Make the Most of Relationship Marketing

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Why do some businesses have close rates as high as 80% and others as low as 10%?

Why do some firms consistently grow and add new staff while others undergo cutbacks and lay workers
off?

The answer isn’t simple, but firms can begin to answer questions like these by looking at how they market to customers. Traditional marketing techniques
encourage companies to identify what customers want and provide that value in a “product”– without developing an on-going ‘give and take’
relationship with the customer. But many successful companies have made a paradigm
shift in how they market to customers–it’s called “Relationship Marketing.”

What is Relationship Marketing?

In its most basic form, Relationship Marketing expands on traditional marketing principles. It seeks to create new value for customers and then shares the value
between consumers and producers. It doesn’t create value for a one-time sale or just to “close” a deal. It’s an on-going process of identifying and creating value with customers and sharing the benefits over a life-long
relationship .

The 4 P’s

Most marketers develop marketing strategy using the four P’s as a foundation:

Product
Price
Promotion
Place

The 11 C’s

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However, many successful firms implementing a customer-focused approach to marketing
strategy are rethinking and expanding the historical definition of marketing.
The Relationship Marketer manages a new set of variables – the 11 C’s of marketing:

Customer
Define which customers to build relationships with, the objectives to
be achieved, and the strategies to use.

Categories
Define the scope of product and/or service to be offered to the customer.

Capabilities
Determine what competencies the firm requires in order to provide customers
the value they want.

Cost and Value
Build customer profitability by creating new value for customers.

Control of Processes
Manage contact with the customer efficiently, especially where
collection of cash is concerned.

Collaboration
Be proactive in working with key decision makers to develop strategies in
other areas of their business.

Customization
In order to create new value for the customer, aspects of product/service
development, production and/or delivery may need to be customized.

Communication
Make contact with the customer often, not just for promotion, but with meaningful
interactive communication.

Customer Measurements
Get regular and measurable feedback from the customer about the relationship
you have built.

Customer Care
Develop and manage a customer care process whereby you are providing the customer
with timely information, training, and feedback.

Chain
Actively manage the chain of relationships associated with the customer including
external stakeholders, suppliers, and distribution channels.

Make it a Reality

Companies today develop plans for most core functions of the business. At the bare minimum, there is likely a strategic plan and a marketing plan providing
objectives to be met over the next year and a template for getting there. Many companies talk about building relationships with customers, but few companies
put a plan in place for doing so. Without a plan, your good intentions are meaningless, and relationship building is at risk of falling to the bottom of the priority.

Firms committed to strategic relationship building can use the following eight-step process
for preparing a Relationship Marketing plan:

Step 1: Preplanning

Prepare a justification to management for the Relationship Marketing initiative
and commitment of resources necessary. Form a team and include a definition
of member roles, responsibilities, and project objectives.

Step 2: Customer Assessment
Assess current customer relationships including the value of customers to the business,
the strength of the relationship with the customer, and future business opportunities
with the customer.

Step 3: Benchmarking

Gauge where your business is versus the competition in terms of their position
with their customers, their Relationship Marketing strategies, and potential
to convert their customers into yours.

Step 4:Self-Assessment

Assess the current state of your business and whether Relationship Marketing
is an attainable goal at this time. The assessment should include an understanding
of your core business and consideration of barriers that may prevent successful
Relationship Marketing or require adaptation to make it possible. Barriers may
include:

Corporate culture
Strategies and leadership
Employee skill sets
Current technology and processes
State of current customer relationship

Step 5: Statement of Opportunity
A summary review of the self-assessment should answer critical questions including: Why
pursue Relationship Marketing? What kinds of relationships will be formed? What
risks are involved with the initiative?

Step 6: End Assessment

Assess where the company will be if it successfully implements Relationship
Marketing. Set measurable objectives for attainment, and gauge customer buy-in
for the vision and goals to be achieved.

Step 7: Business Plan

Present solid business reasons for moving forward. The presentation should address
issues like the size of the business opportunity, approach for achieving objectives,
and timing for return on investment.

Step 8: Implementation

Manage the scope of the project, barriers to adoption, and project management – you may not have all the skills in-house needed to get the job done. The overall
project may be too large for one team and may have to be broken down into smaller projects such as IT, customer service, and processes. Keep lines of communication
on progress open internally and with customers. Measure progress of key metrics, like customer retention rates. Finally, do an overall assessment of the impact
Relationship Marketing has on your business.

Putting Relationship Marketing in place forces companies to take a hard look at the strategies and process they use for getting and keeping customers. Although
the process can be slow, and sometimes painful, the payback is worth the effort.

A company that successfully implements Relationship Marketing as a core competency will develop a bond with customers that will be difficult for competitors to
break.

The result: improved close ratio and customer retention rates.

 

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