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“Build the relationship, and the transactions will follow.”
Now, we realize that this sounds like something straight from the screenplay of “Field of Dreams”, but in the worlds of relationship marketing and transactional marketing, this simple group of words embodies sincerity, morality and the result of proven tactics impossible to dispute. Before we explore the reasons why relationship marketing is clearly more beneficial than transactional marketing, let’s take a look at each of these approaches individually…
What is Relationship Marketing: A Primer
When we speak of “relationship marketing,” we’re referring to a facet of Customer Relationship Management – or “CRM” – that focuses on customer loyalty and long-term customer engagement as opposed to shorter-term goals such as individual sales and customer acquisition. The overall intent of relationship marketing, otherwise known as customer relationship marketing, is to forge solid, emotion-centric customer connections to a brand that can yield ongoing business, free word-of-mouth promotion and data feedback from customers capable of generating leads.
Relationship marketing stands in stark contrast to the more traditionally-accepted transactional marketing approach – something we’ll explore in detail a little later on – which focuses more on increasing the number of individual sales. When we look at the transactional model, we see that the return on customer acquisition cost may be insufficient; a customer may be convinced to choose that brand one time, but devoid of a powerful relationship marketing strategy, he or she may not return to the brand in the future. We will explore how while organizations do combine elements of both marketing approaches, it’s customer relationship marketing that is beginning to play a more vital role for many businesses.
Implementing a Relationship Marketing Strategy
Based on the tenets of Customer Experience Management (CEM), relationship marketing focuses on improving customer interactions to nourish better brand loyalty. Indeed, these interactions can still take place over the phone or in person, but much of relationship marketing and CEM has taken to the Internet. It’s no secret, really, that most consumers today expect to be granted easy, almost tailored access to details about a brand due to the abundance of information online and the flourishing use of social media – even expecting the opportunity to influence services and products via online reviews and social media posts.
Modern day relationship marketing encompasses creating simple two-way communication between customers and the companies, tracking customer activities and providing tailored data to customers based on those activities.
MVMG Quick Example: An e-commerce site tracks a customer’s activity by allowing them to create a user profile so that their data is saved, quite conveniently, for future visits and so that the site can deliver more tailored information to them the next time….alternatively, site visitors may also sign in through Facebook or another social media platform, allowing them an easier user experience while automatically connecting them to the brand’s social media presence.
The Flip Side of the Coin: Transactional Marketing
Transactional marketing refers to a business strategy that concentrates on single, “point of sale” transactions, with an emphasis being placed on maximizing the volume and efficiency of individual sales rather than developing a relationship with the buyer. Within the deeper layers of intricate marketing techniques, the transactional approach is based on the four traditional elements of marketing, often times referred to as “THE FOUR P’s”:
- Product – Developing a product that meets consumer demands.
- Pricing – Establishing a price for the product that balances the fine line between profitability for the manufacturer and affordability for the consumer.
- Placement – Determining and implementing an efficient distribution chain for the product.
- Promotion – Creating a visible profile for the product, rendering it appealing to clientele.
MVMG Tidbit: According to Customer Relationship Management expert Michael Lowenstein, transactional marketing can lead to “passive, reactive and short-term customer relationships” because the approach does not value customer retention.
Though the main disadvantage of the relationship-based model being its relatively expensive approach, fostering ongoing interaction with buyers through Customer Relationship Management strategies typically improves Return On Investment (ROI) in the long run. What’s more, many marketing experts feel that the transactional marketing technique is becoming an almost antiquated practice.
The Merits of Relationship Marketing Over Transactional Marketing
Remember when we kicked off this blog and mentioned the phrase “Build the relationship, and the transactions will follow”? We’re going to mention it yet again, and touch on some elements we previously covered, as we begin our foray into explaining just how more effective relationship marketing is compared to its transactional brethren. To begin with, it must be understood that the relationship approach presents broader, longer-term goals as compared to transactional-based tactics. As its namesake implies, relationship marketing focuses on developing long-lasting relationships with clients for the succinct purpose of securing sales well into the future.
MVMG Fun Fact: Nagasimha Kanagi once said in an article that appeared in The Journal of Management and Marketing Research Role of Relationship Marketing that “relationships as a focus of marketing strategy aid in the understanding of consumer needs and wants, which is useful to implement profitable exchanges. With knowledge and application of relationship marketing, a businessperson is helped in achieving customer satisfaction, customer retention and customer acquisition.”
Still, to be effective in relationship marketing, you must find yourself infiltrating every level of contact with a current or prospective customer – from the sales staff to point-of-sale displays and even on to customer service representatives. There are a myriad of powerful relationship marketing strategies that we consider investments in the promise of long-term sales, and these include frequent buyer incentives, referral programs, blogs, newsletters, social media, media and community relations, customer service training and branding.
MVMG Quick Quote: “The aim of marketing is to know and understand the customer so well that the product or service fits him or her…and sells itself.”
– Peter F. Drucker, management expert
If you find that your own business’ growth has flatlined, you should be making a commitment to a marketing campaign – and we know marketing isn’t as easy as many make it out to be…it does indeed require both time and monetary investment to be effective. But trust us when we tell you that one of the most effective ways to market your services and brand is through the strong relationships you foster with clients. A greater client experience always equates to an impeccable reputation for your company, which in turn yields more of the right kind of clients to your doorstep.
Five Relationship Marketing Strategies That Work
Incredibly, we have met plenty of business owners who are fearful of, or don’t know to begin networking; we’re here to tell you that networking is nothing to be afraid of, and it can indeed have a tremendous effect on your business. From our perspective, the first step to building a network is to simply get involved in your community.
MVMG Quick Stat: A 2010 advisor survey by Senior Market Advisor revealed that 57-percent of wealth management advisors utilize community involvement to broaden their audience.
This can be accomplished by becoming a member of a community organization such as the Elks Lodge, Rotary Club or your local Chamber of Commerce, where it’s easy to meet and interact with a diverse range of people – and prospective clients! Our recommendation is to begin figuring out what you care for about your community, how you can possibly improve upon it and then locate a group that engages in these activities.
If you have particular hobbies, you can join a group based on these interests (which we like to call “affinity groups”). Such groups can be found running the proverbial gamut from knitting clubs and golf meet-ups to wine enthusiast groups and book lovers’ gatherings; all you have to do is search the Internet for what you’re most interested in and specify the city.
MVMG Fun Fact: Networking, while a long-term strategy that may take anywhere from six months to two years to yield results, will get you noticed if you’re active in your community and you engage in “good deeds.”
Any human being involved in any aspect of customer relations – that is, the service of clientele and/or consumers in some capacity – understands the utmost value contained within referrals. Indeed, word-of-mouth “advertising” has been a time-proven tactic supported by countless business owners over the decades, and continues even as we enter the futuristic-esque year of 2016. However, what most people don’t understand is that if referrals are not “institutionalized,” opportunities will be missed when considering the right introduction to the right person…
Let’s put it like this: A quick method to generate more referrals is to place an item on the agenda for every client meeting, which can be called a “Sounding Board.” As an example, let’s say you are the head of a CPA office…you can ask the client, “Can I act as a Sounding Board for friends or family members that need another opinion about where their financial status lie? It’s a service I provide my best clients.”
3. Client Events
Believe us, we know: The mere thought of hosting events for clients can make even the most seasoned of business professionals toss and turn at night. These events – running the gamut from seminars to client appreciation breakfasts and even family barbecues – are undeniably valuable, though, and can be easier to coordinate than you might imagine. One simple solution we have found to be highly successful is to find a sponsor for your event, as many product sponsors can give “product-neutral” presentations on certain topics.
Not only do seminars such as these support your brand, they can attract family and friends of your clients…and while friends of clients may not show at first, trust us they will once your events reach “high quality” status. Consequently, even if clients don’t bring friends to events, they will ultimately deepen their relationship with your company, heightening the chances that they will refer someone to you.
4. High-Quality Websites
If there’s anything we understand forward and backward, it’s online marketing – and no matter what anyone else tells you, a well-designed website is ESSENTIAL for the modern-day business. Why? Because it’s a highly valuable extension of the brand name you have worked so diligently to create. Existing clients will visit your company’s website to track down quick information, while potential clients will scan your site, looking for reasons to call for an appointment, product question or service query. Presenting your company’s services and values in a clear, meaningful fashion is of primary importance – as one of your most powerful marketing tools, it shouldn’t be handed off to some college student in a dorm room to work on between classes.
If your business’ website comes off as being pedestrian, dated or looking like it stepped off a generic template – i.e. it doesn’t effectively convey your brand, personality and modern capabilities – a prospect will likely look elsewhere for other competitors offering the same or similar services, products, etc.
5. Client Communication
Here’s an eye-opening fact you may not be aware of: Experts say the best companies communicate with its clients 63 times each year. Sound like a lot? In reality, it actually ISN’T – there are client communication websites and tools that exist such as Forefield and MarketingLibrary.net that can offer you weekly economic commentaries that can be forwarded to clients, with many of them that can be branded with your company logo and include a “quote of the week” or quirky riddle…something that will engage clients and cement their relationship with you. In so doing, some of your most prized clients may forward these emails to their own network, thus adding to your referral base.
At the end of the day, the bottom line is this: There are a myriad of opportunities to create lots of communication each year.
These aforementioned strategies are straightforward yet fundamental when growing a business, as well as for making the case for relationship marketing. You can be sure that if you embrace these concepts, you can indeed be wildly successful.
Always remember: Build the relationship, and the transactions will follow!
Questions? Comments? Be sure to leave them below!