With the increasing number of similar types of businesses and changing customer needs and wants, it is challenging for any organization to retain customers by creating customer satisfaction. Relationship marketing is a concept that has been evolved as one solution to this challenge.
Relationship marketing is a strategy that is designed with the aim of creating a long term relationship with the customer by creating ultimate customer satisfaction. This concept is an improved level of customer loyalty and retention. Moving on from the short-term customer satisfaction, relationship marketing encourages businesses to think and act for the customers’ long-term satisfaction for the product or service.
Customer loyalty is expected to have through interaction and communication with the purpose of understanding the customer and by creating a positive attitude about the product. This understanding is created by developing a strong connection with the customer and providing the information to the customer directly to satisfy their requirements.
The aim of relationship marketing is to create a more customer-oriented, strong, and more emotional relationship. This approach can lead to word-of-mouth promotions for the organization and it can create a positive impression in the society about the product/brand without spending on advertising. Once the customer is acquired, retaining the customer with the brand in the long-run is mainly focused and expected though this strategy. With the advancement of technologies and the use of social communication platforms, the relationship marketing strategy keeps on evolving more collaboratively.
The strategy of relationship marketing is influenced strongly by the business process reengineering theory. According to the BPR theory, the businesses should maintain a structure to complete the necessary processes and the tasks related to the processes rather than completing functions. This makes the cross-functional teams responsible to complete the entire process rather than finishing part of the process and passing it to another department.
Importance of the Relationship Marketing strategy
Due to the broad scope of the strategy, the relationship marketing concept can be advantageous to any type of organization. It mainly helps the organizations to achieve competitive advantage through customer loyalty. The customers who are satisfied with the product offered by the company have a less tendency of switching to a competitor product. The repeat trade helps the organizations to achieve more profit. Apart from that, the cost of acquiring new customers can be less when customer loyalty is created.
The ability to retain customers can help the organizations to face the competition stronger. This encourages businesses to allocate more resources to retain customers than to acquire new customers.
Acquiring new customers can be challenging. Apart from that, it is involved with a high cost. From the organization’s point of view, it is profitable to have a regular set of customers than having customers who purchase once or who purchase occasionally. It helps to save and reduce the acquiring costs for the company as well as advertising costs to attract new customers.
Relationship marketing requires keeping close contact and well-understood communication with the customer. It helps the organization to identify the changing wants and needs of the customer. Apart from that, by having proper communication and understanding, the organization can identify the trend changes in the market and improve its product to face growing competition.
Relationship marketing can create a higher customer lifetime value. It can align the organizational activities around the customer requirement and play a major part in satisfying customer needs. The organization can create a positive customer experience and improve overall customer satisfaction by identifying customer expectations better. This will make the customers satisfy with the product or service and they will act as brand advocates who recommend the product and help the product to grow in the market.