Relationship marketing Thursday, August 29, 2019

The task of creating strong customer loyalty is called Relationship Marketing.

The steps in customer development process is

Suspects -> Prospects -> First-time customers -> repeat customers -> Clients -> members -> Advocates -> Partners.

There might be defections from any of these levels, in which case, relationship marketing works on customer win-back strategies.

There are 5 different types of levels of investment in customer relationship marketing –

Basic marketing: the sales person simply sells the product

Reactive marketing: the salesperson sells the product and encourages the customer to call if he or she has questions comments or complaints.

Accountable marketing: the salesperson phones the customer a short time after the sales to check whether the product is meeting the expectation.

Proactive marketing: the company salesperson contacts the customer from time to time with suggestion about the improved product uses or helpful new products.

Partnership marketing: the company works continuously with the customer to discover ways to perform better.

There are also certain marketing tools which can be used for added customer satisfaction –

Adding financial benefits - through frequency marketing programs and club marketing programs. Club membership programs to bond the customer closer to the company can be open to everyone who purchases the product or service, such as frequent flier or frequent diner club, or it can be limited to the affinity group.

Adding social benefits – developing more social bonds with the customer; help make brand communities; etc.

Adding structural ties – Supplying customers with special equipment or computer linkages to help them manage their payrolls, inventory, etc. better.

Customer profitability the ultimate test

Ultimately, marketing is the art of attracting and retaining profitable customers. The well known 20-80 rule says that the top 20% of the customers may generate as much as 80% of the company’s profits. The largest customers who are yielding the most profit. The largest customers demand considerable service and receive the deepest discounts. The smallest customers pay full price and receive minimal service, but the costs of transacting with small customers reduce their profitability. The mid size customers receive good service and pay nearly full price and are often the most profitable.

A company should not pursue and satisfy all customers.

A profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling, and servicing that customer.

Quote : Marketing Management by Philip Kotler 10th Edition