Meeting consumer needs on an ad hoc basis by offering them a product or service is not enough. To continue to grow and guarantee their sustainability, companies must establish a long-term relationship with their prospects and customers. Relationship marketing meets such an objective. Overview !
How to define relationship marketing?
In the 1980s, the demand economy marked its advent. Brands now place customer relations at the heart of their strategy. From transactional, marketing then becomes relational.
Definition
Relationship marketing brings together all the actions implemented by a company to establish and maintain a personalized relationship with its prospects and customers. It is not only intended to encourage purchase. Its first objective is to establish a quality relationship with its target by making its brand known as well as creating attachment and generating trust in it.
Based on a customer-centric approach, relationship marketing helps improve loyalty. Since the rise of the Internet, many means can be used: sending newsletters, publications on social networks, setting up sponsorship programs, etc.
What is the difference between relationship marketing and traditional marketing?
Traditional marketing is primarily transactional. Its aim is above all to provoke mass purchases. To do this, the same message is sent to large audiences through email campaigns, billboards, etc. Generating short-term sales, transactional marketing quickly shows its limits in a hypercompetitive context.
On the other hand, relationship marketing is oriented towards individualization. It is based on personalized actions which aim to engage the target and build their loyalty over the long term. Relationship marketing doesn’t stop when a prospect converts into a customer. He strives to transform him into a regular who will subsequently become an ambassador.
Why did relationship marketing develop?
Consumers no longer just want to buy a product or service. They want to learn more about brands, their history and their values. They also aspire to more human and more personal exchanges. Relationship marketing meets these needs.
While transactional marketing is one-directional, relationship marketing goes both ways. It favors a horizontal relationship, human to human. The approach is conversational, sincere and transparent.
Social media has completely changed the way consumers interact with brands. These channels favor the development of relationship marketing , because they facilitate direct communication with prospects and customers.
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What is relationship marketing used for? What are its objectives ?
Relationship marketing is used to build lasting relationships with customers. It has several objectives.
Lead nurturing: converting simple visitors into customers
A relationship is established from the first contact a prospect has with your company. This is the starting point of relationship marketing. The latter aims to develop this relationship throughout the purchasing journey and to gradually guide the potential customer towards conversion.
We’re talking about lead nurturing. This is an inbound marketing technique which consists of feeding prospects who are not yet ready to purchase with relevant and targeted content to convince them to take action. Lead nurturing can, for example, rely on sending automated emails using an emailing CRM to provide useful information on your products or services or demonstrate the expertise of your company. Either way, it helps strengthen your credibility and build trust in your brand.
The effectiveness of lead nurturing relies entirely on its alignment with the stages of the purchasing journey. After the acquisition phase, you should send the prospect content that presents your structure and your offer. As he progresses, his interest in a product or service may become clearer. You will then need to send them specific resources (case studies, white papers, explanatory videos, customer testimonials, etc.) to help them move forward in their decision-making.
Know and evaluate the prospect’s interest in your products and services
Relationship marketing also aims to score and classify prospects according to their level of interest in your products or services as well as their probability of conversion: this is lead scoring. To ensure the effectiveness of the rating system, it is essential to base it on relevant criteria such as the number of times a prospect visits your website, downloads of resources, participation in webinars, etc. It is also wise to take socio-demographic data into account.
Like lead nurturing, lead scoring must be adapted to the different stages of the purchasing journey. Prospects who have just integrated it can be evaluated based on their engagement and general interest. Those who are at a more advanced stage, for their part, can be rated on criteria linked to the purchasing decision.
Increase customer loyalty and lifecycle value (CLV)
Improving customer loyalty is one of the main objectives of relationship marketing . Concretely, the latter aims to establish an ongoing relationship with customers. This involves communicating with them regularly. Keep them informed of all the news from your structure. Don’t hesitate to collect their feedback either. This way, your brand will remain engraved in the minds of your customers. You will also create an emotional bond that will encourage them to remain loyal to you.
On the other hand, relationship marketing seeks to maximize customer lifetime value (CLV or Customer Lifetime Value). This metric refers to the profit generated by a customer throughout the duration of their relationship with your business. Relationship marketing optimizes it by encouraging repeat purchases. In practice, you will keep your customers engaged by staying in touch with them. They will therefore be more inclined to choose your brand when they want to buy. Note that relationship marketing also increases opportunities for cross-selling and upselling.
A better reputation, more customer satisfaction and an increased ROI
Improving your reputation is another goal of relationship marketing. This results from transparent communication with prospects and customers, but also from proactively managing their concerns and quickly resolving their problems. Remember that a good reputation is essential for acquiring new customers.
Furthermore, by emphasizing personalization, relationship marketing creates enjoyable experiences that increase satisfaction. However, satisfied customers are more likely to be loyal and more likely to recommend your brand to those around them.
In addition, relationship marketing aims to increase the return on investment (ROI) of your marketing actions. By enabling the establishment of lasting relationships, it helps reduce the costs of acquiring new customers. You should know that these are on average 5 to 10 times higher than the costs linked to loyalty. Additionally, loyal customers generate regular revenue through their repeat purchases, which contributes to the overall ROI.
Our advice for solid relationship marketing
It is not difficult to optimize your relationship marketing. Just follow several tips.
Segment your targets and set up an efficient sales funnel
Segmentation plays a major role in relationship marketing. It is in fact the basis of personalization. By dividing your audiences into different segments, you will be able to communicate in a more individualized way. You will be able to send them the right message at the right time given that their needs, behaviors and preferences have been precisely determined.
Segmentation will allow you to better understand your prospects and customers. You will then be able to show them through your interactions with them that these do not happen by chance. Your targets will definitely appreciate this approach. The result is better conversion and retention rates.
The strength of your relationship marketing also depends on the performance of your sales funnel. If it is well designed, it will allow you to effectively guide your prospects throughout the purchasing journey. Remember to analyze its different stages to identify their strengths and weaknesses. This will allow you to make the necessary adjustments. Furthermore, make sure to distribute content adapted to each stage: informative articles to maintain interest, customer testimonials to strengthen your credibility, demonstrations to encourage conversion.
Personalize your communications as much as possible
You must personalize your interactions with your prospects and customers as much as possible. Allowing them to feel privileged, individualized communications encourage them to make a purchase and increase their satisfaction. You can, among other things:
- Send your prospects and customers personalized emails with their first name;
- Offer your targets product recommendations based on their previous purchases;
- Publish blog posts or documentation that address the concerns of people who visit your website;
- Provide tailor-made advice to each buyer;
- Set up customer service that will have access to the history of customer interactions with your company and will thus offer them personalized support.
Also remember to adapt your tone according to your audiences. Depending on the case, this can be casual, professional, reassuring, etc.
Determine your business and customer service values
Your company values play a key role in building a long-term relationship with your customers. Determine the main principles that guide you on a daily basis and make them known on your website, in marketing campaigns, direct messages, etc. Also implement actions that translate your values into reality. For example, if sustainability is particularly important to you, adopt environmentally friendly practices and communicate your initiative. Additionally, make sure that the behaviors of your various colleagues and all the decisions you make reflect these values.
On the other hand, determine the values that guide your customer service (responsiveness, empathy, courtesy, honesty, etc.). Then develop a charter that summarizes these different principles and ensure that it is made available to each agent in your customer service. It is also wise to provide training to your teams to teach them how to apply these values when interacting with customers.
Measure the effectiveness of your relationship marketing strategy
It is essential to measure the effectiveness of your relationship marketing strategy . This will allow you to understand to what extent it impacts your relationships with your customers and to identify areas for improvement. The following key performance indicators (KPIs) are particularly interesting to monitor:
- The customer loyalty rate: This indicator refers to the percentage of people who remain customers. A high retention rate is a sign of a strong customer relationship;
- Customer retention rate: This KPI refers to the proportion of customers you managed to retain over a given period. It demonstrates the relevance of your relational efforts;
- The email opening rate: Referring to the number of emails that were actually opened by recipients, it allows you to evaluate the relevance and incentive nature of your messages;
- Click-through rate: It corresponds to the percentage of recipients who clicked on one or more links in an email. It reflects the engagement of prospects and customers with your content;
- Lead conversion rate: This is the percentage of leads that were converted into customers. This indicator measures the effectiveness of your sales process;
- Customer lifetime value: This KPI calculates the profits made over the lifetime of a customer. It allows you to estimate the long-term profitability of your relationships with your customers;
- Net Promoter Score (NPS): This KPI gives an idea of the propensity of your customers to recommend your brand, your products or your services. It is a valuable indicator of customer satisfaction;
- The cart abandonment rate: It indicates the number of transactions that have not been completed by customers on an e-commerce site. A high cart abandonment rate suggests that improvements need to be made in the purchasing journey.
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