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Relationship Marketing: The Ultimate Guide

The only guide you'll ever need to understand relationship marketing. Check out these tips and examples, so you can be a relationship marketing pro.

Updated August 24, 2020

Contents

 

What is relationship marketing, and why is it so important? Relationship marketing is a marketing strategy that emphasizes customer retention, satisfaction, and customer lifetime value.

An easier way to think about it is this: Imagine you’ve worked hard for new customers. How do you keep them super happy, and wanting to come back? And how do you get them to tell all their friends about you? That’s relationship marketing in a nutshell. It’s building the relationship between you and the customer.

This post will cover everything you need to know to get started in relationship marketing – what relationship marketing is, why it’s so important, some real-life examples, relationship marketing strategies your business can use, and how to track the success of your relationship marketing.

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 so 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, imagine if the customers who did come back never shared you with friends. Well, you’d be stuck constantly fighting to get people to remember you.

Relationship marketing works because the connections it builds encourages customer loyalty and fosters word-of-mouth sharing. The key factors that make relationship marketing so important are:

  • Creates repeat customers by building engagement (think of it like built-in retargeting)
  • Encourages word-of-mouth sharing, which results in new customers
  • Slashes acquisition costs and increases the chances customers will refer friends

These statistics further prove the power of relationship marketing.

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 experiences. And this strategy works. As Gartner found, “When it comes to making a purchase, 64% of people find customer experience more important than price.”

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. In other words, it’s vital to hit a home run and create a lasting impression with your customer experience.

Half of all customers say they are satisfied with a given brand, but only 38% of customers say they are engaged with one. 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. Let’s cover some ideas that will help your brand get into the relationship marketing 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. When you start viewing things from the customer’s perspective, you can get a better understanding of the situation at hand.

Sometimes you have to filter your personal knowledge of the product. A simple way to do this is pretending to be the customer yourself, and imagining you were unfamiliar with the product. This might make it easier for you to remember to treat them how you want to be treated.

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 them solutions. Not only will this result in a much better outcome, it can help you grow and build your relationship with that customer. 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 when they arise.

customer checklist to help work on your customer relationship

The incident checklist doesn’t have to be long. Here are a few items to add to your checklist.

  1. 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.
  2. 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.
  3. 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 point fingers. Even if the problem isn’t your fault, offer a solution that doesn’t point to the customer as being the problem. In all cases, it’s always good to apologize for any inconvenience.
  4. 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 a few days to check if the issue is resolved.

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
  • Allow 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
  • Make 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 your business is what it is. Take the time to listen to their concerns, their needs, and what they think could be improved. If enough people are pushing for one thing, perhaps it’s time to consider some changes. 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 Alan Weiss said, “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.

Uber provides an awesome example. Giving feedback to Uber drivers encourages the creation of a better experience for everyone who uses Uber and helps Uber work with quality drivers. The system is proactive, instant, as you can provide feedback as soon as you get out of the car.

Uber.com example of customer experience with their rating system of their drivers

Feedback creates innovative opportunities

Thanks to social media, customer reactions and thoughts spread quickly and can possibly make or break a business.

Instead of not being open to accepting feedback, you should welcome engagement and having conversations rather than complaints. This way, you have an enclosed feedback opportunity for your customers to share their experiences that isn’t lashing out on social media. Not having an outlet like this is just leaving the door open for chaos.

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.

Feedback creates innovative opportunities with Startbucks Idea submission example

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.

The A.C.A.F Customer Feedback Loop also known as Ask, Categorize, Act, Follow up,

Win back lost business by addressing concerns

Comments, customer ratings, and reviews influence purchasing decisions for better or for worse. A negative comment creates more than just a rocky relationship—it can deter potential customers from purchasing your product.

Fortunately, repairing a broken relationship is usually more efficient than trying to build one from scratch. You can win back past valuable clients by using what you know about them and what they know about you. When used effectively, this information will save you both time and money in restoring broken relationships with customers.

For example, if your customers come from a brand ambassador lead, you might reach out to the ambassador to see if you can mend the broken relationship.

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 too much that it gets bothersome or overfills the audience’s feed, or too 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.

Focus on where your customers are and create a plan on how you can increase engagement there. Whether it’s by finding brand ambassadors, sharing user-generated content, or replying to customers, you don’t need every social media platform – you just need interaction.

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 the 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.

Obviously, some businesses have more wiggle room to hand out freebies than others. But, all businesses should try their best and do what they can to make a customer’s bad experience, better. This doesn’t have to mean giving things away. But, by doing what you can, you’ll help to turn things around. In fact, you could 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. This can be done in a number of ways: a news sign or board by the cash register, a monthly newsletter, or you can even have employees personally share any new items while talking to customers.

It doesn’t have to be a very detailed update. In fact, it may be better to keep it short and sweet. Even a quick mention of any changes can be enough without taking up too much of your customer’s time.

For example, a promotional pitch for a coffee shop may go like this: “Hi Katy, I know you love your iced coffee with caramel, but we have a new pecan flavor for the fall, would you like to try it?”

Not only does this phrase already indicate great relationship marketing (the barista remembered Katy’s favorite order), it also makes her feel at home and opens the conversation to the new flavor.

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.

A study from Kelton showed 47% of consumers say receiving an exclusive offer made them feel excited, and 54% say it makes them feel rewarded. The same study revealed that 94% of Americans would take advantage of an exclusive offer if it was one the brand would not typically offer the general public.

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.

If you’d like to know more about how you can create a stellar referral program, feel free to contact us, schedule a demo with us, or start a free trial.

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: Between work and personal life, people spend a lot of time in their inbox. This reveals 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. The best part is once you’ve created your email message, they can be automatically sent at a certain time or once a certain action is taken.
  • Social media marketing: Social media accounts is 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.See how

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 go through these four points when they assist customers.

1. What do we do? Communicate the main benefit your product or service offers

2. How are we different? Separate your product from the crowd, whether you have one or 20 different competitors

3. Who is our target audience, and does our customer fit that audience? Use a CRM or similar software tool to discover more information about your customer. By looking at each customer individually, you can better guide them to successfully using your product or service.

4. What value do we offer? Show the customer what’s in it for them. Maybe it’s your personal one-on-one service, or a special feature only found on your platform. No matter what your unique value may be, emphasizing this in all relationship marketing efforts can be the key difference.

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 after 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. Some ways to help track customer data include:

  • 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 the right data, most customers won’t mind. According to a survey by digital company Episerver, 90% of consumers are fine with brands knowing more about them if it helps to deliver a more rewarding and satisfying shopping experience.

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 about your company protocol.

Make sure to keep your guide up-to-date by have 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.

Here are a few specific things you can learn from immediate customer feedback:

  • Ways to improve the installation or onboarding process
  • Suggestions for new products or features
  • Preferred pricing and payment options
  • Ways to simplify product or service usage
  • How to tailor offers to customer needs
  • The best means of providing consistent customer service

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.

Fullstory.com features regarding how to better provide customer support experience

Elev.io creates in-app helpers to guide and assist customers toward understanding exactly how to use each feature in your platform.

elev.io platform that helps customer when they need support or help

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.

How can you determine the strength of your relationship marketing 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:

average customer lifetime value equation

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 to up 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.

program tags

Intercome how to add tag feature for your customer support platform to better build customer relationship

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 your email subscribers. Rather, it’s about the quality of your network – how engaged are your your followers?

When it comes down to it, social media engagement is more important than your quantitative follower growth. To help 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 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 up-sell 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

helpscount.com happiness report to keep track of your customer experience and relationship

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. However, 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?

 

Watch referrals roll in automatically instead of hoping they magically appearFind out how
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