Modern customers are marketing savvy. They know when you are selling to them, and the more sales-y and transactional you become, the more off-putting it gets.
Relationship marketing stands in stark contrast to this gimmicky type of marketing.
It focuses on building genuine connections with the customer base that are going to last beyond the transaction.
In this detailed guide, we define what relationship marketing is, explore the benefits it brings, and discuss real-life examples of brands involved in strategic relationship marketing.
What is relationship marketing?
Relationship marketing is a business strategy to boost customer retention and nurture long-term relationships with existing customers.
Instead of focusing on acquiring new customers or making one-off sales, relationship marketing is all about keeping the existing customer base happy by providing them, among other things, great customer services and hyper-tailored experiences.
In relationship marketing, everything from the psychology of colors for your brand to the various return and exchange options you offer is designed to delight and serve the consumer.
Successful relationship marketing fosters greater brand loyalty and devotion among customers.
Why is relationship marketing important?
Customer acquisition costs keep getting higher. For B2B businesses, customer acquisition costs range from $500 to $5,000. For a standard e-commerce business, this cost hovers around $10 to $50.
Forbes says (quoting the book Marketing Metrics) that it’s far more efficient to try and sell to existing consumers than attempting to seduce a new one.
According to Forbes, businesses usually have a 60-70% chance of a successful sale when they market to an existing customer, but only a 5-20% probability that a new customer would care.
Keep also in mind that consumer trust in brands is consistently dropping. People prefer to listen to friends and family when trying a new product or service than trust a brand’s ad about the same.
In such a climate, it makes more business sense to focus on customers you already have than stretch yourself thin trying to appeal to consumers who may not trust you to begin with.
How does relationship marketing help you with that?
● Better return on customer acquisition cost
When you shift your focus from more individual sales to an increase in happy consumers, you bring your customer acquisition costs down. You realize that even if you can convince a consumer to shop with you one time, that sale is truly a loss without a strong relationship marketing strategy in place. You need relationship marketing to ensure your one-off consumers consider you for their next purchases too.
● Long-term customer retention
You retain more customers in the long term when you try to build goodwill with them. It results in repeat purchases and a more loyal customer base that competitors struggle to break apart.
● Better understanding of customer needs and preferences
The more resources you invest in creating lasting connections with your consumers, the better you become at knowing their pain points and what makes them happy. It allows you to create hyper-personalized experiences, products, and services that work for them and future innovation that’s aligned with their goals and unmet needs.
The benefits of relationship marketing
What does relationship marketing bring to your table when you indulge in fostering lasting connections with your customers? Below is a brief list.
● Increased customer lifetime value. CLV estimates the potential revenue a customer can generate for you for the course of the duration of their relationship with you. The longer you retain a customer, the more business they bring you. Relationship marketing invests in customer retention strategies thus increasing your customer lifetime value.
● Stronger customer loyalty. When your customers are happy with you, your competitors will struggle to sway them away.
● Improved customer retention rates. Happier customers will share their experiences with others, thus making more people open to considering you and giving you more chances, resulting in more customer retention.
● Greater brand awareness and equity. Customers love to share their positive brand experiences with others, thus increasing your brand awareness among the people.
● Higher customer satisfaction. When you strive to meet your customer needs and exceed their expectations, your customer satisfaction rates boost too.
● Higher brand endorsement by customers. Satisfied customers generate your buzz for you, often going out of their way to defend you and market your products and services to others.
● Reduced marketing costs for long-term strategies. With your customers acting as your brand ambassadors and endorsers, you enjoy a reduction in your traditional marketing costs and become more able to spend on relationship-building strategies.
● Deeper customer understanding. When you invest in relationship marketing, you invest in understanding your consumers and what they want. It gives you a deeper and more nuanced understanding of all of your customer segments.
● Ability to identify opportunities to cross-sell and upsell. It also allows you to identify gaps in your services and your customers’ experiences with other brands. Hence, allowing you to create products, services, and experiences that you can upsell and cross-sell to your consumers.
5 Examples of relationship marketing
Take a look at the brands below that are excelling at relationship marketing.
1. Amazon Prime
Through Amazon Prime’s subscription service, Amazon offers you benefits such as free two-day shipping, access to Prime Video (the streaming service owned by the platform) and Amazon Photos (their photo storage cloud service), plus exclusive deals on Prime Day.
By providing valuable benefits and services, Amazon builds strong relationships with Prime members, who tend to spend more and shop more frequently on their ecommerce site.
2. Starbucks Rewards Program
Starbucks’ loyalty program, Starbucks Rewards, offers customers points for every purchase they make. Each dollar spent gets you one reward point. Members can redeem these rewards for free drinks, customized drinks, specialty beverages, food items, brand merchandise, and more.
Starbucks also sends personalized offers and discounts to members based on their purchase history, creating highly tailored experiences for each customer, encouraging repeat visits, and fostering a sense of belonging among its fanbase.
3. Nike Run Club
As one of the top sports brands in the world and a leading choice for athleisure wear, Nike is everyone’s favorite. They foster a sense of community in their customer ranks through the Nike Run Club app, which is all about offering valuable resources for runners and fitness seekers.
The app provides personalized training plans, tracking tools, and a supportive community for runners. You can share your progress with those in your community, challenge each other with running goals, or focus on your progress with the app supporting your fitness goals.
Through these relationship marketing strategies, Nike positions itself as a trusted ally in customers’ fitness journeys.
4. Fenty Beauty
Fenty Beauty is one of the pioneers in the beauty inclusion revolution. The brand quickly distinguished itself from the competitors’ offering a staggering amount of 50 unique shades of its Pro-Filt’r Foundation.
In 2017 when the brand first launched, it was a thing unheard of. Leading brands had to scramble to catch up, but by the time they did, Fenty had created a place for itself as a game changer.
Customers looking for more diverse options in their makeup flocked to Fenty and many have never left since.
5. Patagonia
Patagonia should be a study in relationship marketing. The outdoor gear company has garnered a passionately loyal following for its unwavering commitment to environmentalism and climate action.
Through its Worn Wear Program, Patagonia encourages customers to repair and recycle their used Patagonia clothing and gear, rather than buying new items. The company offers trade-in programs, repair services, and tips, and hosts events where customers can learn how to fix their gear.
By promoting sustainability and encouraging customers to use their Patagonia stuff for longer, the brand strengthens its relationship with its environmentally-conscious consumer base.
8 Strategies of relationship marketing
With these great merits to relationship marketing and the immense success it brings to brands long-term, what are some of its strategies that you can count on?
Depending on your brand’s unique goals, your company’s long-term objectives, and your customers’ unique preferences, below are some of the best relationship marketing strategies with the most potential.
1. Exceptional customer services
Very few brands can boast about offering products and services that nobody else is offering. Most of us compete in crowded markets. And the one thing that will always help you stand out is exceptional customer service.
Long after the transaction has ended and the product or service has delivered its value, the lasting impression will be of the service you provided.
Elevate your customer service by offering omnichannel customer support. Chatbots on your website plus customer service options on your social channels can make your CS more effective. Expand your team to include CS agents who can answer customer queries by email, phone, and online.
2. Hyper-personalized customer experiences
Show your customers you know them and care about them by designing extremely tailored experiences for individual users. 40% of consumers buy from businesses that tailor the shopping experience.
But to make your CX personalization truly effective, go beyond standard product recommendations and invest in next-gen AI to conduct sentiment analysis, geolocation ad targeting, personalized content, and dynamic digital experiences.
These strategies will allow you to figure out the purchase behaviors and preferences of each unique consumer so you can offer them products and services that they want, where they want, how they want, and at the price they want.
3. Surprise mentions, gifts, and discounts
Connect with your customers by showing them you appreciate them. Mention them in your social media posts, feature them in your user-generated content that you choose to highlight, and give shout-outs that you know will delight them.
Sending surprise gifts with or without an order, or offering them surprise discounts at the checkout are some of the ways to make them happy through tangible means.
4. Timely feedback empowered with action
You need to get proactive with your customer feedback. If you equate customer silence with satisfaction, you’re in for shocking surprises. Experts report that 96% of unhappy customers never complain. What’s worse, 91% of those unhappy consumers will simply leave without sharing their negative feedback with you.
So, become proactive with your feedback. Send a quick (max 2-3 questions long) survey when customers place an order and try and find out how their experience has been. Gather their feedback and draw insights.
Identify the low-performance areas to fix the issue and improve what’s working.
Seeking feedback not only allows you to solve errors before they become issues but it also improves customer trust and shows your consumers that you’re a brand who listens and acts.
5. Loyalty and reward programs
Establish a loyalty program that rewards your repeat customers with long-lasting benefits. When you offer exclusive perks and discounts to people in your membership club, you incentivize their repeat purchases.
Similar to what Starbucks has been able to do, by consistently rewarding loyalty, you ensure that that loyalty only strengthens and grows.
Exclusive discounts, pre-booking slots, lifetime warranties, and service upgrades are some of the proven ways to reward customer loyalty and expand it across the customer base.
6. High-quality useful content
You succeed in building strong customer relationships when you offer them products, services, and experiences the way it’s going to benefit them the most. One way to do that is to offer great products and services. But another way to achieve this is to show them the ways they can maximize the benefits of those services.
If you offer skincare products, for example, build a resource center of tutorials, articles, and videos where you teach users how to use your products the best. Go a step further and educate them about skincare through a lens of inclusion and diversity.
Collaborate with marketers and brands that share your values and offer your combined consumer base a comprehensive way to benefit from what you have to offer.
7. Diverse communication channels
Meet your customers where they are.
If the majority of your fans are on TikTok and Instagram, don’t undermine the effectiveness of YouTube and X (formerly Twitter).
Maybe the latter platforms don’t (and shouldn’t) get your 100% attention and resources. But focus your 20% on them to reach customers who frequent those legacy apps.
Be strategic about it and focus your best efforts on channels that are most popular with your customers without completely ignoring others.
Repurpose your content so one channel can be your go-to for your product launches, one of them hosts your video tutorials and virtual events, while the other can help you show off your brand character and personality.
The underlying objective is to ensure you are available to your customers no matter where they are to answer their queries, satisfy their concerns, and share updates with them.
8. Transparency and authenticity
Shun the voice that tells you you have to make sales and instead focus on leaving a great impression. Be authentic in your communication.
If you receive a customer query about a product and you discover the product is not going to be a good fit, be upfront and say so. Offer them alternatives that’ll help. If you don’t have alternatives at your store, direct them to another brand even if they are a competitor.
This honesty will help the customer remember you and reach out to you for future purchases. It will also help you gain customer trust which is a rare commodity. Authentic interactions like these also open doors for innovation where you work on high-potential ideas knowing this is something your customers are looking for.
Conclusion
Short-term marketing strategies are of incredible value when you’re looking to meet targets and shake the industry. Yet, with consistent efforts to build lasting connections with customers, you can achieve more sustainable success, deeper market penetration, and an upgraded brand equity.
With your customers acting as your marketers, you can expand and innovate on firmer feet and with massive goodwill on your back.
Combine short-term marketing goals with long-term relationship-building to give your business the best odds.
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