Relationship marketing

Traditionally, the marketing of products was viewed through a transactional model.  The transactional model of marketing:

  • was focused on a single sale;
  • looked to the short-term;
  • Had little regard for customer retention;
  • required limited customer commitment;
  • required only moderate customer contact;
  • saw product quality as a responsibility of the production department alone.

Over the last couple of decades however, this view of product marketing has changed and a model based on developing relationships between an organisation and its customers has developed.  Modern relationship marketing:

  • Is focused on customer retention and loyalty;
  • emphasises the product benefits to target customer groups
  • Looks to the long-term e.g. the acceptance of higher short-term costs to produce higher profits in the long-term;
  • requires the development of high quality tailored services
  • requires high levels of customer contact; the information gathered from such is used to build the relationship further.
  • Product and service quality is the responsibility of everyone in the organisation.

Relationship building is crucial in sectors such as financial services and information technology but increasingly it is also seen in consumer product markets.

If you are looking to develop a relationship marketing strategy, it is crucial that you segment the market place and determine the customer segments you wish to attract.  You must analyse your current customers and what types of relationship they have with your company.  You must also determine what type of relationship you want them to have with your company.

Often you will find a gap between the type of relationship your customers have with your organisation and the relationship you want them to have.  You need a strategy which closes that gap.  This requires the development of benefits designed to meet customer needs and the development of communications which modify consumer behaviour.

Piercy (1999) categorised consumers into four categories determined by their relationships with an organisation:

  1. Relationship Seekers – These are customers seeking to have a long-term and close relationship with your firm
  2. Relationship Exploiters – These consumers will gorge on the benefits of a relationship but will show no loyalty and move on when they feel like it.
  3. Loyal Buyers – These are regular loyal customers but they do not want a close relationship with your firm
  4. Arms-length transactional buyers – These are consumers who avoid a relationship with your firm but will buy on the basis of price, technical specifications or on industry innovations.

Investing relationship marketing effort on exploiters and transactional buyers is a waste of your time and resources.  Piercy suggests that relationship building showed be focused on seekers.

Piercy’s model makes it necessary for a firm to develop four different marketing strategies for each relationship group. Key customer accounts are likely to come from relationship seekers and loyal buyers.  In some firms, such as Ugg and Apple, the relationship marketing model have been taken to its extreme with the development of brand communities.

Remember the aim of relationship marketing is to develop long-term loyalty amongst consumers so as to stimulate profit and growth.  A prime method of developing loyalty is to focus on customer satisfaction.  Customer satisfaction is developed by high quality service provision and value. Service value is developed through the employment of high quality, loyal and productive staff.  High quality support staff allow other employees to deliver quality products to consumers.