Relationship marketing

Relationship marketing is an ongoing interaction between buyers and sellers in which sellers actively work to improve their understanding of buyers’ needs, and buyers become increasingly loyal to the sellers because their needs are being so well satisfied. Relationship marketing is based on the understanding that, in most market situations, it is infinitely easier and less expensive to maintain and cultivate relationships with existing customers than to find and build relationships with new customers. Marketers adopting relationship marketing strategies take a long-term perspective, emphasize retaining customers, emphasize customer service, engage customers frequently, are committed to their customers, attempt to build cooperation and trust, and commit everyone in the organization to providing quality products and services. Relationship marketing contrasts with transaction marketing, in which buyer-seller exchanges are characterized by limited communications and little or no ongoing relationship between the two parties. For example, when traveling, consumers often purchase products or services from street vendors whom they will likely never see or purchase from again. The relationship exists only as long as it takes to make the transaction. In some countries, even travelers’ exchanges can evolve into relationships. Often merchants will begin the selling process by serving copious amounts of tea and then have a customer return for fitting a dress or ring spending hours in the exchange process. These merchants have been practicing relationship marketing for centuries, though the practice is relatively new in the United States. Relationship marketing is based on promises that go beyond the obvious assurances customers expect. Any company that earns CUSTOMER LOYALTY probably does so by exceeding expectations, providing exceptional service or quality, or taking the time to get to know its customers. Relationship marketing involves bonding, empathy, reciprocity, and trust. Bonding means developing mutual interests or needs that tie customers and marketers together. Empathy is the ability to see situations from the perspective of the other person. Reciprocity is the giveand- take between buyers and sellers to address unforeseen circumstances and problems. Trust is the confidence buyers and sellers have in each other. There are three levels of trust in relationship marketing: financial, social, and structural. Financial relationships are based on incentives for the customer to continue to do business with the firm. Airline frequent-flyer programs are an example of a financial relationship. Social relationships are based on interactions at a social level. Newsletters and events engaging customers on a social level build relationships. Many universities recognize their alumni are their best sales representatives and cultivate those relationships through alumni organizations. Structural relationships are close partnerships between buyers and sellers. Previously in the United States, most business buyers had only a transactions-based relationship with their vendors. In the 1990s, businesses found trusted partners could be a valuable source of ideas and cost savings. Vendors now often have representatives working directly with their customers, reordering materials as needed without negotiations. Just-in-time delivery systems are an example of structural relationships between buyers and sellers. Relationship marketers often use the saying, “The only way I want to lose a customer is if they DOMA (Die Or Move Away)!” They also recognize the lifetime value of a customer, the revenues and intangible benefits, including customer referrals and feedback over the life of the relationship less the cost to acquire, market to, and service the customer. Even so, sometimes marketers will terminate a relationship, as will customers. A highly demanding, small-volume customer may not be valuable enough to build and sustain a relationship.