Learn why it is now an era of Business Relationship Marketing
‘Build the relationship and the transactions will follow.’ You don’t have to be a mastermind to know it, as we all doing business know how tricky and edgy it can be to maintain invaluable relationships.
Business Relationship Marketing is about forming long-term relationships with customers. It focuses to promote customer loyalty by providing worthy products and services. Relationship in business is very important not only because it invites referrals, but a solid relationship strategy can build a platform to apply adequate action to the business and make value propositions clear, simple and connect to customers’ needs, emotionally.
According to business authors Emmett C. Murphy and Mark A. Murphy, acquiring a new customer can cost five times as much as retaining an existing customer. Bringing forth new customers, serving them their demanded taste and then to continue a subsequent relationship cannot be as easy as is expected by the business houses. It can be one of the most difficult and expensive task for any business.
Yes, it is true that all customers are important for the business and they all should be treated with respect but having said that business does not grow only via respect, profit is important for its functioning. Hence, segmentation of customers becomes very essential. The companies must recognize that not all customers are equally profitable and that they must develop/design strategies to enhance the profitability of those customers they seek to target. Making continued relationship with such customers becomes equally important for the business.
Researchers and management consultants found that retained customers are more profitable than new customers for the following reasons:
- The cost of acquiring new customers can be substantial.
- A higher retention rate implies that fewer customers need to be acquired which is more cost effective
- Established loyal customers tend to buy more
- Regular customers place frequent, consistent orders and, therefore, usually cost less to serve
- Satisfied customers often refer new customers at virtually no cost
- Satisfied customers are often willing to pay premium prices for a business they know and trust
Realizing the above mentioned profitability of relationship marketing, every business houses are required to take measured strategies for effective business relationship marketing.
For effective Business Relationship Marketing, a business should be able to:
- Understand the economics of customer retention so that resources are appropriately allocated between the two tasks of retaining and attracting customers
- Highlight the critical role of internal marketing in achieving external marketing success
- Ensure that marketing is considered in a cross- functional context
- Switch from focus on market share (volume) to share from the wallet of the customer
As the old model of transactional marketing is inadequate to cope with today’s business environment, marketing has entered a new era of Business Relationship Marketing.
One of the strategic aims of the Relationship marketing is to retain the valuable customer which means that the company first has to take the decision on:
“Which customers are valuable and deserve to be retained and loved.”
Author: Bipin Devkota
Clock b Business Innovations