Relationship Marketing

It has long been recognized that gaining new customers particularly in mature market, is

a costly exercise.

Therefore it is only logical, that every effort be made to retain the existing customer base. In this millennium it is predicted that a new customer will emerge who will not be interested in brand or supplier loyalty.

This background illustrates the very important role that relationship marketing will play in the future in ensuring effectiveness of marketing efforts.

First a definition of relationship marketing is in order. It is a strengthening of relationships, with the customer from transaction to transaction, in order to develop a a value creating exchange process. This means that the business should move away from the traditional idea that marketing and selling is concerned with transactions, to being concerned with the management of a longer relationship with the customer.

The Lessons from Japanese Companies

1. They accept losses in the short term in order to ensure a dominant market share in the future so as to generate profit in the long term. Examples are many to reconfirm this fact. The Japanese automobile industry and the success achieved in the US and European markets is a prime example.
2. Once a Japanese company wins a customer, it works hard to build a relationship. For example one a Toyota customer always a Toyota customer - as the motto goes. This requires professional management of the customer relationship process.
3. They build long term relationship with their suppliers, in the interest of customers rather than the "cheapest price of the day" approach, widely adopted with suppliers. The supplier relationship is built on true partnership approach, which fosters mutual trust and respect - Your success is ours, our success is yours.

How to introduce relationship marketing to your organization

1. Identify your key customers
2. Study the needs and/or expectations of both parties (company and customer)
3. Identify what is required so that the company will  work closely with the customer.
4. Build the relationship marketing process as an integral process of the as an integral part of the company's marketing strategy.
5. Build the relationship with the identified customers, by first focusing on small winning situations.
6. Recognize the different types of customers have different expectations. This must be reflected in the relationship building process. Therefore in order to successfully introduce and successfully and sustain a relationship marketing program an organization must have a different outlook towards its customers and reflect the same in marketing strategies formulated and implemented.

Examples of relationship marketing programs

1. Airlines - frequent flyer schemes, through which passengers build entitlements for upgrades, preferential rates and services.
2. Loyalty cards - offered by supermarkets and departmental stores, to reward customers commitment and loyalty.
3. Corporate credit cards - offered by car rental companies and international chains of hotels.
4. Customer loyalty clubs - set up and managed by a wide array of organizations, in consumer and other marketing areas.]
5. Partnership agreements with suppliers.

Implications of relationship marketing for marketing planning.

In the event that a organization decides to introduce a program of relationship marketing, it should be aware of the implications to the marketing planning.

The key areas that the market planners will have to think long term and build up relationships with customers and a different approach will be required for the existing customers and more importantly future customers. When the marketing mix is formulated greater emphasis will have to be paid on personal selling on benefits as opposed to features, direct marketing as opposed to mass media, greater usage of pricing as a strategic marketing tool.

If relationship marketing is to succeed as a as an effective marketing strategy it should be fully supported by the top management more important it should be driven by a senior manager.

As stated earlier it should be considered to be a long term strategy and not a quick fix. Finally the internal customer i.e. the employees should not be neglected but should be trained and should understand this method of marketing.