Relationship Marketing evolved in the 60’s and became popular in the 80’s.  It’s a classic and essential form of marketing that we should all strive to put into practice with existing and developing clients.

 

Relationship marketing emphasizes the understanding of your customers needs through their buying life cycle, providing products and services as they need them and, mostly importantly, building long-term relationships.

 Relationship Marketing is a powerful tool that can substantially increase the profitability of a business. According to Harvard Review contributors Riechheld and Sasser, a 5% increase in customer retention can lead to a 25-85% rise in profits, depending on the industry. How does this occur?

• High cost of acquisition – the longer the relationship, the lower the amortized cost
• Long-term customers stay – results in stable and increased sales volume
• Word-of-Mouth Marketing – happy customers spread the word
• Add-ons – satisfied customers are more likely to buy additional products/services
• Less educating – this  frees up  both the customer’s and supplier’s time
• Customer joy – you make their life easier, you get better feedback
  

So how do we go about gaining and keeping our loyal customer base? A prerequisite to Relationship Marketing is to understand your own company’s internal marketing structure. Internal marketing relates to using marketing techniques within an organization itself.

• Determine the needs of your company’s “internal customers”
• Understand who they are and how they work with you and with each other
• Track and analyze their preferences, activities and complaints
• Predict their future needs/requests

Knowing this information will help you to be more successful with your external marketing and in your customer relationships. I’ll expand on this further in my next blog.