How to Build Enduring Customer Relationships!

Feb. 9, 2010 - PRLog -- Relationship Marketing is targeted at building stronger and longer lasting relationships with clients and other companies. It requires a deliberate business strategy  where the relationship is improved with existing customers with less emphasis on finding new customers. It is also intended  to cater to the needs of individual customers and recognises the typical groups or clusters of customer types in any business. Each group ( based on say, geography, socio economic factors, tastes and preferences, age, ethnic group etc) is  studied and their respective needs are reflected in the nuance of your Relationship Marketing programme.

Relationship Marketing applies techniques like marketing, sales, customer care and communication all suitably flexed to reflect each identifiable customer or customer group. The relationship is not only enhanced but its life period is increased by these strategies.

One of the 7 Keys of the Alchemy Process to grow a business recognises the additional sales growth that can be achieved simply by working at extending the lifetime value of a customer. And as the customer realises 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.

An early  form of Marketing came into existence in the 1960s. But, organisations 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 especially powerful in situations where 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.

In previous articles we have explored the power of developing your USP ( Unique Selling Proposition) and once it is achieved it becomes difficult for competitors to do well against you in the market. 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 and offering a greater range of products/services. This kind of marketing concentrates on losing dissatisfied and low margin customers and acquiring new more profitable customers. The Relationship building that ensues concentrates on upselling, back end sales, cross sales,  all are commonly used techniques in advanced Relationship Marketing.

According to research, the cost of retaining an old customer is only ten percent of the cost of getting a new one, so it makes sense  not to run around getting new customers as your sole focus. Building relationships with existing customers with relationship marketing keeps your marketing costs low and your profits high!

According to another research done by cross-sectional analysis, a five percent improvement in customer retention is responsible for twenty-five to eighty-five percent of the profit. Wow- that’s powerful!

Usually high cost is incurred when getting new customers, so if sufficient numbers of existing customers are retained, there will be no need to focus solely on acquiring new customers.

Once customer trust is gained. Loyalty increases and the chances of switching to another company becomes relatively less. The customer will start to buys goods in bulk, he will buy other supplementary goods and he will become less price sensitive placing a higher value on the good relationship.

So your  unit sales volume increases and there is a corresponding increase in the pound-sales volume and profits. Existing customers will also become your best ‘living’ and ‘free’ advertisements. If you keep them coming back for more through creative Relationship Marketing they will undoubtedly recommend you to others.

Since  existing customers are familiar with your processes, it will take less time and money to educate them about the procedures putting fewer burdens on employees also and increasing their job satisfaction and motivation so it becomes ‘win-win’.

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, many software packages are available to facilitate customer relationship management. With the help of this software the tastes, activities, preferences, and complaints of customers are tracked. Almost all successful companies have this software in their marketing strategy, which benefits the customer as well as the company providing valuable information which cab be used by all customer facing staff.

So the main aim of relationship marketing is to develop and maintain relationships with committed and loyal clients who if treated correctly, will in time grow your sales and profits at relatively low cost.

So start thinking about how you can build relationships with your customers that use the principle outlined in this article.

As an Alchemy consultant I am trained and skilled at developing relationship marketing so please do contact me if you would like some help.

Michael Harris,
Alchemy Business Transformations Ltd.
http://www.growingmybusiness.co.uk
http://www.alchemybusinesstransformations.co.uk

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Alchemy Business Transformations specialises in helping SME's achieve extraordinary growth in sales and profits. We work with Business Owners using the Alchemy 7 Step process to implement a programme of sustainable growth which transforms the business.