Relationship Marketing is targeted at building stronger and long-lasting relationships with clients along with other companies. The business is performed with a strategic orientation, in which the relationship is improved upon with existing customers rather than finding new customers. It is meant to focus on the needs of individual customers. Its major part involves studying the need of the client and just how it alterations in different circumstances.
Relationship marketing applies techniques like marketing, sales, customer service and communication. The relationship is not only enhanced nevertheless its life period is increased by these strategies. And as the client realizes the worthiness of relationship, they are drawn closer. This marketing not only focuses on building relationship and attracting customers to their products and services but additionally how to retain them.
A raw form of Marketing came into existence in the 1960s. But, organizations remained as facing difficulty in selling products, so a system was developed to sell inexpensive goods to larger number of customer. Leonard Berry and Jag Sheth originated this marketing, in 1982. It had been started in B2B markets and industries, which involved long term contracts for many years. Over the time period, various marketing strategies were improved and relationship marketing was one of them.
Relationship marketing does apply where the customers have many options looking for exactly the same service or product and the customer is entitled to create a selection decision. In this kind of market, businesses try to maintain their customers by providing comparatively better products and good service and hence, achieving customer loyalty. And when it is achieved it becomes a hardship on competitors to complete well in the market. The client turnover wasn’t paid attention on as the main attention was on customer satisfaction. This kind of marketing was named as defensive marketing. Offensive marketing is the online marketing strategy where not just new customers are attracted, but additionally the sales are stepped up by increasing the purchase frequency. This sort of marketing specializes in freeing dissatisfied customers and acquiring new clients.
According to an investigation, the cost of retaining an old customer is just 10 % of the cost of getting a new customer, making sense not to to operate around to obtain new clients in relationship marketing. And according to another research made by cross-sectional analysis, says that, a five percent improvement in customer retention is responsible for twenty-five to eighty-five percent from the profit. Usually expensive is incurred when getting new customers, so if sufficient number of existing customers is retained, there will be no need of acquiring new customers.
Once the client trust is gained his chances of switching with other company becomes relatively less, he buys goods in large quantities, he buys other supplementary goods and he starts neglecting average price variation. This maintains the system sales volume and there's a rise in dollar-sales volume. The existing customers will be like a living advertisement. If he is satisfied with the company he'll recommend it to his friends and acquaintances.
Since the existing customers understand the process, it will take less time and money to educate them about the procedures putting fewer burdens on employees also and making them feel more satisfied with their jobs. The customers are divided into groups depending on their loyalty. This procedure is called relationship ladder of customer loyalty. The groups in ascending order are prospects, customer, client, supporter, advocate and partner.
Because of the advancement in computers and Internet, software has been developed to facilitate customer relationship management. By using this software the tastes, activities, preferences, and complaints of customers are tracked. Almost all the companies have this software within their online marketing strategy, which benefits the client as well as the company.
Thus the main purpose of relationship marketing would be to construct and maintain relationship with committed clients who should bring profit to the company. Another benefits achieved are confidence building and social benefits.
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