Relationship Marketing: Why It’s So Effective

Relationship marketing focuses on the connection a company has with its existing client base while building and improving on those relationships. This is a long-term process seeking stable solutions to earnings and return on investment. It is not a glitzy quick fix solution, so it doesn't always get the attention it deserves, but it is a collaborative strategy that truly works.

Less Expense, Higher Returns

If you were told that you could increase your sales without increasing your marketing budget, your interest would be piqued, would it not? This is precisely what relationship marketing does.

A typical way businesses operate is to assume that when a customer has purchased a product or service once, the customer will remain loyal. This can be a costly mistake, as it is easier and less expensive to build relationships with existing customers than it is to entice new consumers or to win back customers that have defected to your competition.

The following are a few key statistics to consider when determining where to put your marketing dollars:

• Repeat customers spend 33% more than new customers
• Referrals among repeat customers are 107% greater than referrals from non-customers
• It costs six times more to sell something to a prospect than to sell to an existing customer

Based on these statistics, you can see that your marketing budget will go further if it is used to build and nurture your existing customer relationships. This means treating your customers as though they are your strategic collaborative partners, rather than just numbers.

One Thing at a Time

It may seem a bit daunting to think you need to completely change your marketing strategy overnight, but it need not send you into a panic. You can choose to start slowly. Focus on just one of the above mentioned bullet points to test the efficiency of the strategy and you should notice a difference in your business right away.

For example, bullet point number one: Repeat customers spend 33% more than new customers. For example, you operate a website that sells specialty health and beauty supplies. There is a certain brand of sunscreen Sally found on holiday in France that isn't sold in the United States. She happens to find your website, which does sell this particular sunscreen, and she’s thrilled. She becomes a loyal customer and purchases the product. On a return trip to France, she finds a shampoo she loves that yet again, isn't available in the U.S. Happily, she finds the shampoo on your website, and in the meantime, purchases a few more products to try. She talks with her sister on the phone and recommends the shampoo from your website, which then results in more purchases for your company.

This is not an unlikely scenario. In Sally's story, she has taken the lead in investigating the website, but there are marketing strategies that would push a customer towards making that leap on their own. How about an email with a list of new products offering a discount? Or a few samples of new products when you ship orders? There are many ways to strategically build strong customer relationships, which will enhance the longevity of your business, as well as its bottom line.

Christian Fea is CEO of Synertegic, Inc. A Joint Venture Marketing
firm. He exemplifies how to profit from Joint Venture relationships by
creating profit centers with minimal risk and maximum profitability.
Join his JV Wealth e-zine at http://www.christianfea.com/joint-venture-wealth-report/?a=2