PRINCIPLES OF

MARKETING
Defining Relationship
Marketing
According to Gilaninia et al (2011), Relationship
Marketing involves creating, maintaining and
enhancing strong relationships with customers and
other stakeholders. Increasingly, marketing is moving
away from a focus on individual transactions and
towards a focus on building value-laden relationships
and marketing networks. Relationship marketing is
oriented more towards the long term. The goal is to
deliver long- term value to customers and the
measure of success is long-term customer
satisfaction.
Five different levels of relationships that can be formed with
customers who have purchased a company’s product, such as a car or
a piece of equipment:
1. Basic. The company salesperson sells the product but does not
follow up in any way.
2. Reactive. The salesperson sells the product and encourages
the customer to call whenever he or she has any questions or
problems.
3. Accountable. The salesperson phones the customer a short time
after the sale to check whether the product is meeting the
customer’s expectations. The salesperson also solicits from the
customer any product improvement suggestions and any
specific disappointments. This information helps the company
continuously to improve its offering.
4. Proactive. The salesperson or others in the company phone
the customer from time to time with suggestions about
improved product use or helpful new products.
5. Partnership. The company works continuously with the
customer and with other customers to discover ways to deliver
better value.
Concept of Relationship
Marketing Forbes.com defined Relationship
marketing is a strategy designed for customer
loyalty, interaction, and long-term
engagement to be fostered. It is designed
to develop strong connections with
customers by providing them with information
directly suited to their needs and interests by
promoting open communication.
Customer relationship is the development of an
ongoing connection between a company and its
customers. The relationship involves marketing
communications, sales support, technical
assistance and customer service. Customer
relationship is a big part of marketing.
Relationship marketing is an interaction with
current customers and potential ones.
According to Serrano, Relationship Marketing includes activities
aimed at developing and managing trusting and long-term
relationships with larger customers. (Customer profile, buying
patterns and history of contacts are kept in a sales database)
Characteristics of Relationship Marketing
1. It focuses on the long-term rather than the short-
term.
2. It focuses on partners and customers rather than on
the company’s products.
3. It puts more emphasis on customer retention and
growth than on customer acquisition.
4. It relies on cross-functional teams rather than on
departmental-level work.
5. It relies more on listening and learning than on talking.
A cross-functional team is a group of
people with a variety of expertise
who come together to achieve a
common goal. It typically includes
employees from all levels of an
organization.
Benefits in Developing and Implementing
Customer Relationship
1. Consistent customer experience
2. Customer Feedback
3. Customer Profitability
4. Customer advocate
5. Innovation
Benefits of Relationship Marketing
In the business world, retaining customers
has a lesser cost at least eight times
compared to acquiring new ones. Thus,
this marketing capitalizes on the same fact
and is beneficial to the company in several
ways.
A. Understanding Customer Characteristics; -
the company can segregate its customers into
groups based on their characteristics like
purchasing power, frequency and volume of
sale transactions. It also helps the company
get valuable feedback from its customers and
understand their needs and expectations.
B. Delivery and Meeting Expectations - if the
company knows what its customers’ needs are,
it will help reduce wastage due to trial and error
methods. It is easier to create a product if the
features and specifications of the product are
known.
C. Repeat Business - Sellers should maintain
good attitude to the buyers. By doing this,
buyers will feel that they do not need to switch
sellers.
D. Prevents Negative Transition. - Trust and loyalty go hand
in hand and it is super beneficial for all business. It will help
prevent customers from turning to competitors.
E. Word-of-Mouth Marketing
❖ Increasing customer base - satisfied existing customer is
100% more likely to recommend a product/service to a
prospective customer. Apart from customer, referrals, there
are several other ways to increase customer satisfaction by
employing methods of utilizing social networking websites,
blogs, informal surveys, benefits on loyalty cards, timely response
to complaints and requests as a constant reminder of its
presence around and retention equity is improved by
enhancing customer satisfaction.
F. Reduced Marketing Cost - benefits also
include lesser marketing costs and more value
creation. This can be explained by stating the
following statistics: every 5% increase in
customer retention can increase a company’s
annual profits from at least 25% to as much as
125%, while simultaneously leading to a
reduction of 10% in marketing costs. An existing
customer will spend 33% more than a new
customer to buy a company’s product/service.
G. Identification with the company - the
benefits are reaped both by the company and
the customers. It helps customers identify
more with the company. Keeping your
communication lines open and keeping in
touch with the customers makes them feel like
they are being valued. It will keep customers
coming in and build brand equity for the
company in the long run.
H. Product Market Expansion - the
company’s employees must be ready to
deliver beyond the company’s boundaries
on customer demand.