Relationship Marketing
Profitable Customer Life Stages in Relationship Marketing
Building a consistent customer base through strong relationships with your clients is the foundation of all relationship marketing plans. Focusing on understanding the customer’s perspective, as well as delivering products and services that address a client’s specific needs, will help give your company an edge in an increasingly competitive marketplace.
Attracting new customers, gaining new business, and maintaining these ties throughout a lengthy period of time is often referred to as a “customer life cycle,” or as “customer life stages.” These terms are part of a relationship marketing platform that presupposes an extended affiliation with a client.
The goal of every marketing plan is to get a new prospective client into a relationship with your company so a customer life cycle can be developed. Thinking of your customers in terms of a long standing relationship will determine how you approach your prospects.
At the beginning of your relationship, it is a good idea to have a customer life cycle method in place. This will target your strategic thinking in a different way than if you were looking only to develop clients in a short term relationship. If you approach and engage a client as though he will be with you for a long time, the chances are higher that this relationship will be realized.
A customer life cycle strategy is a system that keeps the customer as the center of importance through the lifetime of your company’s relationship with the client. There are a few key points to keep in mind when developing a plan for a customer life cycle.
Satisfaction vs. Loyalty
It is important to keep in mind that customer satisfaction is not the same as customer loyalty. Customers may feel completely satisfied with your products and services, but not feel a sense of loyalty to your company – a loyalty that would inspire them to purchase from you each time, instead of one of your competitors.
An important part of a successful relationship marketing plan is to engage a customer in a life cycle so he will be both loyal and satisfied. This is a subtle distinction, but one well worth keeping in mind: satisfied customers are not necessarily loyal customers.
Product Purchase vs. Product Consumption
Product purchase and product consumption are two distinct phases in the customer life cycle, and it is important to keep this in mind. A customer may purchase a product, but may not immediately use or consume the product.
Getting a clear idea of the relationship between purchase time and consumption time for each of your customers will help you to better facilitate a successful long term relationship with your clients. You may need to alter your company newsletters, emails and re-order reminders based on the purchase/consumption relationship. For example, let’s say your company sells contact lenses online. If a particular customer tends to buy a repeat order of lenses several weeks before he needs them, you will have to make sure your email re-order reminders are in sync with this customers purchase and consumption habits to help you maintain him as a loyal customer.
Understanding the customer life cycle and these subtle distinctions are one step towards building a successful relationship marketing strategy, and ensuring the longevity of your business.
Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing firm. He exemplifies how to profit from Joint Venture relationships by creating profit centers with minimal risk and maximum profitability.
To discover more Joint Venture Marketing Strategies join his free Joint Venture Marketing Wealth Report
Discover Professional Associations to Develop New and Profitable Relationships
Marketing your small business can be tricky—there are a myriad of approaches, theories and potential platforms in which to structure your marketing plan – so putting a plan into action can sometimes seem overwhelming. If your business is relatively new or a marketing strategy such as relationship marketing is unfamiliar, you may want to seek help from a professional association.
Professional associations offer a wealth of information, training classes and expert contacts to help guide you in the right direction. If you choose to join a professional association, you’ll have immediate access to creating relationships with other companies who are also members of that association.
The Association for the Advancement of Relationship Marketing (AARM)
The Association for the Advancement of Relationship Marketing (AARM) is the most well known professional association committed to helping businesses develop relationship marketing platforms. AARM is an international association that offers training courses and information on how to integrate a relationship marketing scheme into your company’s business structure.
AARM focuses on Customer Relationship Marketing and Customer Relationship Management, both commonly known in the business world as CRM. CRM is the central marketing practice under which relationship marketing fits.
AARM offers professional development workshops, seminars, and coaching with certificate programs to help you integrate a relationship marketing platform into your business. If your business is new to thinking in terms of a relationship marketing strategy, guidance from a professional association like AARM can help you navigate these uncharted waters that may seem a little daunting.
If you are a business with an established marketing platform, news, information and workshops from a professional association like AARM can help you stay on the cutting edge of marketing ideas for your business, and help you develop new and creative ways to meet the needs of your customers.
It is not necessary to join a professional association like AARM to benefit from what the association offers—you may participate in the seminars, workshops and classes even if you are not a formal member of an association. But one of the main benefits of becoming part of a professional association is the networking possibility that it offers. Membership in a professional association gives you access to other members who have the experience and knowledge that could benefit your own business.
Networking for Marketing
Professional networking is an important part of relationship marketing. By networking with other businesses, you enhance your professional relationships, which can only help benefit the relationships you have with your current customers.
Forming alliances with other companies, or just making a new business acquaintance, can enhance your existing client relationships also. Learning from other experts in your field, or even people in related fields, can give you insight and ideas on how to approach problems and issues with your own business. Another benefit of professional networking is the potential to share clients; you may meet a contact whose clients are in need of the types of products and services that your company provides, and vice versa.
There are many benefits to exploring a professional association, even if you do not want to make the official commitment to join as a member. The networking opportunities and business contacts you’ll make will be beneficial and you’ll stay informed and on the cutting edge of what is happening in the relationship marketing industry, which will only improve your business’s relationship marketing platform.
Relationship Marketing: How to Increase Qualified Leads by Using the Purchase-Readiness Survey
The Internet marketplace is growing increasingly competitive and difficult to navigate. The response rates from customer inquiries are trending downward and the process of driving new leads is becoming more expensive. Therefore, it is critical to incorporate a relationship marketing strategy into your businesses marketing plan to help maximize the power of each and every client lead with which you are presented. Simply put, not taking advantage of customer prospects that you have so diligently laid the groundwork to pursue is tantamount to handing these clients to your competition.
The process of ensuring that your client leads remain engaged and interested in ultimately pursuing a relationship with you is one of the central principles of relationship marketing. There are a few fundamental tactics to use in this early stage of building client relationships, which is also sometimes referred to as the nurture phase. These tactics are a good guide to help you increase the number of actual customers you obtain from your prospecting activities.
Purchase-Readiness Survey
If you do not have or are not already using a purchase-readiness survey, it is time to incorporate this survey into your relationship marketing strategy. The purchase-readiness survey should be incorporated into all of your lead and prospect generating mechanisms. A purchase-readiness survey allows you to gather critical contact information, as well as a customer’s readiness to make a purchase. Some standard questions to consider incorporating into your survey are:
• Timeframe for considering a purchase
• The customer’s role in the decision making process
• Key qualifying questions
Finding the Right Balance of Questions
You will need to balance and be aware of a prospect’s tolerance for and willingness to share information, with your need to gather information. Nobody likes to feel invaded or pushed, so it is important to be clued into the mood of your prospect. The more information you request from a client prospect, the more time it requires of your prospect, which they may be unwilling to give. It may be that the more eager you appear to gain a prospect and make a sale, the more you will alienate this prospect. You do not want to appear desperate to land a prospect (even if you are) –most humans can smell the essence of desperation– and nothing makes a person retreat faster.
Try to take cues from your potential clients: if they seem willing to talk and divulge information, it is okay to proceed with your questions and your purchase-readiness survey. But if you sense reluctance in your prospect, it is always better to scale back and give them space, and perhaps come back and approach this prospect at a different time when they may be more amenable to hearing what you have to say. You may have better luck at forging a lasting relationship at a different time. Nobody likes to feel intruded upon or pressured. Adopting a persistent but more laissez-faire attitude in your relationship marketing plan, you are likely to be more successful and have satisfied clients who are loyal to your company.
Giving the Unexpected to Your Customers
In a relationship marketing platform, creating lasting relationships with customers is integral to a successful marketing plan. Creating strong affiliations and contacts through superior customer service is the first step towards a successful relationship marketing platform, but it is also important to develop ways to give the customer more than other companies are providing and more than the customer expects.
What can you give customers that they cannot get elsewhere?
If you are operating in somewhat of a niche market, chances are you are already offering something that it is difficult for customers to find elsewhere. But, in a competitive marketplace, what can you do to distinguish your business by giving your customers something that they don’t typically get from other companies?
A few common ideas that are not universally implemented are free samples and discount coupons with each order. Another good idea that is only implemented in a handful of places is birthday recognition, either just via an email or a card, or by offering special discounts or free samples to customer during their birthday month. People love to get something for free and a high percentage of people who are given a coupon for a free item never actually redeem it, but the feeling of goodwill and loyalty is planted.
What can you give customers that is totally unexpected?
This is in somewhat of the same vein as the above suggestions, but with a slightly different slant. Doing something for your customers that is really unexpected and out of the ordinary will distinguish you to your clients, and may lead to word of mouth referrals.
How about a follow up email after an order to be sure that the customer is happy with their products? Instead of a free birthday coupon that the customer can redeem, how about just sending a small sample with a birthday greeting? What about automatic re-order email reminders? Email reminders are popular for products like contact lenses, but how about for coffee or skin care supplies?
Thanking potential customers who don’t make a purchase
What can you do to implement a platform to thank customers who don’t end up buying from your site? This may sound a bit odd, but if you have reached out to a new client, yet they don’t make a purchase, it is still a good idea to than this person for their time and consideration. This is not a widespread practice, we typically only thank people who make a purchase. The idea here is that just because this person did not make a purchase at this juncture does not mean that they never will. If they are thanked in an elegant way, even though they have not made a purchase, this will distinguish your company to them, and cause them to think of your for possible future purposes.
All of these strategies are suggestions of ways to help you strengthen the relationship marketing platform for your business.
Customer Service Tips for Relationship Marketing
Customer service is an integral part of creating a strong and solid relationship with your clients. A company’s most vital asset are its customers. Your business could not exist without them. By establishing good customer service practices, you will strengthen your relationship marketing strategy, as well as your customer associations. Below are a few straightforward tips for increasing the success of your customer service platform.
Be a Good Listener
Take time to identify with the customer, make the customer feel at ease, and to understand what it is the customer is seeking or looking for. Beware of making assumptions about what you think the customer wants and give the customer the space to communicate what they want, to you.
Ask questions to properly determine the customer’s desires and concentrate on their tone of voice and words if you are on the phone, or even their choice of words in email or chat. Assessing how a customer feels, and communicating that this is important to you, as well as understanding how to execute solving their problem, will make for a smoothly run business with a loyal following.
Identify and Anticipate Needs
One marketing school of thought asserts that customers don’t buy products or services, what they buy are good feeling and solutions to problems that are emotional rather than logical. Whether or not you ascribe to this philosophy, it is a good one to adapt, at least partially, and will help deepen the connection that customers feel to you.
The more you know your customers, the better you become at anticipating their needs, which makes you a vital part of their consumer experience. The better you know your customers and become at anticipating their needs, the more aware you will be of potential problems or upcoming needs that your customer has. This will give you an edge in the long run over other companies with whom your customers do not have a relationship marketing strategy.
Help Customers Understand Your Systems
Technology can be confusing for even the most techno-savvy individuals. If your customers don’t understand how your system works, take the time to explain it to them. If a customer gets frustrated, impatient and angry, you may lose a customer, which you can’t afford to do. Take time to explain how your systems work, and this will help demonstrate that the human element is very important to your business.
Know how to Apologize
When something goes wrong, or if you make a mistake, admit it and apologize. It is an easy thing to do, and customers appreciate the candor and honesty. If you make a mistake with someone’s order, include a sample or a coupon to balance out the inconvenience for the customer. It will not incur a large cost for you, yet will demonstrate to the customer that you are truly sorry for the error, that you are eager to make amends, and that their business is important to you and your company. The customer may not always be right, but when they are, definitely let them know it!
An Overview of Relationship Marketing
Relationship marketing is a form of marketing that developed from the direct response marketing campaigns, which were popular in the 1960’s-1980’s. These campaigns emphasized the importance of customer retention and continued customer satisfaction, rather than stressing and outing attention toward individual transactions, and per-case customer resolution.
What is Relationship Marketing?
Relationship marketing is a type of strategic marketing that targets an audience with more direct information on specific products and services in which that customer may be interested. It differs from other forms of marketing in that it seeks to retain customers by building a relationship with them, rather than direct or intrusion marketing, which focuses on acquisition of new clients by targeting majority demographics, based in part upon prospective client lists that have been purchased from a third party source.
As traditional marketing was taking off in the 1960’s and 1970’s, companies found it more difficult to sell consumer products. The original model was developed into a system of marketing which targeted selling relatively low-value products in mass quantities to a high volume of consumer. Since the beginning of modern day marketing platforms, many methods have been developed to attempt to broaden the scope of marketing. Relationship marketing grew out of this era, and is one example of an early attempt to expand the reach an applicability of marketing.
Simply put, relationship marketing focuses on targeting the relationship of company to customer. If you have an existing customer base, it makes sense to learn what these customers like about your products and services and how you as a company can improve on this. If you build on the good relationship that you already have with your customers, and create customer loyalty, this is more valuable than putting energy towards always attempting to gain new business.
Defensive Marketing vs. Offensive Marketing
Relationship marketing can be understood in simple football-like terms of offensive and defensive approaches. “Defensive” marketing and “offensive” marketing are terms that were coined by C. Fornell and B. Wernerfelt in 1987.
Defensive marketing describes attempts to reduce customer turnover and increase customer loyalty to retain the customers that you have already gained, by keeping them happy with your service, and interested in your products. This contrasts with offensive marketing, which seeks to obtain new customers and increase customers purchase frequency. Defensive marketing focuses on reducing, or better managing customer dissatisfaction, while offensive marketing focuses on “liberating” dissatisfied customers from competitors and moving them into the offensive marketer’s customer base essentially getting customers to switch teams.
Customer & Consumer Relationships
Relationship marketing is a key collaborative strategy to retain customers. It is essentially an off-shoot of customer and consumer relationship management. The theory is that attracting new customers is more costly, yet less profitable than developing existing client loyalty. By developing and promoting your existing client base through research and understanding of what your clients’ individual needs are, you will develop a loyal client base for years to come, with less expense and higher returns than trying to attract new clients. Building lasting relationships with the clients you have is a recipe for long term marketing success.
Social Networking as Part of Relationship Marketing
In internet commerce, it is vital to build a strong network of relationships with your customers. By having a base of loyal customers, you ensure the successful longevity of your business. From time to time, it is necessary to gain new business’ new clients and customer with whom you bring into the pool of focus for building a strong relationship. You may be doing all the “right” things, such as newsletters for your business, email marketing campaigns and advertising on other websites, but you still feel that you’re not attracting as many new customers, or building as many new relationships as you would ideally like to. Exploring social networks as a way to form new business relationships, and to potentially gain clients is something worth investigating, if your business has not yet done so.
Social Networking
The popular social networks like Facebook are thought of as a place to keep in touch with long distance friends, share photos and stories about your life. But these online social networks are also great ways to make new business contacts. Each network is structured slightly differently so you may want to join several, or investigate the sites on your own before deciding which one to try for your business purposes. Social networking can be the next step in a relationship-marketing plan for your business. Below are a few of the most popular social networks and what they have to offer from a business perspective.
When thinking of a social network, many adults assume they are juvenile or the domain of teenagers and twenty-somethings. If you have an aversion to the idea of social networking, LinkedIn is the best place for you to start. LinkedIn has a mature, professional audience, and it is a combination of social networking and business networking. When you join LinkedIn, you usually list your contacts, both social and professional, and invite them to join. Once your contacts have joined, you then have access to their social and professional contacts and they have access to yours. This is a great way to reach out to new people and make connections because you have a mutual friend/associate in common.
Facebook isn’t just for kids anymore, the demographic of this particular social network continues to broaden, and it is a great resource for making contacts and potentially looking for people to hire if and when your business expands. Facebook has a number of useful features and advanced applications, along with a certain level of privacy that doesn’t exist in other networks. It also has the sheer volume of numbers on its side: with 600 million searches and more than 30 billion page views a month, there is a seemingly endless pool of resources to tap into.
MySpace
MySpace is perhaps the social network that is geared most towards a younger population. However, try not to let that deter you. The Internet is making it easier for younger, tech-savvy people to create business, which means there is large market of younger business owners and entrepreneurs, as well as potential customers that can be connect with on MySpace. Young people also have more disposable income than they have historically, which means that subscribers to MySpace often have money to spend, and are they looking for unique, niche market sorts of products.
Building strong customer relationships as part of a relationship-marketing platform is an important ingredient in the success of your business. Using these social networking tools has the potential to connect you with extremely talented, professional people with whom you may not have otherwise been exposed. Part of a good relationship-marketing platform involves reaching out and building relationships with people with whom you have something in common. These social networks are an excellent way to expand your network of business contacts.
Beginning Tips for Relationship Marketing
Relationship marketing, simply put, is the strategy of building strong, lasting relationships with your client base, thus building loyal and committed customers. Often in striving to gain media visibility and recognition, businesses temporarily forget or overlook their most important marketing resource, your business relationship with people!
Below are a few handy tips to help you reassess your relationships with your customers, and to start to develop a plan for building on and improving your client relationships.
Get Organized
It is difficult to target and streamline communication and build relationships if you don’t start out knowing where you stand with your customers. You probably have files on your customers, but do these files include the tracking of correspondence? If not, this is an aspect that should be added to your customer files.
Another idea is to develop a file of success stories . . . are there customers with whom you have a strong relationship, who are loyal and devoted clients? If so, assess the history of your relationship with these clients to determine if you did something different to gain their loyalty and trust. You may even want to start a file of success stories to refer to for suggestions and inspiration, which may be helpful during times when creativity about how to expand customer relationships may be waning.
Develop a Communication Plan
Communication is the first step in building strong relationships with your customers. First, assess what your communication strategy is, and if you do not currently have a strategy for ongoing contact with your clients, it is time to develop one! Whether it is a weekly, monthly, bi-monthly or quarterly correspondence with your clients, it is important to decide upon a plan of action and to implement this plan.
If you already have a communication plan in place, and are tracking your customer communication, now is the time to review and assess the effectiveness of your plan.
- Do your customers seem engaged and interested in your communication with them?
- Is your customer base steady, or do you seem to be losing customers?
- Have you had any repeated complaints from multiple customers?
- How can you better serve your customers?
- Is there an easy and reliable way for customers to reach you if they have a complaint, concern, or would like to make a suggestion?
This may all sound overwhelming at first, but these are just a few areas to get you started thinking about how to facilitate more communication with your customers. You are probably already doing some of these things. If there are several of these suggestions that you are not doing, yet you feel compelled to implement, don’t panic! Just take one suggestion at a time and move forward that way. Relationships with clients are built over time, and anything you do now to start the process is a step in the right direction towards building a lasting client base. Once you start to understand and embrace the importance of customer relationships in a strategic marketing plan, you will be heading in a direction for success.
Why Relationship Marketing is Deeply Effective
Relationship marketing focuses on the connection a company has with its existing client base. This marketing strategy seeks to improve and build on this relationship, which in the long run will create a loyal customer base and profits for the company. Relationship marketing is a long term process that looks for stable solutions to earnings and return on investment. It is not a glitzy quick fix solution, so it doesn’t always get the attention it deserves, but it is a collaborative strategy that truly works.
Less Expense, Higher Returns
If you were told that you could increase your sales without increasing your marketing budget, your interest would be piqued, would it not? This is precisely what relationship marketing seeks to do.
A typical way that businesses operate is to assume that when a customer has purchased a product or service once, the customer will remain loyal. This can be a costly mistake, as it is easier and less expensive to build relationships with existing customers than it is to woo new customers or to win customers back that have been wooed away by your competition.
There are a few key statistics to consider when deciding where to put your marketing dollars:
- Repeat customers spend 33% more than new customers
- Referrals among repeat customers are 107% greater than referrals from non-customers
- It costs six times more to sell something to a prospect than to sell that same thing to an existing customer
This is a staggering bit of information, and based on these statistics, you can see that your marketing budget will go further if it is used to build and nurture your existing customer relationships. Building these relationships means treating your customers as though they are your strategic collaborative partners, rather than just numbers.
One Thing at a Time
It may seem a bit daunting to think you need to completely change your marketing strategy overnight if you’re not currently using a relationship marketing strategy, but it need not send you into a panic. You may choose to start slowly even if you choose just one of the above bullet points to target, you will notice a difference in your business, and it will give you an opportunity to test the efficacy of this strategy.
Let us start with the first bullet point: Repeat customers spend 33% more than new customers. For example, you operate a website that sells specialty health and beauty supplies. There is a certain brand of sunscreen Sally found on holiday in France that isn’t sold in the United States. She happens to find your website, which does sell this particular sunscreen, and she is thrilled. She becomes a loyal customer and purchases the product. On a return trip to France, she finds a shampoo she loves that yet again, isn’t available in the U.S. Happily, she finds the shampoo on your website, and in the meantime, purchases a few more products to try. She talks with her sister on the phone and recommends the shampoo from your website, which then results into more purchases for your company.
This is not an unlikely scenario. In Sally’s story, she has taken the lead in investigating the website, but there are marketing strategies that would push a customer towards making that leap on their own. How about an email with a list of new products offering a discount? Or a few samples of new products when you ship orders? There are many ways to strategically build strong customer relationships, which will enhance the longevity of your business, as well as its bottom line.
Re-Evaluate Your Marketing Strategy
Is relationship marketing a key aspect to your marketing strategy? If not, it is time to re-evaluate your marketing strategy, and how you spend your marketing budget. Typically, businesses spend 80% of their marketing budgets on going after new customers and attempting to gain new business, yet this does not result in an 80% increase in sales and business.
Building existing customer relationships and expanding customer retention is an important strategic aspect to consider. A new and growing business, of course, needs to constantly capture new customers to grow its customer base. However, it is important not to lose sight of who your customers are, even if they have purchased from you only once.
Why Does a Customer Defect?
There are several reasons why clients may decide to leave you and go to a competitor, but the ones heard most often are:
- They felt your pricing was too high or unfair
- They had an unresolved complaint
- They took a competitors offer
- They left because they felt you didn’t care
In this list, it is the last two reasons that make up the majority of lost customers, which can be a difficult realization, but one that can be turned around. Business, by nature, is competitive; you may not always be able to meet or beat the prices of large companies who can buy in larger quantities. But preventing a customer from leaving you because they feel unimportant is wholly within the scope of your control and responsibility.
How to Retain your Customer Base
There are several ways to achieve the goal of retaining your customers and making them feel that their business is important to you. The main focus here is building that relationship, finding ways to connect with your customers. Learn about their needs and what they are looking for when they make an online purchase, how to meet these needs, and very importantly, to let your customers know that you value them.
In the seemingly endless world of internet business, it is easy for a customer to feel like a number that does not matter to a corporation. Nothing could be further from the truth, and you need to make sure you customers know that. If one customer feels ignored and switches to a competitor, not only do you lose the business, but you could potentially be harmed by unhappy word-of-mouth discussions.
Customers often feel an affinity for the “little guy” in business, the “underdog” so to speak. People routinely pay more for the same vacuum cleaner bags at a mom & pop store than at a big conglomerate hardware store for a variety of reasons. But the main reason is the relationship they build with the owners, the feeling that they matter, and that the owners are happy to see them when they walk through the door.
The same is true in internet marketing. It is a more complicated avenue, but the sentiments remain the same. People like to feel noticed, and that their business is important. If you can create relationships with your customers that make them feel this way, you are well on the road to customer retention and a solid customer base.