What exactly is relationship marketing? Is it just another buzzword to add to our list of ever growing terms for how we justify new marketing efforts, marketing budget transition, and shift in strategy? According to Marketing-Jive – it did not make the 2010 top marketing buzzwords list. It was, however, on the top 100 buzzwords list for 2008. Is it a thing of the past? My belief, with the explosion of social media, is that relationship marketing is no longer the strategy, but rather the end goal.
Wikipedia defines relationship marketing as a mutually beneficial arrangement where both buyer and seller have an interest in providing a more satisfying exchange. In plain English, it goes beyond the goal of acquiring a new lead and turning that new lead into a customer. It refers to that long-term engagement between customer and brand that is more meaningful and creates a stronger bond between the two.
The core concept of this type of marketing is that it’s a mutually beneficial relationship, both from the perspective of the brand and its view of the customer, and from the customer’s perspective with regards to its loyalty to the brand. Another piece of the goal would be to build a relationship with a customer that their friends and family will envy, ultimately causing new relationships to be formed.
Let’s look at an example or two of mutually beneficial arrangements:
- American Eagle’s All Access Pass: Both the customer and the brand feel the reward of being a part of the relationship. Rewards cards are a great example where the relationship becomes mutually beneficial. I purchase a pair of jeans at American Eagle and swipe my All Access Pass. AE benefits not only from the sale, but in getting to know me as a customer better by understanding my purchase patterns. I, in return, get postcards and email discounts on future purchases. This becomes a mutually beneficial customer-brand relationship. I, as the customer, am far more likely to return to AE with my discounts and not only continue to purchase from them, but to tell my friends about the good rewards I receive.
- Macy’s: In my mind, Macy’s has one of the best examples of a mutually beneficial relationship through their in-store credit program. It seems like just about every month, they offer up discounts and coupons for their cardholders that are leaps and bounds above the already reduced pricing in the store. It gives the incentive to not only open a charge account with the brand, but to continue to use the card in order to receive the extra discounts. Macy’s wins in that the in-store card use is way up, and they can gather more analytics on their customers to deliver better campaigns, and the Macy’s customer feels like they are getting special treatment with the larger discounts for the continued patronage and a simple swipe of the card.
- Auto Dealerships: Now this one get’s a bit tricky, but I must say… Now-a-days it seems the auto dealerships all beat each other up with this deal and that deal, leaving the consumer entirely confused and anxious about the whole car buying experience. I actually had a mutually beneficial relationship with a car dealership for quite a few years. It’s not enough for the dealership to throw in free oil changes, because there is more to a relationship than that. Back in the day, there was a small Ford dealership called Ev Lewis Ford in Honeoye Falls, NY. This dealership made it their goal to have a personal relationship with every customer who walked through their doors. Our family had purchased several cars from this dealership and referred several folks to them as well. It was more than just the car buying experience that was positive, it was their service department, their involvement in the community, and so much more. I knew when I dropped my car off that it would be taken care of, and I would not be taken advantage of. Unfortunately, the dealership has since closed, as the namesake has since passed. I just wish there were more dealerships out there like that.
Relationship marketing is not just about giving your customers incentive to buy with you, it’s about making them WANT to buy with you, as if you are the only logical choice for them. It’s about that relationship with your customer that makes them want to Tweet about their most recent experience, and tell all their friends on Facebook about those fabulous pink shoes they found at a great price!
I would further suggest that when that relationship is formed, we marketers should fully leverage the information our customers provide, from demographic info to purchase history and whatever other analytics we can draw. This will show us which relationships are lasting and which are not, and perhaps lend some insight in to how we can build even better relationships with our customers that will continue to last. If we could use predictive modeling based on our existing customer relationships to profile the perfect customer segments, we could deliver specialized incentives to various relationship groups.
Marketers and brand owners do need to get out of the mind-set that the end result is a single purchase conversion. With social media being as heavily used as it is, we cannot afford to build bad relationships with our customers. Let’s make our good relationships even better, and hope that our customers become willing to share their good experiences with their social networks.
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