Do you know how much it costs your business to retain a customer? Compare this to the costs of attracting a new customer and you’ll be surprised.WHAT IS RELATIONSHIP MARKETING?
Smart businesses understand that the cost of retaining an existing customer is significantly less than the cost of attracting a new one – by as much as a factor of five according to some studies. This simple fact has led many companies to change their marketing focus and to invest in developing mutually satisfying, long-term relationships with customers.
This approach to marketing is called ‘relationship marketing’ and it involves understanding the needs, goals and desires of key stakeholders. Some of these stakeholders include customers, employees, marketing partners and the financial community – all of which have an impact on the success of an organisation.
HOW DOES IT WORK?
Relationship marketing involves developing separate offers, messages and services that relate to the individual needs of stakeholders. The aim is to capture a larger share of each customer’s expenditure by building loyalty and focusing on customer value.
Relationship marketing works best in markets with fewer customers and higher margins. For example, the financial planning sector uses relationship marketing techniques with its premium clients. Many organisations in the sector position themselves as a ‘financial partner’ that understands its clients’ unique goals and circumstances and develops a relationship over the long-term.
This approach has enabled the financial planning services market to grow organically. Previously clients used advisors on a transactional basis, for example when they needed advice on a major financial decision such as a redundancy payout. Today, partnerships have developed where advisor provide services to clients on a long-term basis.
WHAT IS THE MEASURE OF SUCCESS?
Good relationship marketing delivers a mutually beneficial relationship that delivers profits for both buyers and sellers. In relationship marketing a ‘sale’ is not the measure of success but the beginning of the relationship. The ultimate measure of success for both parties is profit.
Relationship marketing is not effective in all situations. Transactional marketing can also be appropriate when marketing relatively low value consumer products, with low switching costs and when the customer prefers single transactions to relationships.
EIGHT RULES OF MARKETING
Here are eight rules to get you started in relationship marketing.
1. Always answer the phone and respond to emails. Show your customer that you care by always responding within 24 hours to their enquiry. It will make them feel important and will make you look responsive to their needs.
2. Know your customer. Understanding the needs of your customer is imperative to relationship marketing success. Don’t just know their business, also find out about their personal interests and send them a birthday card!
3. Be a good listener. Listening skills show respect for your customer. Look at the person speaking to you, ask questions (but don’t interrupt), be receptive and show that the information is important to you.
4. Keep your promises. Don’t make a promise you can’t keep. You’ll lose trust very quickly.
5. Know how to apologise. If you do break a promise or make a mistake, apologise to the customer. They’ll appreciate your honesty.
6. Identify problems and solutions. Don’t wait for the customer to come to you with a problem. Go the extra mile and alert them to issues of relevance and potential solutions – it will help to grow your business.
7. Treat your employees well. Happy employees equal happy customers. Treat your employees well and they will act as ambassadors for your business.
8. Get regular feedback. Ask your customers for feedback on your products and services. You can do this through informal conversations or by conducting a customer satisfaction survey. There are sure to be opportunities where you can improve your offering.
Think of it this way: isn’t it great when your favourite coffee shop knows how you like your coffee?
Renee Hancock is a marketing and communications specialist, whose experience spans finance, government, education, not-for-profit, telecommunications and law. She has consulted for two of Australia’s most prestigious public relations agencies and now works in-house for a leading financial services organisation.
