Relationship marketing is a marketing strategy based on 3 core tenets i.e. customer retention, satisfaction, and lifetime value. Simply put, ask yourself these 3 questions. As a marketer -
1) What do you do to keep your customers coming back to you?
2) Are you creating enough values to keep them satisfied?
3) How long do they stay loyal to you? Can you extract the most value out of each customer in their lifetime?
Answering these questions is the starting point for relationship marketing. It is all about building meaningful relationships with your customers. Sometimes, you have to treat them beyond the traditional notion of customers. Treat them as your friends.
Frederick Reichheld, in his research, showed that increasing customer retention rates as much as 5% can impact your profit by 25-95%. On the other hand, it is 20-25 times more expensive to acquire a new customer than retaining a former one.
Initially, you need to spend a lot to acquire your customers. But once done, all you need to do is build and engage in meaningful relationships.
Why does this happen? Because your existing customers have already become comfortable with your product. They know about you and follow your company. Moreover, the number of channels to communicate with them is higher.
In another research by Gallup, fully engaged customers generate 51% higher sales for you than disengaged customers. Because they are likely to spend 23% more on your product, on average. Moreover, the 80-20 rule also states that 20% of your loyal customers usually account for 80% of your revenue stream.
Customer Engagement always pays off. Engaged customers are
Now calculate how much profit relationship marketing can generate for you!
In a survey by KPMG, customer retention was marked as the highest revenue-driving factor for retailers. Conversely, customer acquisition is marked as the second most significant factor. The wide rift between these two is created by relationship marketing.
What is the ultimate goal of relationship marketing? To offer a seamless customer experience. Zendesk concluded that 39% of customers will avoid the company for the next 2 years if they had a negative impression. Hence, impressions matter.
7,707 Americans shared their negative experiences with brands in 2018. And here is the result.
30% customer completely boycotted the brand. Similarly, 25% decreased their spending on the brand. Moreover, a whopping 24% said that they would not try the new products. This is equivalent to losing customers.
So, engaging in relationship marketing can bring in fortunes for you. But not engaging will even cost you more!
By now, you must have a clear idea of relationship marketing. Here are the top 10 relationship marketing strategies to apply in real life. Be ready to go beyond customer’s expectations.
Firstly, build your buyer personas. Having personas allow you to view everything through the customer’s eyes. Hence, you will understand their specific needs, desires, and pain points.
To know more about buyer personas and how to build them, check out our Ultimate Guide to Creating a Complete Buyer Persona Template.
Before we dive into more objective relationship marketing strategies, it is important to cultivate the right mindset. Treat your existing customers as if they were your only customers. You have no more sales channels. So, you understand how crucial it is to keep them satisfied.
Be ready to solve problems, if any. Firstly, You must sound empathetic. Secondly, you should reassure them that you understand their problems. Third rule: be ready to accept that it is NEVER their fault. Now, what if it is really their fault? Re-read the third rule again.
Finally, solve the problem promptly. Ask for their feedback and apologize for any inconvenience. Moreover, solving the problem isn't the end of the story. Follow up after a few days even after the problem is solved.
“Ask your customers to be part of the solution and don’t view them as part of the problem” - Alan Weiss.
Nobody knows better than your product than your customers. Because they use it. Engage them to be a part of the solution. There are a couple of ways to do so. The easiest feedback channel is social media.
Social media creates a do or die situation. It can build or break your brand in a minute. Hence, use the opportunity to the fullest. While charting up your next business plan, create a post on what your customers would like. Or you can organize events and competitions to make customers share their stories.
You can further use your website, application, or listening tools to gather customer feedback. Ridesharing platforms have been gathering valuable customer feedback since day 1.
Of course, not all customer feedback carries the same weight. Neither all can be implemented due to limited resources. Hence, you can follow this quick exercise to determine which feedback to implement or discard. After you have gathered the feedback, follow along.
Gone are the day's brands talk about their products only. Instead, nowadays most brands are publishing branded content i.e. blogs, how-to-videos, web series, and even movies. The idea is to provide the customers something useful and relevant.
A prime example of building relationships through branded content is Lego. Lego created an entertainment industry around their product. Similarly, Angry Birds also created video games to market their merchandise and toys.
Many brands have also created online communities around their service. Google and Nike are prime examples of such marketing. The communities offer customers a sense of belonging. Moreover, it allows the brand to get reach efficiently.
Communities matters. Because they enable the brands to practice non-intrusive forms of marketing. The customers don't feel violated. Instead, they choose to consume content out of their own volition. Hence, relationships grow.
Who doesn’t love FREE items? Be opportunistic at festivals. Offer discounts, giveaways, and reward programs. Anything a rational person violently loves.
Sometimes discounts or giveaways can even repair bad relationships. If someone complained of receiving faulty products, offer them a new item for free instead. The point is to prioritize long-term relationships over short-term gains.
These programs are a crucial part of relationship marketing. Loyalty programs allow you to furnish your brand loyalty. It gives customers an incentive to stay loyal to you. Such programs can come in different forms i.e. points redeem, cash rewards, exclusive and personalized discounts, etc.
On the other hand, referral programs are based on the rawest fundamental assumptions. People tend to believe their friends and family more. Hence, a recommendation coming from someone close is extremely impactful. So impactful that it can convert people into loyal customers.
These programs are more significant than you thought. Firstly, they create wow moments for your customers. It gives them something to remember. Secondly, it gives them a reason to come back. Thirdly, such programs spread positive word-of-mouth.
If relationship marketing were a house, interaction is the brick. Positive interactions build trust. Trust leads to goodwill. Finally, goodwill leads to sales. Hence, you must have the right tools at hand to maintain customer relationships.
Email marketing is a great tool to build relationships. However, you must personalize your message. Do not spam. Unrelated emails may lead to negative interactions. Adding automation can help too.
Often you send out mails to the listed customer emails. But most of them turn out to be fake. However, Verifybee can help you verify the authentic emails and phone numbers. It also connects you to your existing CRM.
At present, social media is where most interactions happen. Little gestures help. For example, do not send out the same automated comment to everyone. Such gestures only show that you don’t care. Instead, as with mails, personalize your comment. Let them know about useful updates if any.
CRM software can simplify your relationship marketing strategies. A standard CRM tool helps you keep better track of your customers. Moreover, they enable you to generate and score leads efficiently.
CRM tools such as Salesforce can give you a definite edge in relationship marketing. However, if you just want a low-price decent CRM software that does the trick, you can check this blog on Choosing The Optimum CRM Tool.
Merely applying the strategies won’t help. You must monitor the impact on certain metrics. Here are some key relationship marketing metrics that you can consider.
There are probably hundreds of metrics on relationship marketing. Don’t just aimlessly apply them. Instead, study them. Use them wisely to drive your customer relationships.
The root of all marketing strategies is to drive sales and profit. However, the definitions have changed over time. Brands nowadays do not aim for money; rather they aim for relationships. Because relationships eventually translate to long-term and steady revenue flow. Patience is the name of the game here.
So, are you ready to prioritize long-term relationships over short-term gains? Steady revenue over sporadic profit? customers over everything? Which strategies are you going to use in your next CRM project? Let us know because relationships matter.