In relationship marketing, customer profile, buying patterns, and history of is assigned to one or more major customers to fulfill their needs and maintain the. Some 30 years ago Deutsch had what he refers to as "the ultimate relationship marketing experience" - peddling Bama-buster t-shirts to. Relationship Marketing has evolved as a marketing strategy as well as the designed to strike a cord amongst the readers that prompts one to apply for the job.
Airline industry and related travel service industries like hotels and car rental companies are following this type of incentive for a long time. Frequent flier programs provide financial incentives and rewards for travelers who choose their airline for long time. Hotels and car rental companies do the same. Long-distance telephone companies in the United States have engaged in a similar battle, trying to provide volume discounts and other price incentives to retain market share and build a loyal customer base.
Unfortunately, financial incentives do not generally provide long-term advantages to a firm since, unless combined with another relationship strategy, they don't serve to differentiate the firm for a long period.
Many travelers belong to several frequent flyer programs and don't hesitate to trade off among them. While price and other financial incentives are important to customers, they are generally not difficult for competitors to imitate, since the primary customized element of the marketing mix is price.
Other types of retention strategy are cross selling of services, like the tie up of airlines industry with hotel chains and credit card companies. Level 2- Social Bonds: This strategy bonds the customers to the firm through more than financial incentives.
While price is still assumed to be important, level 2 retention marketers build long term relationship through social and interpersonal as well as financial bonds. Customers are viewed as clients rather than mere customers. The clients are the individuals whose wants and needs the firm tries to understand and design the product accordingly.
Services are customised to fit individual needs, and the marketers find ways of sticking to the customers, thereby developing social bonds with them.
Social, interpersonal bonds are common among professional service providers e.
A dentist who takes a few minutes to review his patient's file before coming in to the exam room is able to jog his memory on personal facts about the patient occupation, family details, interests, dental health history. By bringing these personal details into the conversation, the dentist reveals his genuine interest in the patient as an individual and builds social bonds. Sometimes relationships are formed with the organization due to the social bonds that develop among customers rather than between customers and the provider of the service.
Over time the social relationships they have with other customers are important factors that keep them from switching to another organization. While social bonds alone may not tie the customer permanently to the firm, they are much more difficult for competitors to imitate than are price incentives.
In the absence of strong reasons to shift to another provider, interpersonal bonds can encourage customers to stay in a relationship. In combination with financial incentives, social-bonding strategies may be very effective.Transactional Marketing Vs. Relationship Marketing
Level 3 strategies involve more than social ties and financial incentives, although there are common elements of level 1 and 2 strategies encompassed within a customisation strategy and vice-versa. Two commonly used terms fit within the customization bonds approach: Mass customization and customer intimacy.
What is Relationship Marketing? definition and meaning - Business Jargons
Both of these strategies suggest that customer loyalty can be encouraged through intimate knowledge of individual customers, and through the development of one-to-one solution that fits the individual customers needs. Mass customisation has been defined as the use of flexible processes and organisational structures to produce varied and often individually customized products and services at the price of standardised mass-produced alternatives.
Mass customisation, however, does not mean providing customers with endless solutions or choices that only make them work harder for what they want; rather, it means providing them through little effort on their part with tailored services to fit their individual needs. Level 4- Structural Bonds: Level 4 strategies are the most difficult to imitate and involve structural as well as financial, social, and customization bonds between the customer and the firm. Structural bonds are created by providing services to the client that designed right into the service delivery systems.
Often structural bonds are created by providing customised services to the client that are technology based and serve to make the customer more productive.
Tools of Relationship Marketing: One of the most important and basic tools of relationship marketing is the customer database. For some organisations, the database is so huge and complex, it is often called as Marketing Warehouse or data warehouse.
However, smaller version of the database is known as data mart. In all these types of database efforts are made to save, as many data about the customer as available and to retrieve them on demand. For example, a world-renowned chain of hotels makes it a policy to treat each and every customer in customised manner. One such customisation is delivering the customer his or her favourite newspaper in the morning.
This information is stored in the central network of the chain and the housekeeping staff at any country can have access to the customer preferences database when the customer books himself or herself for that particular branch of the chain. The customer remains satisfied with such individual attention and will in all probability be loyal to the chain. It is observed that even with the fastest microprocessors available for data warehousing serious problems are encountered in retrieving the required information on time.
Data Mining is a development in Information Technology, through which required information is mined from the server. However, a detail discussion on this is beyond the scope of this material and hence no further discussion is offered.
OLAP online Data Processing is another tool through which retrieval and storage are made faster than ever before. This tool stores data in hypercube format specially designed to summary values of each of the transaction points across all of the various dimensions.
Source record are extracted from the relational database, aggregated and batch loaded into predefined dimensions on a dedicated multidimensional server. If any time a user needs to see a new dimension, it can be created with the next reload by the database administrator. This subject is also beyond the scope of this material. It must be mentioned here that these tools may not be seen in isolation and all these are used at the same time by the same programme.
This model is helpful in monitoring retention of a particular customer.
This method tries to rank a customer relative to all other customers in terms of Recency, Frequency and Monetary Value. Recency is how recently a customer has visited for a purchase, which according to Jim Novo is the most important indicator of future behaviour.
Frequency is the repeat rate, while monetary value means the volume of transaction in one go or over a period of time.
The RFM model suggests that a company should find out segments of customers on the basis of their recency, repeat rate and monetary value.
The propagators of this model insist that each company might have different strategies to deal with the RFM segments, but such segmentation is a must for relationship marketing. However, the one-to-one marketing approach is as old as business itself. For centuries, general store owners, for example, have always taken a one-to-one approach with their customers.
Ever since the birth of commerce, business owners have remembered details about each customer. They have subsequently used that knowledge to improve their service and boost sales. These individuals are similar in specific ways that are relevant to marketing.
For example, we may divide segments into spending habits, age, interests, job types, or gender. In other words, customer segmentation concentrates on customizing marketing components for customer groups rather than individual people. One-to-one marketing — tailoring our approach Marketing-Schools. We then tailor our marketing approach to each customer differently. How we approach them depends on the choices they made. Rather, we use it to maintain their attention, and ultimately, keep them buying from us.
In everyday life we are used to going back to the same supermarket, the same garage and bank with the same bank all the time. This happens because we have grown to accept an unspoken relationship that exists with these businesses for various reasons and we feel happy dealing with the same vendors day in and day out. Every human interaction and transaction is built around relationships.
Networks of relationships is the fundamental design of the human society. No wonder that this fundamental fact has been recognized and explored by all the businesses where in they have been building business strategies around the customer and strive to build a relationship with every Customer. Relationship Marketing therefore has evolved not only as a marketing strategy but has been the foundation on which the Companies build their core values and ethics. Relationship Marketing defines the framework for the Company to reach out as well as and orient themselves to the outside markets, to the end customer as well as to the business partners, the suppliers and vendors too.