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Relationship Marketing
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This document describes the importance of building relationship with the customers. It also explains the various types of relationships etc
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Relationship MarketingA strategic orientation that focuses on keeping current customers
and improving relationships with them with a long-term view is
called Relationship Marketing. Its origin was the airline industry
which realized that ‘frequent flyers’ accounted for a great part of
their revenues. They devised ways by which they could reward such
customers.
It stands on the principle that it is easier and cheaper to keep an
existing customer rather than acquiring a new one. This brings us
round a point that it focuses more on retention and enhancement of
the existing customer than attracting a new one. Example:
Starbucks started customer acquisition by promoting ‘coffee
drinking life style and targeting the affluent coffee drinkers. Friendly
people with the indulgent physical environment attract further more
customers. Starbucks became instantly popular with ‘fast retail
expansion’ and newer methods of customer service (pass through).
After this successful customer acquisition, Starbucks seems to have
failed in customer retention. Longer queues, more mistakes and
affected brand image. The experience at Starbucks became ordinary
though the price being charged was premium. Interactions with
customers reduced and customer satisfaction decreased as a result.
(Moon and Quelch, 2006).
Customer Relationship Management (CRM) – this refers to
practices, strategies and technologies that companies use to
manage and analyze customer interactions to improve business
relationships with customers and assist customer retention.
Information can be gathered cheaply through telephone, live
interactions and social media. The collection and interpretation of
data is called ‘data mining’.
Empirical studies show that huge investments were made in CRM
from the year 2010. These figures were even more than money
invested on supply-chain management.
Some Advantages –
1. Such systems boost sales
2. Detailed information about purchase history and consumer
preferences. We can then target them more effectively.
3. The loyal customers are less price-sensitive. Knowledge about
customer can bring forth new customer insights and
businesses can plan accordingly.
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