Relationship Marketing Making the Customer Count
Relationship marketing is one of the key sections in the enhancement of business performance it’s important to learn the relevance of this topic as it helps us understand the role it plays in the service
Industry. We can further state that relationship marketing is the identifying, establishing, maintaining, enhancing, modifying and terminating of relations with clients so as to establish value for customers and net profit value for organizations.
The service industry needs to keep up with the new turn of events. For a business to succeed it needs to concentrate on its existing customers and how to retain them. In any marketing
activity customers have always been the main focus but company views regarding this are changing overtime.
In the 1980s, emphasis was targeted on individual sale but over the 1990s, emphasis is placed on an individual client. The current business scenario which is increasingly competitive requires marketing be viewed as a total approach to business and the customers affirms a central position. Advertising, market research, promotions are activities that are just further away from the point.
Relationship marketing states that attracting new customers is just the first step and that the key is in customer retention.
Marketing should ensure that a firm keeps and improves the relationship with its customers.
The loyalty ladder or relationship marketing ladder defines customer loyalty. It shows the stages of relationships that customers can possess with an organization. We can break it down in the following stages:
Prospect-At this stage we focus mainly on converting a prospect into a customer.
Customer-when, an individual, has only done business with an organization once we call him a customer.
Client-when a customer does repetitive business with an organization he becomes a client.
Supporter-he is usually pleased with the services offered to him and has a positive opinion of the business.
Advocate-this is a referee as he recommends the business products and services to others since he or she is happy with it.
Partner-This is mainly seen in business to business relationships between a supplier and his customer. Close and long-term relationships are developed because of satisfaction derived by the client.
Existing customers are easy to close a sale with according to many organizations and they are consistently more profitable than new customers. Resources go into attracting more new customers rather than trying to maintain the ones already acquired. Investment used in bringing in new customers is immediately moved the new prospect. When clients are taken for granted this makes it risky for them to defect and this is when attention is turned to them when they almost leave or have already left.
The loyalty ladder emphasizes on two main key tasks that is enticing new customers and maintaining current existing clients. To balance effectively the scarce resources, a firm has to maintain the balance between the two tasks.
Taking Canfield as a case study, balancing between attracting new customers and retaining existing customers isn’t happening.120 active managers were interviewed and 80% of them consider that too much money goes into marketing efforts to bring in new customers and 10% state they have the right balance while the remaining 10% feel that too much time and money is invested on existing customers. Organizations should know in detail the wants of each individual.
Retaining an existing customer is key. More profits are earned if a customer stays in the company. If a firm was to reveal this value to its employees in financial terms they will concentrate on customer satisfaction and customer delight. Losing a customer poses as a gain to a competitor. In the end if marketing, customer service and quality link is achieved, for them to work effectively a firm has to coordinate them well. Relationship marketing provides a framework that joins them together.
Hutt,D., Speh, T. Business marketing management: B2B. 9th edition. Ohio: Thomson South-western, (2007).