Key takeaways
- Relationship marketing is a marketing strategy that emphasizes customer retention, satisfaction, and lifetime value.
- Examples of relationship marketing are multichannel marketing, holiday greetings, personalized communications, and more.
- Addressing customer feedback, making customer service easier, and using loyalty programs are all strategies for relationship marketing.
What is relationship marketing, and why is it so important? Relationship marketing is a marketing strategy that emphasizes customer retention, satisfaction, and lifetime value.
Imagine you’ve worked hard for new customers. How do you keep them happy and wanting to come back? And how do you get them to tell all their friends about you? Relationship marketing, in a nutshell, is building the relationship between you and the customer. Here’s how to apply relationship marketing to strengthen your own business.
What is relationship marketing?
Relationship marketing is marketing designed to foster customer loyalty, interaction, and long-term customer engagement.
Instead of focusing on short-term goals like customer acquisition and individual sales, relationship marketing aims at developing strong emotional connections between customers and a brand.
Relationship marketing achieves this by providing them with information directly suited to their needs and interests, and by promoting open communication.
Why is relationship marketing vital?
For your business to succeed, you’ll need to foster emotional connections with your customers, both new and old.
Imagine if you stopped getting repeat customers, or if the customers who did come back never shared you with friends. You’d be stuck constantly fighting to get people to remember you.
Relationship marketing works because the connections it builds encourage customer loyalty and foster word-of-mouth sharing.
These statistics further prove the power of relationship marketing.
- Fully engaged customers bring in 37% higher revenue and sales than actively disengaged customers. They also spend over 23% more, on average.
- Increasing customer retention rates by just 5% increases profits by 25%.
- Meanwhile, it’s 5–25 times more expensive to gain a new customer than retain an existing one.
- 20% of your current customers will account for 80% of your company’s future revenue.
Advantages of a relationship marketing strategy
Relationship marketing powerfully creates value, markets to the customers you’ve already won over, and encourages customer engagement. Let’s break down these advantages of relationship marketing strategies in detail.
Creates value
With relationship marketing, your goal is not to lower pricing structures but to create valued customers based on experience. And this strategy works. According to Emplify, 61% of consumers will pay at least 5% more if they know they’ll get a good customer experience.
Markets to current customers and fosters engagement
Why should you prioritize your existing customers’ experience?
Whether your business offers a one-time purchase or subscription service, Zendesk claims that 39% of consumers avoid vendors for over two years after having a negative experience. This emphasizes the importance of creating a lasting, positive impression with your customer experience.
Successfully engaged customers represent an average 23% premium in share of wallet, profitability, revenue, and relationship growth compared to average customers, according to Gallup. It takes a lot more to engage a customer, but taking the time and effort to create engaged customers ends up paying off the most.
Engaged customers are:
- 5 times as likely to repurchase and create strong customer lifetime value (CLV)
- 5 times as likely to forgive negative experiences
- 4 times as likely to refer friends and family to a business
- 7 times as likely to try a new offering
Relationship marketing helps your customers succeed, creates an excellent opportunity for receiving feedback or reviews, and gives you a competitive advantage.
Understanding the different levels of relationship marketing can help you identify where your business currently exists and what you need to do to raise it to the next level.
Getting in the relationship marketing mindset
To shift your company’s strategies and priorities to building relationships, it’s important to start by cultivating the right mindset.
Mindset idea 1: Step into the customer’s shoes
Your business might think it knows almost everything about your product or services, but you don’t always know how your customers feel. Viewing things from the customer’s perspective can help you get a better understanding of your business.
A simple way to do this is pretending to be the customer yourself and imagining you are unfamiliar with the product. Think of how you would react if someone messed up your order or if a service you bought didn’t turn out as planned. Use this logic to help you sympathize with the customer, and then provide solutions. In the majority of cases, adopting this customer-centric strategy will end up with a better product and approach to the market.
Mindset idea 2: Create customer situation checklists
You may have a checklist, spiel, or procedure you use for each sale or point of contact with a customer. One good checklist to have in place is a customer incident checklist (see one of the checklists below). This can make handling a difficult customer situation much easier.
The incident checklist doesn’t have to be long. Here are a few items to add to your checklist:
- Listen first. Don’t react. Instead of disregarding the customer’s concerns, listen to them and address them. Understand why the customer is unhappy and what they want. Listening is the quickest way to turn around a negative customer experience.
- Restate their problem, and tell them you understand it. This doesn’t mean you have to agree. It simply lets customers know you hear what they are saying.
- Figure out where the problem originated. Let them know if your team made a mistake or if there is a product bug. If the problem was a misunderstanding on their end, figure out a solution to help them, rather than pointing fingers.
- Act timely and follow up. Respond to tickets, questions, and complaints promptly. No one likes waiting around for their issues to be resolved. Even after you solve the problem, ask right away if there is anything else you can do. It’s a good practice to also follow up after a few days to check if the issue has resolved.
(To make things easier, there are various checklist apps that can help get the work done, easily dividing your list based on needs and preferences.)
Mindset idea 3: Imagine you only have one channel
Imagine that you can no longer talk to new customers at all. All you have to grow and maintain your business is working with existing customers. No other channels are allowed.
What would you do to make sure your customers are not only satisfied, but share your product or service with their friends? Although purely hypothetical, this is a good way to make sure your existing customers are receiving the best care and support.
Examples of relationship marketing
A key to successful relationship marketing is a good customer experience. The easier you make it for customers to shop with you, the more likely they are to do so. This is where tracking customer information and interactions come into play. For example, tracking the merchandise a customer adds to cart can initiate a reminder email that they haven’t yet completed the sale.
It’s also helpful to store and organize customer information. When a customer has an account and is able to store their information, it reduces any friction in the checkout process – without having to input their personal details and shipping information, it can make future purchases a breeze.
Stored information also makes communication more tailored to the individual customer, as you know their preferences and past purchases. Of course, it’s best to also make it easy for customers to reach you for any questions or issues they have. In the end, two-way communication is key.
Here are some popular examples of relationship marketing:
- Birthday or holiday greetings
- Listening to customer requests and implementing change
- Allowing customers to create profiles (allowing them to do so with an existing social media account can help further streamline the process)
- Loyalty or referral rewards programs
- Multi-channel marketing (reach customers via email, social media, flyers, etc.)
- Personalized communications
- Making customer actions as easy as possible
Relationship marketing strategies and ideas
At its root, relationship marketing is about helping the customer and going above and beyond what they expect. Now that you’re familiar with the basics and a few examples of relationship marketing, let’s look to some relationship marketing strategies you can use.
1. Listen to customer requests and implement change
Your customers are the reason for your business’s success. Take the time to listen to their concerns, their needs, and what they think could be improved. This is often easier to do if your business uses messaging apps, like Drift or Intercom. These apps help keep and track messages as they come in, allowing you to view all the requests in one place and take it from there.
As consultant Alan Weiss says, “Ask your customers to be part of the solution and don’t view them as part of the problem.” Inviting customers to give feedback, and making it easy, helps them feel heard.
Thanks to social media, customer reactions and thoughts have the potential to spread quickly and make or break a business.
Starbucks offers a prime example of building relationships through feedback. The brand invites customers to share their ideas through the “My Starbucks Idea” initiative.
Customers are then allowed to vote for the best ideas and share their thoughts. Through this platform, Starbucks strengthens its relationship with its customers and listens and implements their ideas.
In order to turn your feedback procedure into one that creates relationships with your customers, you’ll need to prioritize your customer feedback loop. HubSpot has a great article on the A.C.A.F. customer feedback loop model.
Win back lost business by addressing concerns
Relationship marketing involves enriching other relationships you’ve built with new trust, credibility, and rapport. When a company builds on customer engagement, it can quickly address consumer concerns, complaints, and compliments, resulting in customer satisfaction.
2. Use social media, but focus where it matters
Using social media to communicate with the market and generate new leads is an effective form of relationship marketing. However, this should be done in moderation—avoid posting so much that it gets bothersome or overfills the audience’s feed or so little that it never becomes a relationship.
Many companies try to build their online presence using several social media and directory listings. While it does help to interact with consumers through their preferred channel, spreading yourself too thin doesn’t help.
Instead, take a more efficient approach. Understand where your customers spend most of their time, build a solid community on that channel, and increase engagement and outreach on that channel first.
A brand mention tool, like BuzzSumo or Mention, may be a good way to not miss out on any mentions from your customers or potential leads. With BuzzSumo, for example, you can easily identify which social media accounts are getting the most engagement and shares.
3. Be generous and opportunistic to save relationships
Avoiding bad interactions with customers is crucial to building a relationship, but human (and machine) errors can happen.
Properly resolving less than pleasant experiences is often the difference between saving a relationship and destroying it. Being opportunistic about when to give away things, including discounts and freebies, is one key to resolving these bumps.
You might even turn previously dissatisfied customers into advocates, who will rave about how you went above and beyond to solve their problem with your generosity.
4. Implement smart customer touch points
While you don’t want to overwhelm the customer, you should keep open communications about any updates or news, whether that’s through a news sign or board by the cash register, a monthly newsletter, or even employees personally sharing any new items while talking to customers.
5. Make tasks easy and convenient
Think through your current customer service process— are there any areas where you can go that extra step? A good rule of thumb is the easier it is for the customer, the better.
This is why online stores typically work so well. Many online stores keep customers’ credit cards and addresses on file, making it a relatively quick purchasing process. Some stores may even allow customers to log in using their existing social media, making it even easier to complete transactions.
Once a customer has purchased a product or account, there are some ways to guarantee a smooth start. Standard help resources, like a knowledge base, FAQ, or tutorial videos make it easy for a customer to learn about the product at their own pace. These resources are available to customers even out of office hours, so they can help themselves at any time or place.
6. Use loyalty and referral programs
According to Ann Handley of MarketingProfs, “We’re past the age where if you build it, they will come. You have to have some sort of promotional program in place.”
Though loyalty programs and referral programs are two different styles of marketing campaigns, they are both great forms of relationship marketing. One increases loyalty, while the other encourages loyal customers to spread the word and grow the customer base. Both types of programs, however, rely on good relationships.
When used hand-in-hand with relationship marketing, loyalty programs and referral programs can encourage customers to stay with your business and spread the word to others.
Loyalty rewards
Loyalty program points and cash rewards have become a significant element in relationship marketing. When customers get something out of their relationship with your company, they are likely to come back again, and even bring their friends and family with them.
According to Zinrelo, members of loyalty programs generate 12–18% more incremental revenue growth per year than nonmembers, and 84% of consumers say they’re more likely to stick with a brand that offers a loyalty program.
By appealing to human emotions, loyalty programs help create memorable experiences for your customers that keep them coming back.
Referral rewards
A great product, paired with amazing service and experience, increases the odds a customer will refer others to the business – and referrals pay dividends. According to a Nielsen study, 84% of consumers say the recommendation of a friend or family member is their most trusted source when making a purchase decision.
Oftentimes, a special referral discount or deal makes it even easier to retain clients and attract new ones. That’s where a referral program comes in. A referral program invites loyal customers to share their experience with others in exchange for attractive rewards or incentives.
7. Automate your interactions
Adding automation to your marketing strategy can be a big help. Not only does it save you time and effort, it can also take care of any routine tasks needed to keep your business at the top of mind.
Here are two areas where marketing automation tools can be of help:
- Email marketing: Email is a great opportunity for businesses to communicate and build a relationship with their customers, whether it’s a quick update or an invite to your next company webinar. Emails can also be automatically sent at a certain time or once a certain action is taken.
- Social media marketing: Social media accounts are an important place to connect with customers and build trust. You can answer questions, share news about your brand, and post your latest marketing campaign or promotion. While some interactions may need a direct response, most messages can be automated using software, like Buffer or Later. These tools allow you to plan a lineup of posts and stay in the sight of customers, without having to do much work at all.
8. Build a great customer service team
Providing excellent customer service, quickly resolving issues, and actively engaging with customers on social media are essential to forging good customer relationships. However, none of this can be done without a strong customer support team.
Your customer service team is out in the front lines, talking and engaging with customers. Encourage them to be customer-centric and give rewards for anyone who goes the extra mile to satisfy customer needs.
Customer service teams should be able to communicate what your company does, how you differ from the competition, who your target audience is, and what value you offer.
Beyond the customer service team, it’s best to have clear policies that guide all employees on how to interact with customers in both positive and negative situations. Conduct regular training for your entire team, and help the entire company participate in improving the overall customer service experience.
9. Collect and use detailed data about your customers
Customer data can be used to inform your marketing efforts. Have sales increased since the new product was launched? Does the new onboarding process help lessen customer confusion?
Customer data can help guide you to make any necessary changes that will benefit both your company and customers.
- Track customer info: Start with the customer’s name. Whether it’s remembering their name for in-person interactions or addressing them personally in your monthly newsletter, remembering a few top-level details indicate you care about your customers.
- Create messaging tailored to each customer: For other valuable customer information, such as their birthday or date they became a member, you can also send them a nice greeting or notification about the special day.
But what about customer privacy? Will collecting data lead to a loss in customers? If you’re collecting only the necessary data to create a better shopping experience, most customers won’t mind, especially if you’ve created a privacy policy that explains what you do with the information.
10. Resolve the most common issues and requests
Knowing what to say to your customers and when can be a daunting task, especially if you have a growing customer base or offer live chat support. To help provide a fast response, it’s a good idea to create a guide with procedures for each sales inquiry or situation. This can also be used as a training tool for new staff members to learn your company protocol.
Make sure to keep your guide up-to-date by having your customer support team add any frequently asked questions they come across. This is a good way to include any new features or reveal which areas customers tend to need more support.
11. Find more ways to be proactive with your feedback
There are many ways to invite customer feedback and build customer relationships. For instance, you could conduct online surveys or have a form for more immediate feedback. Interacting with customers immediately after they use your product or service will not only result in more detailed responses (when the experience is still fresh in mind), it can improve your overall net promoter score (NPS) and customer satisfaction rating.
12. Invest in a CRM or similar tool
Customer relationship management (CRM) software can make relationship marketing much easier. The right CRM tool can store relevant personal information, record customers purchase patterns, and keep track of all customer concerns or questions. Below are a few CRM tools and features they offer:
FullStory can help your support team understand exactly where customers are having issues on digital platforms, helping to increase revenue and retention.
Elev.io creates in-app helpers to guide and assist customers toward understanding exactly how to use each feature in your platform.
Tracking the success of relationship marketing
Relationships and data might not seem to get along. After all, relationship marketing is not about the number of sales closed, but how you close the sale.
Still, tracking and analyzing metrics behind your customer relationship is a vital aspect of identifying and creating an effective strategy.
The following metrics can help you track the success of your relationship marketing.
1. Customer lifetime value
Customer lifetime value (CLV) is the first metric to help you understand how satisfied your customers are and how strong your relationship with them is. Lifetime value is calculated using the following formula:
We cover CLV in more detail in our comprehensive customer retention article.
2. Conversion rate
Conversions are actions that move a lead or customer further down the purchasing funnel. While purchases are the main conversion most companies aim for, all the actions that lead up to a purchase also count as conversions.
Knowing the rates of key conversions throughout a customer’s journey – from their first purchase to years into their relationship with you – will help you determine stronger and weaker points of your relationship marketing.
Most customer support platforms provide specific features, such as tags and filters, to help track conversion metrics. For example, if a previously loyal customer decides to cancel their membership, you can better see and understand where in the customer’s journey the disconnect may have started to happen.
3. Strength of your network
Your network is not just about how many connections or followers you have on social media, or even the number of email subscribers. Rather, it’s about the quality of your network. How engaged are your followers?
When it comes down to it, social media engagement is more important than your quantitative follower growth. To create content that really engages your followers, start by measuring the demographics of those who engage. Look at age, location, and other details to find out who you connect with the most. Then, tailor your content to these segments.
Another area to focus on is your email list. How are your birthday promotion offers faring? Are you receiving feedback from your customer survey? Look for any areas that need improvement, and find ways to increase your email engagement or open and click rates.
4. Website metrics
Go deeper with your analytics, including the total number of page views, time spent per visit, bounce rate, and cross-sell and upsell ratios. Each of these metrics will reveal how your customers are reacting to your content.
5. Customer feedback metrics
If your customers are having great experiences and feel like they are being heard by your company, you are much more likely to create a lasting relationship. Here are some good ways to identify feedback metrics from your customers:
- Customer experience ratings, such as NPS, Customer Satisfaction Score (CSAT), and Customer Effort Score (CES)
- Social media monitoring
- Direct reviews and feedback from third-party review sites
6. Customer support team metrics
How well is your customer service team building relationships? These metrics can help you find out:
- Case resolution time in hours/minutes/seconds
- Customer callback numbers (How many calls or responses does it take to reach a solution?)
- Duration of the support call or chat
- Total complaints vs. complaint resolution
- Number of follow-ups
7. Other key sales metrics
Some other metrics that point to the strength of your relationship marketing are:
- Number of new and repeat customers
- Retention rate vs. churn rate
- Number of new customers by channel
- Revenue by channel
- Close and renewal rates
- Sales cycle duration (How long does a conversion take? How long do you take to close a sale?)
- Onboarding success
- New revenue sources
Relationship marketing is a must
Like all marketing, relationship marketing is meant to increase sales and expand awareness. But unlike more traditional types of marketing, relationship marketing is aimed at building connections with customers rather than increasing transactions and sales.
How do you plan on implementing a relationship strategy to keep current customers happy and loyal?
