Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth promotion and information from customers that can generate leads.
Relationship marketing stands in contrast to the more traditional transactional marketing approach, which focuses on increasing the number of individual sales. In the transactional model, the return on customer acquisition cost may be insufficient. A customer may be convinced to select that brand one time, but without a strong relationship marketing strategy, the customer may not come back to that brand in the future. While organizations combine elements of both relationship and transactional marketing, customer relationship marketing is starting to play a more important role for many companies.
Effective relationship marketing involves a variety of overlapping strategies and technologies that help foster a deeper, long-term relationship with current and prospective customers.
Implementing a relationship marketing strategy
Relationship marketing is based on the tenets of customer experience management (CEM), which focuses on improving customer interactions to foster better brand loyalty. While these interactions can still occur in person or over the phone, much of relationship marketing and CEM has taken to the Web.
With the abundance of information on the Web and flourishing use of social media, most consumers expect to have easy, tailored access to details about a brand and even expect the opportunity to influence products and services via social media posts and online reviews. Today, relationship marketing involves creating easy two-way communication between customers and the business, tracking customer activities and providing tailored information to customers based on those activities.
For example, an e-commerce site might track a customer’s activity by allowing them to create a user profile so that their information is conveniently saved for future visits, and so that the site can push more tailored information to them next time. Site visitors might also be able to sign in through Facebook or another social media channel, allowing them a simpler user experience and automatically connecting them to the brand’s social media presence.
This is where CRM and marketing automation software can support a relationship marketing strategy by making it easier to record, track and act on customer information. Social CRM tools go further by helping to extend relationship marketing into the social media sphere, allowing companies to more easily monitor and respond to customer issues on social media channels, which in turn helps maintain a better brand image.
Relationship management is a strategy in which an organization maintains a continuous level of engagement with its audience. This management can happen between a business and its customers or between a business and other businesses. Relationship management aims to create a partnership between the organization and its audience, either customer or business, rather than consider the relationship merely transactional.
Relationship management involves any process or strategy used to build support for a business and its offerings and increase brand loyalty. Most often relationship building occurs at the customer level, but it is valuable at the business level as well. While a business may choose to hire a relationship manager to oversee these tasks, it may also integrate these duties with other positions, such as marketing or human resources.
Consumers who feel that a company is responsive to their needs are likely to continue using the products and services of that business. Additionally, maintaining a level of communication with consumers allows the company to identify potential problems before they come to a costly head.
Main Difference between Relationship Marketing and Relationship Management
While relationship marketing is a sales and marketing concept, CRM refers to the tools used to carry out the concept. Relationship marketing is implemented as a strategy and includes activities such as identifying long-term sales and retention goals, public relations, marketing and advertising campaigns.
CRM includes the operational tasks that support the relationship marketing strategy. Activities may include gathering data about the customers, then organizing and analyzing it to create target customer profiles. CRM data is also effective in finding opportunities to create special offers to reward long-time customers for their loyalty, further building the relationship.
Using CRM and Relationship Marketing
Relationship marketing seeks to increase sales by building trust and engaging customers. Using a CRM system effectively allows a salesperson to quickly and consistently deliver what customers are looking for with each and every interaction, because their preferences and buying history are recorded. The system benefits the customers, because they see the business “knows” them. CRM systems coordinate, automate and deliver online and offline advertising and marketing activities that help build the long-term customer relationships that are crucial to a successful relationship marketing strategy.