What Is Relationship Marketing and How Can You Improve It?

12 min read
Sep 19, 2023
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Relationship marketing is a form of marketing that focuses on customer retention and customer satisfaction rather than sales transactions. It differs from other forms of marketing by recognizing the long-term value of building customer loyalty and ensuring that customers are happy after interacting with a business. 

Effective relationship marketing emphasizes communication and avoids intrusive advertising and sales messages. 

If we were to compare relationship marketing to our everyday lives, I think most of us would agree that we feel more comfortable spending time with those close to us rather than strangers who want to sell us something. Our friends know us well, care about us, and we trust them. When they recommend a product, we’re more likely to follow their advice instead of listening to a clerk in a store. Relationship marketing can help a company achieve that.

Knowing this, it seems odd that some brands don’t do more to get to know their customers and build a strong relationships with them. 

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Relationship marketing vs transactional marketing 

Transactional marketing stands in opposition to relationship marketing. It focuses on a sales transaction. The emphasis is on maximizing the number of individual sales rather than building a relationship with a customer. This approach works best when a customer decides to choose your brand for the first time. However, without a strong relationship marketing strategy after their first purchase, they might not return to you in the future. Even though a good price and a successful transaction are satisfying, there are no additional emotions related to it. They don’t get excellent service. There’s no story behind the product and nothing that keeps them connected to the brand. It’s important because many people buy items based on their feelings, not the price itself. 

Many organizations combine elements of both relationship and transactional marketing. However, the former is now playing a more important role than ever. To connect with customers, you need to do much more than provide constant communication and great service. Bonds are created with brands on a deeper level through mission statements related to sustainability, protecting the environment, and helping others in need. When customers feel they’re part of something bigger, it’s easier for them to become loyal. 

The benefits of relationship marketing

Relationship marketing is a strategy that focuses on building long-term relationships with customers by understanding and fulfilling their needs. In business, like in life, there are many benefits to a long-term, healthy and happy relationship. The difference is that there are many forms and types of relationship marketing, all of which can significantly impact a company's bottom line.

A major success of relationship marketing is that it allows businesses to develop long-term relationships with their customers. By building a relationship with customers, businesses can create loyalty and retain customers for longer periods. This is especially important in today's highly competitive market, where customers have many options to choose from. By building long-term relationships, businesses can differentiate themselves from their competitors and create a competitive advantage.

Another benefit of this type of marketing is that it enables businesses to better understand their customers' needs - or, more importantly, the needs of a potential customer. By building meaningful customer relationships and accessing loyal customer data, businesses can gather valuable feedback on their product or service. This feedback can then be used to improve the business, better meet current customers' needs, and attract new customers while also building a better relationship with the customer. 

Furthermore, this marketing approach can be more cost-effective than other forms of marketing. It is often less expensive to retain current customers than it is to acquire new ones. By building a meaningful relationship with current customers, businesses can reduce their marketing costs and increase their profitability.

Finally, relationship marketing can improve customer satisfaction and lead to positive word-of-mouth referrals. When customers feel that a business understands their needs and cares about their well-being, they are more likely to recommend that business to others. This can lead to new customers and increased sales.

As part of a wider plan,  relationship marketing and customer happiness help build an emotional connection on a somewhat subconscious level, address pain points build brand loyalty. Relationship marketing in one powerful strategy that can help businesses build long-term relationships with their customers, better understand their customers' needs, reduce marketing costs, and improve customer satisfaction. By investing in relationship marketing, businesses can create a competitive advantage and increase customer lifetime value. Here are several examples of successful relationship marketing:

Examples of relationship marketing

Many brands are leveraging the benefits of relationship marketing. 

But how do they make relationship marketing work for them?

Patagonia and its types of relationship marketing

Patagonia has different levels of relationship marketing, regularly engaging with customers on a deeper level that goes beyond just regular communication about the brand’s products. Patagonia understands that, like a good CRM tool, relationship marketing is customer relationship management. 

Customers engage in sustainability issues with Patagonia, and their feedback is incorporated into future sustainability programs.  

Patagonia found a core segment of its customer base: people who value high-quality products. They strengthen the relationship with customers based on a quality product but also quality conversations around the product and the world where the brand (and customers) live. Their famous “Don’t buy this jacket” advertisement, in which they asked customers not to buy a new jacket when the old one is still good enough to wear, is a good example. This unusual form of marketing and advertising sees them interact with customers in a standard way but sees people investing in their products as they educate, engage, and create a loyal fan base along the way. 

Dollar Shave Club puts the spotlight on its members

Dollar Shave Club is known for its amazing videos and popular commercials, both on and offline. But their videos are not just about promoting their razors. They have an engaging blog with a strong relationship component.

They also feature their members' stories. These are not regular stories about DSC’s products but stories about customers’ businesses and activities. Dollar Shave Club created a community and provided a sense of belonging for all its members. It’s an important part of their strategy that they refer to their customers as members. Such a small yet important detail because how you address someone can quickly change how they feel about you. Dollar Shave Club's form of relationship marketing allows its members to promote their personal endeavours. As a result, the company saw an increase in repeat customers because the brand was trusted, as little sales or marketing was happening within the community - just talk. This type of marketing plan helped DSC become almost a lifestyle brand. 

Starbucks and Disney create memorable experiences

Starbucks is known for its employees triggering casual conversations with customers, writing their names on coffee cups, and making everyone feel like they belong there. Even if someone orders one coffee and sits there for hours, that’s totally fine. In fact, people often go there to work for hours or have a work meeting. If we add fancy beverages to that, it’s easy to have a nice experience.

The great atmosphere and unforgettable experiences created in Disney Parks also give a sense of belonging. It makes people want to come back because they just feel great there.

With Starbucks and Disney, it’s not only about the product itself but everything around it that they’ve created. It’s about connecting with customers, the atmosphere, fun small talk, and positive communication. It’s one of many relationship marketing examples. Check out this post about.

How to improve your customer relationship marketing

1. Customer service

Good customer service is the base of relationships with customers. Many customers leave a company because of poor service. To change that, you need to implement a more customer-centric culture at your company. Here’s how, in short, you can achieve this: 

Make sure customer satisfaction is a part of your company’s values

You need to articulate a philosophy of putting customers first in a clear and concise manner. Start training people in customer service on how they should treat customers, how they should talk to them, and how they should handle difficult situations.

Create awareness in your organization

According to Forrester’s Customer Experience Index 200, companies with a customer-centric culture have a higher valuation than their competitors. Statistics back up this observation. For example, the probability of selling to an existing customer is 60-70%, while for new prospects, it’s just 5-20%. Creating a customer-centric culture in your company requires being aware of the process. Using these facts can help you.

Make customer satisfaction a priority

Customers are the most important stakeholders in your business. They bring you profits and pay your salaries. Sometimes, you need to sacrifice your important meetings or even interrupt your weekend to ensure that they get the service they need. That is, of course, if you’re putting them first. 

Reward employees who deliver high customer satisfaction

To become a customer-centric organization, you need to have an engaged team that sees personal gains in providing customer satisfaction. One way to achieve that is by rewarding employees who give outstanding service and those that go the extra mile to satisfy customers’ needs. 

Share your customers’ success

Don’t let your relationship with a customer end once you sell them a product. Support your customers’ success! When they achieve something big, they celebrate their success by congratulating them and sharing it on social media. Write about the success they achieved using your product. You can even highlight them as Dollar Shave Club does. 

2. Social media marketing

Relationship marketing refers to regularly staying in touch with your customers, and social media is a great tool to do that. Social media marketing is effective and can help you share daily knowledge regarding your industry or tips for the best ways to use your product. You can also answer their questions and respond to feedback there. You just need to ensure you have someone responsible for managing your social media accounts. If you don’t, remember not to create too many channels just because everyone else does. You won’t be able to maintain the quality you want.

Think about which channels are the best for your business. If you run a travel agency, Instagram and Facebook are the ones to go with. You can share photos from all the places around the world you organize trips to. However, you don't need Instagram if you have a hosting company. Keep in mind it’s not about how you look. It’s about how much you can do, so Facebook and Twitter are better choices. 

3. Content and customer education

Content is the best way to educate customers about your company’s products, the solutions you implement, or anything that helps your customers run their business smoothly. Let’s say you have a real estate agency. Here’s what you can do:

Have a blog

You can create a blog explaining the process of buying and selling houses to your readers. What should they think about when they’re looking for an apartment for rent or for sale? What should they avoid? What paperwork needs to be done to get a loan from the bank? Think about everything that goes with the process, and write about it from your own and your customers’ experience.

Create video content

You can create a virtual visit for each offer on your website. You can also make videos using content you already published on your blog and create tutorials for using your website. There are a lot of possibilities, and your creativity only limits you.

Send email newsletters

It’s one of the best ways to keep in touch with your customers. You can educate customers about subjects that interest them and inform them about the latest sales.

I just mentioned three types of content, but there are many more types of content marketing theories, including infographics, reports, product reviews, ebooks, and podcasts. If you have the time and resources, all of them are worth a try. Just measure the results and watch customers’ feedback to know which one they like the most.

4. Loyalty programs

To strengthen the connection with your customers, you can offer extra services that add additional value to your product. A loyalty program is a great idea. This can be a special discount for the products your customers purchased or a simple point system, which is the most common loyalty program methodology.

Customers earn points that translate into some type of reward. It might be a discount, a freebie, or another benefit. Get your customers hooked as early as possible. You should start with the first transaction a customer makes and enrol them in the loyalty program when they set up an account or buy their first product. This way, you’ll make it their personal goal to accumulate more points right from the start.

5. Gathering feedback

A part of building relationships with customers is listening to their feedback. If you did something wrong, it means admitting your mistake. Let’s say a feature you published is not working so great, and customers are pointing it out in their feedback surveys. Don’t be stubborn by saying, “It’s supposed to look like this,” or, “There’s nothing we can do at this point.” Admit that everything is not meeting your expectations either by saying, “The feature doesn’t work as smoothly as we want it to. We’ve had some issues with it, and we’ll try to improve it as soon as possible. Once we do, we’ll let you know.”

Solutions to customers’ issues are important, but sometimes, it’s not just the outcome that matters but how you handle the whole situation. Customers understand if they see your engagement and you putting your heart into what you do.

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Customer relationship marketing

As you can see, there are many ways to keep in touch with your customers and strengthen your bond with them. At first, you might think that relationship marketing involves everything but gaining new customers. With the right practices integrated into your company, this marketing technique helps customer acquisition, makes it easier to nurture a customer who already uses your service and manages long-term customer loyalty. 

Business relationships are not that different from personal ones. If you want to keep a strong relationship with your customers, your marketing teams need to talk to them, listen to them, sometimes hear their whining, and prepare gifts for special occasions.

There are two sides to every relationship. You either give up on them and continually look for new ones, or you'll embrace the ones you have and live happily ever after with your customers.

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