What is Relationship Based Marketing?

Written by: Kerry Butters | XEN

It’s no secret that in recent years the power balance between brand and customer has changed significantly and in fact it’s something that we’ve pointed out quite regularly at Xen.

Before the internet opened up the worldwide marketplace to the average person on the street, choices were limited when it came to acquiring the products or services one desired or needed.

Energy companies had monopolies on essential household utilities and, if you wanted to purchase a certain product or service, then you were normally limited to one or two outlets from which to choose.

Nowadays however, there are an almost unlimited range of options available to consumers. Energy and other utility companies constantly vie for the best offers and prices to tempt customers in and a simple search on one of the many price comparison websites out there will confirm this. Amazon and eBay (amongst others) make it simple for people to acquire almost any product they could possibly need, and for a good price, to boot. As consumers, we’re somewhat spoiled these days and that makes for a wonderfully competitive marketplace, oodles of choice and a good splash of innovation and exciting new products hitting the stores regularly.

So, in this world of almost unlimited choice, where brands no longer have the captive audience they once enjoyed, how do they foster loyalty?

How do they convince the modern and fickle consumer of 2016 to stick with them and not look elsewhere for what they desire?

The answer is through relationship marketing.

What is Relationship Marketing?

In the never ending struggle to acquire new customers and then convert them into repeat and regular ones, relationship marketing is the undeniable key.

As the name heavily implies, relationship marketing is the process of forming long-term and meaningful relationships with your customers. It’s not enough now to simply chase that one-off sale, you need instead to be thinking about how you keep that customer returning time and time again. And ideally, it would be nice if they would also spread the word and tell all of their friends just how good you and your products are.

Some evidence suggests that acquiring a new customer can cost a business up to five times as much as retaining an existing one. This means that, not only will forming relationships with customers benefit your business from a sales perspective, but also from one-off costs.

It may not surprise you to know that most customers do not abandon dealing with a particular company because they are dissatisfied with the product (after all, the products are often more or less the same regardless of the outlets from which they are purchased) but rather because they were less than impressed by the way they were treated.

Even if they have issues with the product, customers are more likely to return to you to solve it, if they had a good customer experience.

Customers want to feel valued.

They want to feel like they matter to you, beyond a one off sale. If you treat your customers in a manner that suggests to them that, once you have their money, you couldn’t care less about their experience, then I’m afraid that they are fairly unlikely to return in the future. That’s a potential repeat custom opportunity squandered and you are going to need to change things for the next one.

Or see your business struggle as your bad reputation increases – your choice.

The Three (Other) Sides of Relationship Marketing

We’ve already discussed how important the person-to-person aspect of relationship building is, but there are three other facets to this sort of marketing.

Technology allows a business to store and analyse massive swaths of information about its customers. This means that whether a business has a few hundred or millions of customers, it’s simple to quickly and easily craft personalised newsletters, deals and services for them.

In fact, according to research from Smart Insights , 61% of customers say that they are more likely to make a purchase from a company that delivers them customised content and that 90% of them find custom content useful. Perhaps more crucially, 78% of consumers believe that companies that do provide custom content are interested in building relationships with them, rather than simply chasing a sale.

Social media is a massive part of relationship marketing as it enables companies to efficiently and effectively engage with their customers on a personal level. Gone are the day when customers had to phone a company and perhaps be forced through a tedious and frustrating automated service (those that do still exist will soon find customers hanging up). Now they can chat and share their experiences with, not just the company itself, but also fellow customers.

This fosters a great sense of community around a brand, and when managed well can send a business’ relationship building through the roof.

The final facet of relationship marketing and maybe one that you may not have fully considered is the branding itself.

Customers want the brands that they invest in to say something about who they are and their beliefs, values and aspirations – the brand’s ‘personality’. If a customer feels that a brand fits with their own sense of identity, then they are far less likely to go over to the competition. This is how companies like PlayStation, Xbox, Apple etc. inspire (sometimes excessively fierce) loyalty in their fanbases.

However, care must be taken to maintain this loyalty as it is definitely not immune to shifting.

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A Relationship Building Success Story

Consultant and speaker Peter Shankman , thought nothing of sending out a humorous tweet to his favourite steakhouse when he was about to board a plane with an empty stomach.

The restaurant’s response however, was truly mind blowing.

Peter was about to board a plane from Tampa, Florida to Newark after a long day, during which he had failed to eat anything. A self-confessed lover of steak, he sent a tweet to his favourite steakhouse, Morton’s Steakhouse, asking if they could meet him at Newark Airport with a porterhouse when he landed.

Despite insisting that he was joking when he sent the tweet (along the lines of tweeting for the rain to stop), upon reaching his destination Peter was greeted with a gentleman in a tuxedo brandishing a Morton’s bag containing, not only the requested porterhouse steak, but also a serving of shrimp, potatoes, bread, napkins and cutlery.

Now there’s customer service – huh?

Now, Peter Shankman has a popular Twitter account with nearly 170k followers and the cynical amongst us may say that this would never have happened if a less popular person had made the request.

And we could very well be right.

However, to focus on this fact is to miss the point entirely. Peter Shankman had discussed at length on social media his affinity for steaks in general and Morton’s in particular. This means that someone at Morton’s (presumably at the corporate level, as something like this would need authorisation) had seen the tweet and in a little under three hours had arranged the whole thing – including the meal being prepared and then driven 24 miles from the nearest restaurant to the airport.

Here are some of the Twitter responses that Peter received after sharing the unbelievable news.

This is, of course an extreme example and nobody is suggesting that you should be prepared to regularly zoom about, furnishing customers with free products. However, a quick look at Morton’s Twitter page reveals that they continually engage with their customers.

They thank them for complimentary responses and they deal with any issues in a friendly a personable manner.

Social media, as we have mentioned in passing before, requires you to get social and the more that you interact with your followers on a personal level, the better response and loyalty you will receive.

Morton’s even sometimes share the Instagram pictures that customers have taken of their food. Helping to promote the customer’s page and themselves in one simple and appreciative move.

This just goes to show that, when a business is willing to throw profit and logistical concerns out of the window for a moment and put the customer in the spotlight, it can do absolute wonders for their reputation. I have little doubt that more than a few people visited a Morton’s restaurant within a short time of reading Peter’s story.

Crumbs, that story, plus the fact that I’ve just been browsing their Twitter page and all of the delicious looking pictures contained within, has certainly gotten my mouth watering and I’m seriously considering booking a flight to New York – right now.

Other examples of relationship marketing done right include:

Ikea , who undid a font change in their catalogue because their customers didn’t like it.

Direct Recruitment , who send out handwritten birthday cards to their clients.

Dell , who created a special faster store for corporate customers who buy in high numbers.

Vyvanse , who created an online portal where patients with ADHD could get support and assistance from both the company and fellow sufferers.

Building Relationships is the new PR

We hope that we have convinced you that relationship marketing is the way forward for your company.

Get on social media and start engaging with your customers. Be the company that cares; by making your customers feel valued and cared for above and beyond the money they spend with you.

Look for opportunities and grab hold of them with both hands. You never know, you may pull off a Morton’s and do something truly memorable that goes viral and cements your reputation for customer care.

However, relationship marketing is not really about grand statements like the Morton’s case. It is about small everyday gestures that show your customers how much they mean to you.

Never forget that your business would literally be nothing without them, so show them every day how much they mean to you. It’s all about focus – focus on relationships with the customers and the bottom line should sort itself out.

Be Sincere

Most of all, when creating relationships with customers, do take care to be sincere . It’s very easy for most of us to spot when a brand is being insincere and attempting to build relationships through scripts and training. Social media demands that its participants be social and if you spend any time at all managing social accounts then you will soon see how easy it is to start to recognise the same people pop up for a chat on certain days – these are also usually the same ones who faithfully retweet/share your blogs each week.

Of course, this means that you need to have a dedicated social manager or team who will be dealing with the same people all of the time. If you have a large brand – and therefore team – then try to work shift patterns into certain posting times – think time zones.

Consumers will become accustomed to dealing with the same people and will feel that they are forging relationships – almost friendships and this will allow them to feel that they have someone within the company to turn to if things go wrong.

And they should.

That’s what it’s all about in this new digital world that has made the world so much smaller.

But if you constantly shift employees about, and ensure that they can’t forge relationships. If you give your staff no power to make decisions in the event that things go wrong. If you insist that they stick to scripts that go something like “please contact customer service on 0800 blah, blah, blah,” then expect to fail.

Be transparent, be sincere and be there and your customers will love you for it.