneficial for sales revenue, but also cost-effective for marketing strategies.
Some benefits of incorporating principles of relationship marketing include:
Growth in Revenue
If implemented well, relationship marketing leads to growth in revenue as loyal customers either buy products regularly or recommend products to their friends and family.
Increased efficiency in the cost of advertising
As loyal customers turn into promoters themselves for free, companies save a lot of money in advertising.
Increased Profit Margins
With growth in revenue and decrease in the cost of advertising, profit margins increase dramatically. In such margins, companies are further unshackled to price their products more competitively.
Having a brand people are loyal to is great for creating a positive perception of the company in the market. It is for this reason companies like Apple and Google have a great brand reputation. A loyal base of customers helps a business a lot.
If your competitor does not take relationship marketing seriously, you’re well placed to gain an edge in the competition.
Improving Retention of Customers
Through relationship marketing principles, you can improve your customer retention rate dramatically. By making customers see greater value in your products and offer special deals and perks, you arrive at a point where you can easily increase your base of loyal customers.
This is how can take benefits from relationship marketing. It’s a best technique of 2019 & will work more effectively in 2020 & in coming years. you should keep learning relationship techniques by using blogs, videos & applying them in your marketing campaigns. you can take help from a Digital Marketing Institute.