Due to the rise in the number of competitors as well as the buying options in front of consumers, relationship marketing has been on the rise. Relationship marketing involves making strong and deep relationship with the consumers (whether they be individuals or organizations), such that the consumer does not shift a brand and has a long term and satisfying relationship with the brand.
Relationship marketing need not be used only with your end customers. Your stakeholders are equally important. That is why one of the key goals of marketing activities today is to build strong relationships with customers and stakeholders. Thus in all, the various entities involved in relationship marketing are
- Channel partners (Distributors, suppliers etc)
- Financial partners (Shareholders, investors etc)
A firm needs to build a strong relationship with all these entities to be in the front. Imagine having a high defection rate, or having a high attrition in the organization. Defection rate is the rate of a customer leaving its brands, whereas attrition rate is the rate at which an employee leaves a company which has hired him. You do not want a high defection or attrition rate. And hence the use of relationship marketing.
These four entities together can also be known as the “Marketing network” for relationship marketing. One of the smarter strategies for a company to generate profits is simple – Take good care of your marketing network and your profits will follow. Imagine a highly motivated employee working alongside a highly motivated channel partners. This builds confidence for the company from the point of view of the customers which in turn brings sales and better numbers. This attracts the financial community and they in turn start investing in the company. Thus in essence, relationship marketing can actually take the organization to a whole new level of generating business and profits.
With individualization and customization on the rise, relationship marketing too has evolved and has started making separate offers to all the four entities. Nowadays you will find specific recognition awards being given to employees, loyalty programs given to customers, retention rewards and monetary awards given to channel partners and finally financial rewards (stocks, dividends) being given to the financial partners of the company.
By implementing these measures and being focused on relationships, companies have placed much more importance on customer retention. As we know, the better the relationship, the better the relations. And furthermore, the cost of retaining a customer is 20% to that of acquiring a new customer. Also, the retained customer will be responsible for a high amount of sales for the company. The company having a higher number of retained customers is more likely to have a higher market share as compared to the competition.
Overall, relationship Marketing builds a tight knit for the company bringing its main players together and thereby taking the company forward. This in turn results in high performance and high rewards. As said by Leonardo Dicaprio in the movie Inception – A positive motivation always trumps a negative thought. This is where the crux of relationship marketing lies. A positive motivation which brings people together, builds a strong bond and helps the company in achieving its goals.