As all marketing gurus know, retaining a customer is much more cost effective than acquiring a new customer. Furthermore, maintaining good relations with your existing customers and getting a good life time value out of any existing customer is the key to a long term successful business.
Banks like HDFC, ICICI and Axis are regularly thinking of new products and new ways to provide better services for their own customers. Their competition is more with themselves than with competitors. Similarly, the recent hike in Airline prices has resulted in airlines thinking of unique ways to make air travel more relaxing and luxurious such that the customer feels happy at the end of the flight.
Relationship marketing is used to forge long term relationships with the customer such that the customer forms a long term bond with the company and the brand. This in turn benefits the organization in turnover, profitability, word of mouth publicity and overall performance.
Relationship marketing is not easy because each and every customer is different and when devising a relationship marketing strategy, the firm has to look at its existing customer base minutely. The key to success of relationship marketing is to understand your customer completely.
Samsung smart phones have taken up an amazing market share because they are continuously designing products such that their existing customer base itself is upgrading. Users loved Samsung S1 than S2, than S3 and finally Samsung galaxy S4. Thus the brand equity now for Samsung is such that the customer will hardly think of switching the brand.
In the above example relationship marketing is occurring on a product level. But relationship marketing also occurs on service level such as post sales service or overall the experience of the customer with the brand. Maruti promises the customers that they will have a maruti service station every few miles across the country. This is a convenience service for the customer. Thus relationship marketing deals in providing the customers with the best options as per the capability of the company.
There are three main factors which are important for the success of relationship marketing. You will notice that these factors are internal as relationship marketing is an internal effort from the company to reach out to their customers.
1) Market knowledge
You cannot deliver as per customer expectations if you do not know the market realities. Customer needs and desires can be understood only after minutely observing the market. Many companies are nowadays offering accessories for mobile phones and laptops. This is because these companies were the first ones to note that the accessories coming with the mobile and laptop do not satisfy the customer. Instead, the customer is looking for accessories which match his own personality. This lead to a boom in the accessories sector with many players participating across the globe. Thus for an organization focused on relationship marketing, information of the market is key to success.
2) Training programs
Relationships are built by people. And people are prone to make manual errors. Thus how do you ensure that the relationship marketing effort is coming along as you want it? You train them through researched and positively resulting training programs.
Recently, in an air flight some passengers were misbehaving. When the air hostess was asked what she would do in such a situation, her answer was that she is a professional and she is trained to handle such situations. The air hostess went to the group that was misbehaving and approached the eldest in the group and asked them to maintain decorum as other passengers were getting disturbed because of them. This immediately brought results and the group sobered up. Thus training of handling such situations is important in long term relationship building.
3) Empowering employees
The worst situation is when a customer is really furious at the company and the employee of the company (who is the face of the brand in front of the customer) is unable to take decisions because he is not in the right position to take such decisions. Delay in decision making causes more anger and frustration for the customer.
Thus, even though training is important, the success of relationship marketing also depends on the empowerment of your employees such that they are able to make quick decisions and make the customer happy. Several times, a lone individual will not be able to help the customer even though he is empowered. Thus along with empowerment, teamwork is necessary for the success of relationship marketing.
These three factors are the key to success of relationship marketing. Implementation of a relationship marketing plan is important for an organization irrespective of whether the organization is small scale, medium scale or large scale.