Relationship marketing focuses on interacting with customers long term, rather than simply trying to make a quick sale. This strategy affects multiple aspects of customer loyalty. According to the journal, "Management Science," brand loyalty allows you flexibility in setting prices. There are far-reaching implications for the marketer associated with the emergence and growth of relationship marketing. RM heightens the need for a more. Shared Value Literature Review: Implications for Future Research implications on CSV research mechanism from stakeholder engagement and . ( improvements in productivity, market expansion, supply chain, collaborative Revisiting the role of Shared Value in the Business-Society Relationship.
A successful relationship marketing strategy attracts and retains profitable customers. Mutual Benefit The two main components of relationship marketing -- personalization and regular, periodic communication -- strive to increase customer satisfaction.
One of the effects of relationship marketing is mutual benefit. The customer receives something of value through regular, personalized communication.
The Impact of a Relationship Marketing Strategy on Customer Loyalty | Your Business
A business hopefully increases long-term sales and profitability. For example, a grocery store discount card tracks purchase behavior. In exchange for allowing the grocery store access to his spending habits, a customer may receive volume discounts and individual pricing on frequently purchased items. The additional savings may prompt the customer to shop at the store more often.
- The implications of relationship marketing Marketing Management
Retention A satisfied customer is more likely to remain loyal to a company. According to the "European Journal of Economics, Finance and Administrative Sciences," companies are able to make more money from customers who take advantage of a loyalty program's perks.
The Impact of a Relationship Marketing Strategy on Customer Loyalty
Higher customer satisfaction levels tend to increase the cost efficiency of the relationship. Some long-term relationships are not beneficial to a company, regardless of customer satisfaction level. A business should not continue relationships that cost too much to maintain. Of all the areas of the marketing mix, it is in the area and process of personal selling that we see some of the most far-reaching implications of a relationship as opposed to a transaction approach to marketing.
The following represents just some of the shifts in emphasis and perspectives in the selling process when a company moves towards a RM approach: The salesperson must take a longer-term perspective than that of simply making a one-off sale when dealing with customers. Effective relationship selling requires much more of a team effort not only between individual embers of the sales force, but between the salesperson and other functions in the supplying company. The salesperson must be proactive with customers, calling or visiting customers at times other than when they think the customer is ready to place an order.
The salesperson must act as an exchanger of information between his or her own company and the customer, and vice versa. The emphasis must be much more on levels of customer service rather than simply on special deals and attempting to generate sales.
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This means that RM requires different skills and attitudes for successful selling. The relationship salesperson must be skilled at listening to customers and interpreting their problems.
Moreover, systems for managing and motivating salespersons may need to change. For example, remuneration may need to be geared much more to developing customer loyalty and trust, rather than on immediate one-off sales. The notion of customer retention is central to the practice of RM. Kotler and Keller discuss three ways in which a company can attempt to build and maintain stronger relationship with existing customers thereby helping to retain them over time: Essentially this involves rewarding customers financially for being loyal.
Loyalty schemes mentioned earlier, such as reward points or air miles, are examples of these types of benefits. There is some debate about the extent to which such schemes actually encourage truly loyal customers, or simply encourage customers who are looking for the best deal or value. The supermarket group Tesco was amongst one of the first retailers in the UK to introduce a loyalty card system. At first, competitors thought that this was a throwback to the s when consumers were offered trading stamps with their purchases which they could later trade in exchange for products from a catalogue.
Many of these competitors felt that customers would not be bothered to collect their reward points let alone be induced to shop at Tesco because they were available.
Adding social benefits This involves company personnel increasing their personal and social bonds with customers e. The salesperson can play a key role in this approach to building customer loyalty, but in addition, the use of more sophisticated databases to analyse individual customer needs and tailor specific marketing programmes to individual customers is growing in importance with developments in IT.
The banking industry has increasingly been using the notion of social bonds to improve customer retention rates.
At one time, up to the s and early s, many banks had personal relationships with their customers, with customers often knowing and dealing with a bank manager on a close personal basis.
During the late s and early s the banks moved away from this personal approach in an effort to reduce costs and become more like retailers than bankers. NatWest Bank introduced a product for its current account holders who may, for a fee, be given access to a range of banking services which are specifically designed to meet their individual banking needs, thus returning personal service to part of the UK banking system.
There are ways in which this approach to building customer loyalty and relationships can be implemented. Essentially, it involves providing customer support in the form of expertise or equipment.
In other words, this approach increases switching costs for a customer. Examples include companies providing computer software to a customer which helps the customer run production schedules, but which is specific to the supplier. Another example would be the supply of electronic data interchange systems for purchasing. Research by Dodourova22 concludes that behavioural characteristics such as commitment, coordination and communication are found to play a more significant role in explaining overall partnership success compared with organizational characteristics like structure and control mechanisms.
Hewlett Packard provide comprehensive technical and after-purchase support systems for their customers.Strategic Relationship Marketing (B409) Online Info Session
This is so comprehensive that customers do not need to turn to other suppliers for this service. The implications of relationship marketing Systems must be in place with RM to enable constant tracking and assessment of customer satisfaction and needs.
Customer databases and the introduction of total quality management are important in implementing an effective relationship marketing approach.
RM, as we have seen, is based on developing long-term relationships with customers and hence heightens the need for building and maintaining customer loyalty. Although there are many reasons for their introduction, customer loyalty schemes, as introduced by many retailers, are examples of how companies are concentrating on customer retention.