“An effective RM (Relationship Marketing) strategy reduces the cost of customer acquisition”. Comment on the statement.

What is Relationship Marketing and What Can it do for Your Business?

You may have heard the term “relationship marketing” being tossed around over the past few years. Relationship marketing refers to everything you do to develop strong, lifelong relationships with your customers. Relationship marketing includes building brand awareness and positioning your brand as your customers best option. The most important part of relationship marketing is facilitating two-way conversations with your customers.

This type of marketing differs from traditional marketing in that it’s not transactional, but rather relational. The old way of doing things focused on making more sales. The new, better way focuses on creating a better overall brand experience that will not only help you attract more customers, but retain those existing ones for the long term.

The shift toward this more personal marketing approach has been driven by the increased demand of consumers who want to know that the brands they work with not only offer quality products or services, but truly care about them. People want to know there are real faces behind your logo, that you’re listening to their concerns and that you’re willing to go above and beyond to satisfy them.

Now that you have a better idea of exactly what relationship marketing actually is, let’s take a look at several benefits developing this type of strategy can have for your business:

Relationship Marketing Helps You Retain Long-Term Customers.

Research has shown that the longer a customer stays with a brand, the more valuable they become. In fact, an annual increase of just 1% in customer retention can equate to a 20% increase in revenue annually. When you work on building relationships with your customers, and not just selling to them, you begin to develop loyalty, which means they’re more likely to stick with your brand for the long haul.

Relationship Marketing Increases the Likelihood of Referrals.

Regardless of the dozens of different marketing techniques out there today, word of mouth is still the most powerful, with 84% of consumers citing the recommendation of a friend or family member as their most trusted source when making a purchase decision. The more satisfied and loyal your customers are, the more likely they will be to refer your brand to others. The best way to achieve this is through relationship marketing.

Relationship Marketing Makes Price Changes Easier.

Many businesses hate raising their prices for fear that they’ll lose customers as a result. Yet, with the economy the way it is, price increases are something we all have to consider from time to time. A solid relationship marketing strategy can help make rolling out a price increase much smoother. That’s because when you’ve worked hard on the front end to develop relationships with your customers, the resulting loyalty will make them less likely to leave over a price change.

Relationship Marketing Creates an Excellent Opportunity for Feedback.

When you’ve got a whole slew of happy, loyal customers in your corner, you’ve got an instant test market at the ready. Whenever you need to try out a new product or propose a new service, your loyal clientele will be there to offer feedback. Want to know how you’re doing? Ask your long-term customers. Their feedback can help you determine what your business’ greatest strengths are as well as identify areas that need improvement.

Relationship Marketing Will Give You a Competitive Advantage.

The good news for you is that not everyone has jumped on the relationship marketing bandwagon. That means that there’s a pretty good chance at least some of your competitors are not yet leveraging this powerful tool for their own benefit. When you offer a more personal touch with your products or services, you’ll easily achieve a leg up on those that are still stuck in the sales-driven marketing era. That alone is worth its weight in gold.

Some simple tips to help you get started on the right path toward a more relational approach to marketing:

• Keep open, honest lines of communication with customers.
• Invite feedback.
• Be social.
• interact and engage with customers and prospects via social channels.
• Provide exceptional support and service.
• Integrate customer feedback into product/service improvements.
• Monitor what’s being said about your brand online and respond accordingly.
• Offer a customer loyalty program.
• Go out of your way to show customers that you value them.

By making the shift from traditional marketing to relationship marketing, you’ll be well on your way to attracting and retaining customers that don’t just like your brand, but love it. Accomplish this and success is sure to follow.

I fully agree with the answers been added by EXPERTS.............Thanks.

Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales.

Yes once u engage customer you don't need to spare resources for acquisition and engaged customer act as a magnet for bringing other customers to the business.

Thanks for invitation

 I think Relationship marketing is about forming long-term relationships with customers. Rather than trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services. This is different than most normal advertising practices that focus on a single transaction

And I suppose trust will after that & no need to repeat again

That should be explained on light of Relationship marketing and customer relationship management in the domain of marketing strategy .A confluence of factors, including the transition to service-based economies; advances in communication, logistics, and computing technologies; increased global competition; and faster product commodization have enhanced the salience of “relationship-based loyalty” to sellers compared with other marketing mix factors. Moreover, some of these trends are simultaneously increasing customers’ desire for the unique characteristics found in relationship-based exchanges (e.g., reduced perceived risk, higher trust, enhanced cooperation, and greater flexibility). Thus, in many situations, both sellers and customers are becoming more interested in conducting business transactions embedded within relationships. For firms who use or wish to use relationship marketing in their business, the primary benefits are to improve customer loyalty and seller’s sales and profits.

Relationship marketing can reduce the cost of customer acquisition through :

First: Minimize Conflict

The factor with the most significant impact on customer relationship quality is unresolved conflict. Existing research clearly demonstrates that conflict between sellers and customers can quickly wreak havoc—destroying trust, commitment, and, ultimately, a relationship built through many years of investment. To avoid and reduce conflict, selling firms must ensure that their business processes are aligned to their relationship marketing strategy. The company culture must emphasize the importance of resolving conflict, and must institute formal systems for correcting customer issues.

Second: The Role of Boundary Spanners

The individual boundary-spanning personnel with whom customers interface often represent the most critical vehicle for building and maintaining strong customer relationships. In many cases, a firm’s primary relationship marketing investment should go toward hiring, training, and continually motivating boundary-spanning employees. If possible, firms should align dedicated, competent employees to each customer to take full advantage of the powerful impact of such relationships. At the same time, firms must recognize that loyalty generated from customer-salesperson relationships are often “owned” by the salesperson and can be lost if the salesperson moves to another firm. Thus, firms building relational-based loyalty must balance the benefits from employee-customer relationships with the impact of employee turnover. If facing high turnover, sellers should increase the consistency across boundary spanners, reallocate spending from social to structural programs, and reduce boundary spanners' discretionary control of RM programs to increase seller-owned loyalty and reduce salesperson-owned loyalty.

Third : Understand the Customer

 Sellers’ relationship marketing returns can be enhanced by better understanding the customer’s perspective. In particular, selling firms that can measure and appreciate their customers’ relationship orientation—that is, their need and desire for a relationship—can enjoy significant benefits. If a customer has a low need (i.e., low relationship orientation), relationship marketing investments will not only generate poor returns but can actually damage the exchange by increasing customer perceptions of hassles and exchange inefficiencies. Alternatively, a customer with high relationship orientation—one who both wants and needs a close relationship—represents the very best target for relationship marketing. A number of factors are shown to increase a customer’s relationship orientation. Industry relational norms, customer relational-centric reward systems, product dependence and involvement, and any factors increasing a customer’s uncertainty or risk will increase a customer’s relationship orientation and thus, a seller’s relationship marketing effectiveness.

Adopted from  ROBERT W. PALMATIER () Relationship Marketing

agree with the experts........

agree with all answers ....................................

Agree with all =====================================

In addition to the answers I would like to briefly comment on this by saying that using the right resources for marketing should create the shortest and appropriate path to get your customers and retain them !

Thank You

Relationship marketing provides a firm with an opportunity to participate in cross selling which increases overall sales volume and potential profit. Goodwill, which results in ―word of mouth‖ promotion, helps to lower customer acquisition cost, and therefore impacts favorably on profit.

I agree with the rest of the answers