Relationship Marketing

Relationship marketing is a strategic approach that focuses on building long-term emotional connections between companies and their customers. This method aims to foster customer loyalty, engagement, and commitment, ensuring that consumers feel valued and satisfied. By nurturing these relationships, businesses seek to create a sense of happiness and belonging among their clientele, which can enhance the overall customer experience.

The rise of social media has amplified the significance of relationship marketing, allowing for more direct interactions between consumers and companies. Strategies may vary, from informative exchanges to promotional activities involving branded merchandise or community engagement. Successful relationship marketing often includes personalized customer service, regular check-ins, and loyalty programs that reward ongoing engagement.

These initiatives not only encourage repeat purchases but also promote positive word-of-mouth marketing, where satisfied customers share their experiences with friends and family. However, companies must carefully balance the costs and benefits of these strategies, ensuring they maintain authenticity and cultural sensitivity when adapting their approaches across different demographics. Ultimately, effective relationship marketing leads to a win-win scenario, benefiting both consumers and businesses alike.

Published in: 2021

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Subject Terms

Relationship Marketing

Abstract

Companies and corporations utilize relationship marketing to encourage customers to be loyal, engaged, and committed to their products and services. Many companies aim to build an emotional relationship between themselves and their customers, to the point that customers feel happy when they are engaging with the company, and notice a lack of engagement when they have not interacted with the company for a long time. This marketing strategy is part of customer relationship management and has existed for a long time. However, relationship management is getting increased attention due to social media and its ability to more directly connect consumers with companies.

Overview

Relationship marketing builds upon earlier methods of marketing, such as customer-focused marketing (Schultz, Malthouse & Pick, 2017), which became popular after World War II. At this time, rations were lifted and consumers were once again able to buy new products. Consumer-focused marketing, and the relationship marketing that followed, were designed to influence purchasing decisions through the establishment of relationships with consumers. Relationship marketing is a part of consumer relationship management, sometimes abbreviated as CRM. This marketing strategy can occur in many different ways—for some companies the relationship is purely based on the exchange of information, while for others it includes branded merchandise or specific lifestyle activities or products. and for others it is a continual engagement over social media chat rooms, forums, groups, and projects.

Branding. While many companies produce marketing campaigns, not all pay specific attention to they ways that consumers will see, receive, and act on those campaigns. Relationship marketers argue that attention to these aspects and interactions are of critical importance. For example, if a company is using branded merchandise for their relationship marketing, that company will want to be sure that the merchandise is something the customer will desire and will be proud to use or wear. This means that if T-shirts with the brand name are sold, the company will want to ensure that those T-shirts are comfortable, stylish, wear well, and are designed for the target audience. The shirts will need to be "on brand" meaning that the design appropriately conveys the feel of the company to both the targeted consumer and others who might see the shirt when it is worn by consumers. Examples of branded merchandise success are often found in sports attire, where consumers desire, and at times will pay more for, clothing that displays a specific company's logo. When consumers choose to display a corporate logo, they are indicating that the company has a special and specific role in their life or worldview. Put another way, they are indicating that they have a relationship with the company.

Not all branded merchandise needs to be purchased—it is also common for items that are part of a relationship marketing campaign to be handed out at sporting events, fundraisers, or in support of an activity. For example, a bank might pass out cushions for stadium seats to attendees at a winter football game. These cushions could be free, and given to attendees that do not even use the bank. However, they may create a feeling of goodwill between the attendee (who is happy to have a cushion) and the bank (which has shown itself to be interested in community goodwill).

Similarly, it is common for companies to sponsor children's sports teams, and in return have the company name printed on the team's jerseys. This act of relationship marketing connects the whole family to a specific brand or company. It is unlikely that the child will be able to make purchases from the sponsoring company. However, the parents may feel a sense of loyalty with that company due to the sponsorship. By showing that the company is loyal and engaged in the community, community members may feel a bond, and become loyal and engaged in the company.

Cost-Benefit. While all of these activities generate social good, they also cost a lot of money. When deciding to engage in a relationship marketing strategy, companies must weigh the benefits against these costs. The first common benefit is that brand-loyalty results in quicker and more consistent sales. Once a customer has created a relationship with the company, he or she is likely to continue that relationship by seeking out new products and staying up to date with new trends that relate to the brand. Additionally, because they are invested in a specific company, consumers are less likely to shop around to find a similar product from another company at a lower price. This means that consumers who have formed a relationship with a company are less price sensitive because they are willing to pay slightly more for a specific brand.

Companies also benefit from relationship marketing when their loyal customers do the job of marketing to their friends. This might occur when a teenager encourages all of her friends to purchase the same brand of jeans. Or it might occur when neighbors enter into long discussions about how happy they are with their new purchase. Either way, the company is able to build upon two relationships, first the relationship between company and the original consumer and second the relationship between the original consumer and her or his network of friends. This double level of relationships boosts sales, as well as keeps a community of consumers loyal to the company. Researchers have found that this second level, using word of mouth to advertise and advance products, is one of the most successful elements of relationship marketing (Verma, Sharma & Sheth, 2016). This works well because the established relationship is passed from the original consumer to the next, and the company benefits from all of the feelings of goodwill, trust, and knowledge that already exist between the original consumer and the person with whom they are speaking.

Further Insights

While many of the prior examples focus on merchandise, it is important to remember that customer service plays a critical role in relationship marketing. These campaigns are designed to make consumers feel as though they have a personal, pleasant relationship with a specific company. This personal relationship drives sales, but also makes customer service more important. Customers need to feel as though the company knows about them, cares about them on an individual level, and takes their comments and feedback seriously. This strong customer service includes not having to wait too long to speak to a representative and making it easy to find necessary information.

Companies also do well by reaching out to customers before there is a problem. These regular check-ins make customers feel included in the company's new projects, products, or campaigns. Some companies go so far as to make new information available to established customers, making them feel like they have a special inside track to information. Others will provide special services, such as early sales, keeping offices open late for customers, or otherwise showing that the company is willing to provide superior service for customers with whom they have an established relationship.

Not all extensions of customer service involve immediate sales. Some companies also educate consumers about new products, or the need for products. For example, an infant formula company may send direct mailings to new and expectant families. These mailings might include samples of the infant formula, but might also include educational information that is specific to babies, but not necessarily geared to selling formula. In this way, the company is demonstrating that it is invested in the new family's health and well-being. It is also attempting to sell formula to the new families, but is using a method that builds a long-term relationship built on good will and care for the entire family.

Issues

The development of social media has both enabled deeper relationships and given rise to new debates among relationship marketing professionals. When beginning to use social media, it is critical that corporations reach consumers in spaces where they are already comfortable. This means that if a company's key demographic primarily uses Twitter for communication, then the company's relationship marketing campaign also needs to use Twitter for communication. Similarly, if consumers use e-mail, but not Twitter, than it would be wise to keep the marketing campaign on e-mail. Some organizations and companies, such as sports teams, are working to better understand these relationships and how to engage individuals who are currently fans of a team and might later become consumers of a product (Abeza, 2013).

A critical, but hard to accomplish aspect of this engagement is ensuring that consumers view their interactions as "authentic" (Pronschinske, Groza & Walker, 2012). Much of this authenticity is determined by engagement with fans—this might take the form of in-person activities or of dialogues occurring over social media—such as through chat rooms, Facebook fan groups, or other forms of social media networking.

Loyalty Programs. Social media is an excellent way to maintain contact with consumers who have already purchased items. This is especially true if the company is selling durable goods that do not need to be replaced often. To maintain a level of engagement, many companies choose to use loyalty programs, which work well for both in-person sales and online engagements. These programs provide points and incentives for completing tasks, making purchases, or engaging with the brand in new ways. Through these programs, customers are reminded of their relationship with the company, and the company benefits though data collected by the loyalty program.

For example, a store credit card might allow purchases of all types, not only those at store. This means that a clothing store credit card can also be used by the consumer to purchase groceries or book travel. The store which has issued the credit card incentivizes the customer to use the card for all of their purchases by providing points to the consumer that can be used for new clothing items. The consumer benefits from this promotion that provides low cost or free goods. The company benefits in several ways, including from collecting a wide range of data regarding purchases made by the consumer that may or may not relate to the company.

Additionally, the incentives given to consumers are frequently too small to make a complete purchase. If a consumer earns $5 off at a company, but the least expensive product is $50, the consumer still spends money with the company, but she feels as if she is getting an excellent deal due to the discount.

Sustaining Trust. Incentives and loyalty programs also work well online and are called e-loyalty. Both loyalty and e-loyalty programs put a special emphasis on trust. The consumer is asked to trust many things—that the company will accurately record purchasing information, that the correct points will be recorded, and that incentives will be provided as promised. This trust is critical for e-loyalty because consumers are unlikely to have regular, in-person contact with the brand or its representatives (Bilgihan & Bujisic, 2015). While an in-person customer who is upset with a loyalty program could easily determine who to complain to, an online customer participating in an e-loyalty program may feel abandoned by the company if promised benefits and incentives are not provided.

To ensure that a loyal relationship is being built, and that customers are happy, companies will frequently monitor their relationship marketing strategy. This can include interviewing consumers, conducting surveys with both new and long-standing consumers, and/or observing consumer behavior. These studies need not need to be done in secret. Many consumers are happy to be asked their opinion of a company, product, or service. This method of short survey and interviews is frequently used by restaurants that provide a survey at the end of a receipt and incentivize completion by offering a free meal in the future. These surveys and interviews with customers are another aspect of a relationship marketing campaign.

Relationship marketing produces many results that are advantageous for both the consumer and company. However, companies must be sure that they are creating sustainable relationships. This means that they should not overpromise goods or services to the consumer. Additionally, they should not offer goods or services which cannot be provided in a quality way. Relationship marketing costs both time and effort. A company must be sure that they have the necessary resources to create a successful campaign, and that they are not over-committing to the relationship marketing at the expense of other necessary company activities and tasks. Rolling back a campaign after it has begun can produce disastrous results. For example promising high quality backpacks to students who complete a set of tasks, and then delivering low quality backpacks instead will create a feeling of ill will toward the company, and the company may find itself in a worse relationship with customers than before the campaign began.

Additionally, companies must be careful when transferring successful relationship marketing campaigns from one culture or one location to another. What worked well for one group of people might not work as well, or might have a negative result, in another location (Samaha, Beck & Palmatier, 2014). The differences in these results can be cultural appreciation for the products sold, but more often they are the effect of trust and morals that are expressed in the relationship building strategy (Park & Han, 2012). For example, it may be appropriate to ask personal questions in one culture but offensive to do so in another. Or, incentives which were appreciated in one community could be seen as too low quality or otherwise unappreciated in another.

Terms & Concepts

Consumer Relationship Management: The way that a company creates, manages, and assesses interactions with customers.

E-loyalty: Loyalty campaigns that occur online. This can either be a fully online program, or the use of online tools to record loyalty information that originate from in-person interactions.

On-Brand: A product or service is considered to be on-brand when it matches the style, characteristics and feeling of a company. There is no specific rule for determining what is on-brand and what is off-brand. This is why many companies test out new products and services in small markets or with focus groups to ensure that their new campaigns match their preexisting brand image and reputation.

One-off Sales: A purchase or transaction that is only intended to occur once. Because it is unlikely that the customer will return, the business has no incentive to invest in relationship marketing.

1 to 1 Relationship: A type of relationship fostered between a company and consumer. While the company obviously has many consumers, there are strategies that can be taken to ensure that each consumer feels special. This can include ensuring that consumers always speak with the same salesperson, retaining purchasing history to help inform customer service representatives, and/or training all employees to use consumer's names and take the time to have personal interactions with each customer.

Price Sensitive: Consumers who are interested in a specific product, but will only buy that product if it is sold at or beneath a specific price are considered to be price sensitive. Once the product has become more expensive than the customer's price point, he or she will move onto another brand or delay a purchase.

Target Audience: The customers to which a company is marketing are the target audience. There are also be secondary audiences or purchasers, but they are not the focus of marketing campaigns.

Bibliography

Abeza, G., O'Reilly, N., & Reid, I. (2013). Relationship marketing and social media in sport. International Journal of Sport Communication, 6(2), 120–142.

Bilgihan, A., & Bujisic, M. (2015). The effect of website features in online relationship marketing: A case of online hotel booking. Electronic Commerce Research and Applications, 14(4), 222–232. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=108679263&site=ehost-live

Park, J., Gunn, F., & Han, S. L. (2012). Multidimensional trust building in e-retailing: Cross-cultural differences in trust formation and implications for perceived risk. Journal of Retailing and Consumer Services, 19(3), 304–312. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=74661005&site=ehost-live

Pronschinske, M., Groza, M. D., & Walker, M. (2012). Attracting Facebook "fans": The importance of authenticity and engagement as a social networking strategy for professional sport teams. Sport marketing quarterly, 21(4), 221. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=84558883&site=ehost-live

Samaha, S. A., Beck, J. T., & Palmatier, R. W. (2014). The role of culture in international relationship marketing. Journal of Marketing, 78(5), 78–98. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=98365367&site=ehost-live

Schultz, D., Malthouse, E. C., & Pick, D. (2017). Understanding the new, negotiated phase of relationship marketing: A proposed research agenda. In The Customer Is NOT Always Right? Marketing Orientationsin a Dynamic Business World (pp. 475–481). Cham: Springer.

Verma, V., Sharma, D., & Sheth, J. (2016). Does relationship marketing matter in online retailing? A meta-analytic approach. Journal of the Academy of Marketing Science, 44(2), 206–217. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=112860880&site=ehost-live

Relationship Marketing

On this Page

Subject Terms

Relationship Marketing

Abstract

Overview

Further Insights

Issues

Terms & Concepts

Bibliography

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