One thing I’m always saying is that there are just three ways to grow your business. The first one is, get more customers. The second one is, get them to spend more and the final one is, get them to come back more often. This blog is about the final one, getting your customers / clients to come back more often.
This is why this blog is about relationship marketing and the benefits that relationship marketing brings over transactional based marketing.
While all marketing focuses on gaining customers and increasing profits, relationship marketing and transactional marketing take different views of the role of the customer / client. The transactional approach views the client solely as a vehicle for sales, while relationship marketing establishes a relationship with the person behind the sale.
Transactional marketing is focused on a single objective, and that is making a sale. Transactional marketing tactics include advertising and promotions exclusively geared towards immediate sales. The sale is a one time event. This is transactional marketing. The transactional marketing approach seeks to make the largest number of sales possible. An example of transactional marketing is a sales pitch on QVC. The clock is ticking, and the goal is to sell as many of the featured item as possible. The product manufacturers do not take the time to build relationships. Rather, they use incentives, discounts and buzzwords to make as many sales as they can during a short period.
Relationship marketing has broader, longer-term goals than transactional marketing. Relationship marketing focuses on developing long-lasting relationships with clients to secure sales well into the future i.e getting them to come back time and time again. Relationships as a focus of a marketing strategy aids in the understanding of consumer needs and wants, which is useful to implement profitable exchanges. Knowledge and application of relationship marketing helps in achieving customer satisfaction, customer retention, and customer acquisition. For relationship marketing to be most effective, it must infiltrate every level of contact with a current or potential customer, from the sales staff to point-of-sale displays to customer service representatives. Some relationship marketing strategies including branding, customer service training, community and media relations, social media, newsletters, blogs, referral programs and frequent buyer incentives. These marketing efforts are investments in the promise of long-term sales.
Long Term Value (LTV)
Understanding the long term value (LTV) of a customer /client relationship to your business is extremely powerful. Let’s say that you know that through your relationship based approach a client stays with you on average 2 years and in that time they spend £2400 (£100 per month) and your net profit on that spend is £1000. Knowing this you would happily spend £100 or more to acquire that customer. However if you have a transactional based approach you would never look at spending £100 to acquire £100 (i.e. 1 transaction). Thus the business owner who’s using a relationship based approach can easily out market another using a transactional approach.
So when was the last time you thought about the relationships you have with your customers / clients? Here’s four things you could do today to start building a relationship with your customers:-
- Introduce a loyalty scheme for regular clients/ customers. Customers love being rewarded for their loyalty, whether through exclusive offers or gaining access to the VIP area behind the digital velvet rope.
- Communicate on a regular basis, and not just about getting them to buy, Something of interest. A newsletter that covers things that your customers are interested in for example.
- Get personal. You need to see your customers as people not data points. You need to find a way to be personal with them and connect on a human level.
- Customization matters. An enormous benefit of getting to know your customers as individuals is being able to provide them personalised experiences. Bespoke service are in. People want products that seem original and cater to individual wants and needs.That’s why Converse and Nike provide customers with the ability to build their own shoes, including deciding the colors and patterns. Car manufacturers such as BMW let buyers craft their own driving machines.
Hopefully this blog has given you a few ideas to think about. Let’s start getting personal and building those relationships that will lead to a more successful business.