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Relationship Marketing

Disciplines > Marketing > Strategy > Relationship Marketing

Basic premise | The use of data | Building relationship | Using relationship | See also

Relationship marketing is an approach to marketing where focus is placed on relationships with the assumption that sales will follow.

Basic premise

Relationship marketing is based on the premise that:

• Buying decisions have a significant emotional content
• Relationships form the main part of the emotional life of most people
• We form relationships with people, products and brands
• We trust and like those with whom we have good relationships
• We will accept messages and spend money with brands we like
  

Good relationships are based on trust, liking and other positive emotions. These lead to a reduction in transaction cost, making it easier to persuade trusting friends. Loyalty is another benefit as friends always support you and sing your praises.

It is no wonder that relationship marketing seems such a good idea. Make friends with your customers and they will not only keep buying from you, they will also persuade other friends to buy from you.

People do not have relationships with companies. They relate to their image of the company (the real brand) and have relationships with the people from the company (who transmit the brand). Relationship marketing hence starts with clarifying the brand and continues with training people to represent the brand with absolute integrity.

The primary relationship in relationship marketing is between company and customers. The company is represented in person by its employees and generically by its brand and products. All other relationships contribute to this core, including the relationship between the company and its employees, relationships with suppliers, partners and so on.

The use of data

Relationship marketing is also about data. Some, especially those with an IT bias, view it as being all about data, although as noted above, the key is in the word: relationship. Data management, however, can support and enhance many customer interactions.

Databases can help you remember and share customer information, including:

• Names of key contacts
• Personal information such as birthdays and family details
• What they have bought in the past
• What interest they have in buying your products, in both the long and short term future
• Who in your company has spoken with them, and what was said (and especially what was promised)

Databases are intelligent and easily suffer from 'garbage in, garbage out'. They also fail people fail to enter full details, which will happen if they think they will lose more by taking time to always keep it up to date than they will gain if everyone contributes. If they doubt that others will fully contribute then this may be enough to create a self-fulfilling prophesy.

Relationships can easily go sour, with betrayal leading hate and revenge that can lead to longer-term feuds and resentment.

Building the relationship

Relationships are built first by contact, secondly by trust and thirdly by value. When I have met you and got to know you, then I may learn to trust you. And then relationships only really blossom when both sides get something of practical value out of them.

In relationship marketing, the relationship is sometimes person-person, for example when a direct sales force connects with individual customers. More often, it is between the customer and the company, where the company is represented by its products, its websites, its literature, its service department and so on.

Building the relationship starts with first contact, whether this is completing an online form, talking on the phone, etc. It continues with subsequent contacts which may also be personal or remote. The important factor is that the customer should think that company cares about them and remembers them. This is where the database comes in, as this should record all interactions and structure subsequent interactions based on the learning gained.

Using the relationship

The relationship leads to greater understanding of the customer, their needs and the way they buy. This allows for more targeted marketing, for example making special personal offers that are aimed at known or suspected customer desires.

It is important during this leveraging of customer knowledge that the customer does not think they are simply being taken advantage of. To help this situation, continued value should be delivered to the customer beyond the product itself, for example updating them on current trends and connecting them with others who have similar interests. Creating social groups between customers can be a great source of understanding as well as a handy place to test new ideas.

See also

Relationships