#The Daily Edition-What is Relationship Marketing? How does it influence Your Home Based Business
What is Relationship Marketing? How does it influence Your Home Based Business?
At first look, relationship marketing may appear to be just another fad with no practical use in the real world, but the truth is that it is anything from a fad.
It's a throwback to an era when commerce was conducted in a more traditional manner. In other words, instead of only exchanging money between faceless corporations, this marketing technique emphasizes the human element in business.
You'll learn the following things after reading these blog posts:
*Relationship marketing is exactly what it sounds like.
*What do you believe is the reason for its sudden rise to fame?
*How to make advantage of it to expand your client base.
*How to keep and gain the loyalty of customers.
*What is the connection between this and customer service, and how can relationship. marketing best cope with unsatisfied customers?
So, how about we get this party started?
Section 1: What & Why of Relationship Marketing?
There's a phrase for it these days: relationship marketing. It's a tactic that's growing in popularity with each passing year. It's the antithesis of transactional marketing, which ruled for the most of the twentieth century. Instead of a succession of one-time sales activities without attention to who the customer is, transactional (or traditional) marketing focuses on building a long-term relationship between a company and its customers.
This strategy is gaining popularity as a result of the Internet, which has made it easier than ever to remain in touch with clients and develop long-term relationships with them. Relationship marketing is being used by many companies as part of their entire strategy. As an illustration, below are two real-world examples of transactional versus relationship marketing.
An illustration of transactional marketing would be a transactional advertising campaign.
Due to the increasing popularity of energy drinks, MegaDrinks International decides to create their own product and enter the market. They did their homework and discovered that students are the biggest consumers of energy drinks, so they created a new product to appeal to them. However, despite the fact that their new drink is very similar to others on the market, even sharing the same basic formula, it has an interesting name (let's call it Learning Lava!) and an eye-catching appearance.
They do a lot of market research to figure out how much their new drink should cost. To offer it to thirsty and exhausted students, agreements are formed with stores across the country. Finally, a major advertising effort across all platforms is launched to raise awareness about it. This company's new energy drink is a hit after a few months of testing. Because of the product's memorable name and appealing packaging, many customers prefer it over the other ten to fifteen comparable drinks on the shelf.
It's still doing well, but there are a few issues that have arisen overtime...
A full batch of the formula was recalled because of an issue with the mixing equipment, which resulted in an unpleasant odor coming from the cans when they were opened. A public relations expert is hired, and the CEO issues a statement stating that the situation has been resolved and will not occur again. They also bought off a few investigative journalists who had threatened to write negative stories about the business. Even yet, many former Learning Lava clients are unwilling to do business with the company again.
Aside from that, shareholders aren't overjoyed with the energy drink business, as profits are roughly flat year after year. Students no longer purchase Learning Lava energy drinks after they graduate. The market for their product isn't expanding, thus they're losing money. In the end, a foreign competitor has just developed a competing product called Education Energy at a significantly lower price.
This situation isn't easy to recover from.
If they wanted to make amends for the bad press generated by the odor event, they may consider lowering their costs even further or creating a fresh design—perhaps even renaming it. After debating it back and forth, they decided to just let it go.
Despite their success, their endeavor appears to be coming to an end. As a result of their experience with transactional marketing, they expected this outcome from the start. So, it's time to start again with a brand new idea and product.
Using relationship marketing as an example illustrates the concept.
MegaDrinks International makes the same decision as in Example 1 to begin marketing energy drinks. However, they approached it in a new way this time. They decided to stay in the energy drink market for the long term rather than seeing it as a one-off endeavor.. New, competing items won't drive them out of business in two years. As a result, they came up with the brand name SuperEnergy as an umbrella for their energy drink goods (tm).
This first energy drink will be targeted at college students, but the long-term goal is to build a customer base that stays with them for life. Students who complete their studies will go from Learning Lava to SuperEnergy (tm) Job Jolt.
When they reach retirement age, they'll switch to Senior Speed.
These items will be slightly more expensive than their counterparts. In order to avoid being undercut by a competitor with lower labor and fewer regulation, MegaDrinks has decided not to compete on price. Now let's talk about marketing. Most of their marketing is done through word-of-mouth and web virality rather than traditional advertising. Loyalty programs are implemented to encourage repeat purchases, and contests with large cash rewards are held on a regular basis. They're big on Twitter, and they reply to client concerns and questions immediately, seriously, and even humorously/wittyly.
One teaches the best study strategies, and the other is a companion book for young people entering the industry. They even put up a handful of free, helpful how-to guides. These guides contain just high-quality information; there is no branding or advertising to distract the reader. However, obtaining a copy necessitates providing your e-mail address on the SuperEnergy website in order to receive it. Once in a while, they'll send these subscribers e-mails with a mix of light, entertaining entertainment and cheap deals/coupons. These emails have a high open rate since they are quick to read and extremely helpful. Then, just like in MegaDrinks' transactional marketing parallel universe, something happens at the factory. Large quantities of the stench-filled product are sent out, endangering the venture as a whole. However, they approached it differently this time. Everyone who has purchased one of these foul-smelling drinks can mail it in for a free 12-pack in return, so they use all of their avenues of communication to spread the word.
For their trouble, they'll be given not one, but two free t-shirts, each with a clever pun on the occurrence. As opposed to trying to keep their blunder a secret, they decided to come clean about it. So much so that the company's CEO even films a televised apology on his mobile phone and posts it for a month straight on the company web site's front page! Despite the bad odor issue, MegaDrinks International's SuperEnergy brand grows wonderfully after the first year's results are in. The company has regained the trust of its customers. When compared to pure transactional marketing, they aren't producing as much money right away, but analysts believe they will continue to grow over time as more people become familiar with the brand (and then introduce their friends to it).
New rival products come and go, but sales of SuperEnergy stay steady.
Many consumers just prefer their brand's products to those of competitors, even if the latter charge a somewhat higher price. Somehow, the SuperEnergy brand just resonates with them more than other companies for reasons they don't fully understand.
Relationship marketing's advantages
There are numerous benefits to using relationship marketing, as you can see from the examples above: You'll build a devoted fanbase that won't touch anything else. Your items are highly regarded by customers, who tell their family and friends about them. Pricing becomes less crucial as brand loyalty increases, so you can charge much more.
Many clients will follow you if you enter a new market with comparable demography. Spending less on large-scale advertising initiatives and acquiring new customers has the power to change one's state of mind. The ability to convert dissatisfied consumers into ardent supporters by providing excellent customer service.
More to the story...