What Is Relationship Marketing?

Relationship Marketing is targeted at building stronger and long-lasting relationships with clients and other companies. The business is done with a strategic orientation, where the relationship is improved with existing customers rather than finding new customers. It is meant to cater to the needs of individual customers. Its major part involves studying the need of the customer and how it changes in different circumstances.

Relationship marketing applies techniques like marketing, sales, customer care and communication. The relationship is not only enhanced but its life period is increased by these strategies. And as the customer realizes the value of a relationship, they are drawn closer. This marketing not only focuses on building relationships and attracting customers to their products and services but also how to retain them.

A raw form of Marketing came into existence in the 1960s. But, organizations were still facing difficulty in selling products, so a system was developed to sell low cost goods to larger group of customer. Leonard Berry and Jag Sheth originated this marketing, in 1982. It was started in B2B markets and industries, which involved long term contracts for many years.  Over the period of time, various marketing strategies were improved and relationship marketing was one of them.

Relationship marketing is applicable where the customers have many options in the market for the same product or service and the customer is entitled to make a selection decision. In such a kind of market, businesses try to maintain their clients by providing comparatively better products and good service and hence, achieving customer loyalty. And once it is achieved it becomes difficult for competitors to do well in the market. The customer turnover wasnít paid attention on as the main attention was on customer satisfaction. This kind of marketing was initially named as defensive marketing. Offensive marketing is the marketing strategy where not only new customers are attracted, but also the sales are stepped up by increasing the purchase frequency. This kind of marketing concentrates on freeing dissatisfied customers and acquiring new customers.

According to research, the cost of retaining an old customer is only ten per cent of the cost of getting a new customer, which makes sense to not to run around to get new customers in relationship marketing. And according to another research done by cross-sectional analysis, says that a five percent improvement in customer retention is responsible for twenty-five to eighty-five percent of the profit. Usually high cost 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 customer trust is gained his chances of switching to other company becomes relatively less, he buys goods in bulk, he buys other supplementary goods and he starts neglecting average price variation. This maintains the unit sales volume and there is an increase in dollar-sales volume. The existing customers will be like a living advertisement. If he is satisfied with the company he will recommend it to his friends and acquaintances.

Since the existing customers are familiar with 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 based on their loyalty. This procedure is known as relationship ladder of customer loyalty. The groups in ascending order are prospects, customer, client, supporter, advocate and partner.

Due to the advancement in computers and Internet, software has been developed to facilitate customer relationship management. With the help of this software the tastes, activities, preferences, and complaints of customers are tracked. Almost all the companies have this software in their marketing strategy, which benefits the customer as well as the company.

Thus the main aim of relationship marketing is to construct and maintain relationship with committed clients who are meant to bring profit to the company. The other benefits achieved are confidence building and social benefits.

Do You Actively Work on Relationship Marketing in Your Business?

Did you know that not all companies take the time to work on relationship marketing? There are three main reasons for this which include not having the funds to run a campaign, not having a good plan in place and being limited due to technology.

Let’s take a look at each one in a little more depth:

Lack of Funds

If you currently don’t have the funds to run an all-out relationship marketing campaign, think smaller. Try looking at what you can afford to do.

Can you increase your email marketing by mailing out more frequently? Could you run smaller campaigns instead? How about looking to crowdfunding for some help?

You may even want to try setting some funds aside for relationship marketing. Just because you “think” you don’t have enough money for this, doesn’t mean that this is true. Start putting money into a different account and see if you can manage without it. If so continue this way of saving and use the funds for relationship marketing.

Having No Plan in Place

You have no plan in place because you probably don’t understand the concept of relationship marketing in the first place. Once you do, you can then formulate a plan and get things moving.

A simple plan could be to brand your business with a new logo, or update your color scheme? Then update your website, blogs, email templates and your social pages. This provides you with instant credibility and people will start recognizing your brand more often. This can lead to an increase of visitors to your business as well as sales.

Technology Issues

If you are totally stuck due to technology issues then why not hire someone to help you out? Instead of you banging your head about, free up your time and save your sanity by outsourcing anything that is too difficult or challenging.

These issues don’t have to be complicated for them to bog you down. You may just not feel comfortable writing an email campaign, for example.

Or you may be having trouble creating a great looking business page on Facebook. Instead of letting these things slide, outsource them. Hiring a freelancer can work extremely well for this purpose.

Overcoming any type of technology issue will really help you get started on relationship marketing. Now that you have no excuses you can put your time and effort into branding, emailing and just connecting with your current customers, and attracting new ones.

5 Ways to Damage Business Relationships

Relationships are hard to build and maintain and this makes them even more precious. If you’ve worked hard to establish your business relationships, you need to do everything you can to protect them. However, there are many things you may be doing to ruin these precious relationships without being aware of it.

Taking Before Giving

Relationships are based on reciprocity. You give and you take. Each party feels that they’re getting something valuable from the other side. This is obvious to most business people, but what is the ratio of your giving and taking?

You should never make the other party feel like you’re doing something expecting something in return. Instead, pay it forward, be overly generous and wow the other person with all of the value you can, especially in the beginning stages of the relationship.

One-Way Communication

Does it appear to the other person that you talk and never listen? This produces a one-sided relationship that’s really not much of a relationship at all. Picture this situation in a personal context and it’s easy to see. Most of us avoid people who dominate every conversation in our personal lives.

In a good relationship, there’s always a dialog. You should always strive to listen more than you talk. This not only maintains a strong relationship, but you’ll also learn a great deal about your partner that you may not have noticed if you were talking.


Secrecy is a major relationship killer. Of course, in business there are always things that must be kept secret. But you should keep your confidentiality to a minimum. Hiding things makes you appear dishonest, and openness is essential for establishing trust in a relationship.

Try to be as transparent as possible without giving out secrets or too much information. Make sure the other party knows everything they need to know about what’s going on. Give the other person plenty of opportunities to ask questions if they need to.

No Rapport

A business relationship is about business and both parties know it. But if you’re all about the business and nothing else, this isn’t going to feel much like a relationship, but rather an exchange of commodities.

You need to establish rapport. This means establishing a baseline of comfort on a personal level. Find things that you share in common and rely on these things to strengthen your bond. When you start by establishing rapport, you create a strong relationship for the long-term.

Hard to Say Sorry

Do you have trouble apologizing? This could be damaging your important business relationships. When you do something wrong or make a mistake, own up to it quickly and sincerely. Even major mistakes can be mended if you’re willing to apologize. The apology starts you on the path to reconciliation.

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