Defining

Relationship Marketing

12 – ABM: Principles of Marketing

Relationship Marketing
According to Gilaninia et al (2011),
Relationship Marketing involves
creating, maintaining and enhancing
strong relationships with customers and
other stakeholders. Increasingly,
marketing is moving away from a focus
on individual transactions and towards
a focus on building value-laden
relationships and marketing networks.
Relationship Marketing
Relationship marketing is oriented more
towards the long term. The goal is to deliver
long- term value to customers and the
measure of success is long-term customer
satisfaction. Relationship marketing requires
that all the company’s departments work
together with marketing as a team to serve
the customer. It involves building
relationships at many levels – economic,
social, technical and legal – resulting in
high customer loyalty.
 Levels of
Relationship Marketing
Basic
The company salesperson sells
the product but does not follow
up in any way.
Reactive
The salesperson sells the product
and encourages the customer to
call whenever he or she has any
questions or problems.
Accountable
The salesperson phones the
customer a short time after the sale
to check whether the product is
meeting the customer’s
expectations. The salesperson also
solicits from the customer any
product improvement suggestions
and any specific disappointments.
This information helps the company
continuously to improve its offering.
Proactive
The salesperson or others in the
company phone the customer
from time to time with
suggestions about improved
product use or helpful new
products.
Partnership
The company works continuously
with the customer and with other
customers to discover ways to
deliver better value.
 Concept of
Relationship Marketing
Forbes.com defined Relationship
marketing is a strategy designed for
customer loyalty, interaction, and
long-term engagement to be
fostered. It is designed to develop
strong connections with customers by
providing them with information
directly suited to their needs and
interests by promoting open
communication
Customer Relationship
Customer relationship is the
development of an ongoing
connection between a company and
its customers. The relationship involves
marketing communications, sales
support, technical assistance and
customer service. Customer relationship
is a big part of marketing. Relationship
marketing is an interaction with current
customers and potential ones.
According to Serrano, Relationship
Marketing includes activities
aimed at developing and
managing trusting and long-term
relationships with larger customers.
(Customer profile, buying patterns
and history of contacts are kept in
a sales database)
Characteristics of Relationship Marketing
It focuses on the long-term rather than the
short-term.
It focuses on partners and customers rather than
on the company’s products.
It puts more emphasis on customer retention
and growth than on customer acquisition.
It relies on cross-functional teams rather than on
departmental-level work.
It relies more on listening and learning than on
talking.
Benefits in Developing and
Implementing Customer
Relationship
Consistent customer experience
Customer Feedback
Customer Profitability
Customer advocate
Innovation
 Benefits of
Relationship Marketing
In the business world, retaining
customers has a lesser cost at
least eight times compared to
acquiring new ones. Thus, this
marketing capitalizes on the
same fact and is beneficial to
the company in several ways.
A. Understanding Customer
Characteristics
- the company can segregate its
customers into groups based on their
characteristics like purchasing power,
frequency and volume of sale
transactions. It also helps the company
get valuable feedback from its
customers and understand their needs
and expectations.
B. Delivery and Meeting
Expectations
if the company knows what its
customers’ needs are, it will help
reduce wastage due to trial and
error methods. It is easier to create a
product if the features and
specifications of the product are
known
C. Repeat Business

Sellers should maintain good attitude

to the buyers. By doing this, buyers
will feel that they do not need to
switch sellers.
D. Prevents Negative Transition

Trust and loyalty go hand in hand

and it is super beneficial for all
business. It will help prevent
customers from turning to
competitors.
E. Word-of-Mouth Marketing
Increasing customer base - satisfied existing
customer is 100% more likely to recommend a
product/service to a prospective customer.
Apart from customer, referrals, there are several
other ways to increase customer satisfaction by
employing methods of utilizing social networking
websites, blogs, informal surveys, benefits on
loyalty cards, timely response to complaints and
requests as a constant reminder of its presence
around and retention equity is improved by
enhancing customer satisfaction.
F. Reduced Marketing Cost
benefits also include lesser marketing costs
and more value creation. This can be
explained by stating the following statistics:
every 5% increase in customer retention can
increase a company’s annual profits from at
least 25% to as much as 125%, while
simultaneously leading to a reduction of 10%
in marketing costs. An existing customer will
spend 33% more than a new customer to
buy a company’s product/service.
G. Identification with the company
the benefits are reaped both by the
company and the customers. It helps
customers identify more with the
company. Keeping your communication
lines open and keeping in touch with the
customers makes them feel like they are
being valued. It will keep customers
coming in and build brand equity for the
company in the long run.
H. Product Market Expansion

the company’s employees must be

ready to deliver beyond the
company’s boundaries on customer
demand.
Building Customer
Value
Customer value
defined as the satisfaction derived from
what a customer may experience or
expect by choosing a particular action
relative to the cost of that action. The
action can be a purchase, a visit, an
order, or a sign up. The cost refers to
anything that can be given up to
receive the desired product or service
which can be in the form of money,
time, knowledge, data or others.
Levels of Customer
Value
Basic and expected levels
These levels include the basic
requirements of conducting a
business. For instance, restaurants are
expected to have a spacious dining
area and clean tables and utensils. If
these requirements are not met by
the business, it cannot provide high
quality customer value
Desired customer value
This involves what the customers want
from the purchase or service
experience. This is the first opportunity
for a business to get ahead of the
competition. For example, a retail
shop can provide friendly and helpful
staff who can assist the customers in
making the right choices.
Unanticipated customer value
It pertains to an unexpected
purchase or service experience that
may go beyond what the customers
desire. For example, in a gasoline
station, the gasoline boy cleans the
window after filling up the customer’s
gasoline tank without an extra
charge.
 Types of
Customers
Strangers
are customers whose needs do
not fit the company’s offerings.
The company does not need to
invest and exert effort to win them.
Butterflies
as the name implies, are not loyal
to specific brand because they
keep on looking for the best deals
which may lead to patronizing
other brands. The company can
enjoy profits from these customers
only for a short period.
True friends
have needs that match the
company’s offerings. They make
repeat purchases and patronize the
brand as long as it satisfies their
needs. The company must invest in
these customers and strengthen its
relationship with them.
Freeloaders
are loyal but not profitable because
of the limited fit between their needs
and the company’s offering. For
example, a few customers of a salon
patronizes its services regularly but do
not generate enough profit to sustain
the maintenance costs, it can earn
only if it raises the prices of its services.
 Relationship
Development
Strategies
Relationship Development Strategies
Recent research shows that loyal
customers prove to be more profitable
than ordinary customers. This is the
reason why companies are challenged
to maintain customer loyalty. Companies
should practice the following relationship
development strategies to retain loyal
customers:
 1. Communicate with
customers frequently and
effectively
It is important to always get in touch with
customers through e-mail and social
networking sites especially in the new
normal situation. Provide various means
to give immediate feedback (e.g.,
online customer surveys).
2. Offer customer rewards.
Customer loyalty programs, which
include special discounts, freebies,
perks, may work well for various types
of products and services. These
encourage customers to remain loyal
to the brand because they are
rewarded for their patronage.
3. Conduct special events
and provide sponsorship.
Companies can hold or sponsor
parties, concerts, contests, and
the like to boost interaction
among loyal customers and
company representatives.
 4. Enhance customer
service.
Some company outsource their
services to third party
organizations to cater complaints
and inquiries, promote their latest
offerings and provide technical
support.
5. Utilize languages to reach
a wider customer base.
Marketers can create promotional
materials in different languages to
cater specific regions. Consumers
can also now choose the language
they would like to use to
communicate with customer service
representative.
Customer Service in
the Philippine
Business Enterprise
 Customer Service in the
Philippine Business Enterprise
The success of our homegrown
companies lies not just on their
offerings but also on their customer
service. Local business now utilizes
customer service tools that fit our
customer-oriented culture and
extensive technology usage
 1. Email and SMS
also help businesses
communicate with their
clientele more easily as
most consumers regularly
check their inboxes.
 2. Social Networking sites
aside from their primary function of
connecting people, have become
a channel for netizens to ask for
customer support. Telecom Companies
promptly responds to
inquiries and complaints on social
media and redirects the customer to
the site’s private messaging
system for further assistance.
 3. Live chat support
facilitates real time
correspondence between
customer and the company
representative.