Managing & Developing Relationship Marketing

There are clear synergies between Relationship Marketing and Social Media Marketing – together they can work together and complement one another across a variety of businesses and industries. However, there are clear advantages to applying them to the Services Industry where there are frequent opportunities for provider-purchaser interactions. For example, consider the face-to-face interactions experienced at a check-in counter in an airport. The quality of this interaction (or relationship) will often define the length of the transaction and perceived customer-satisfaction. Obviously, not all of these relationships have the potential of becoming long-term and businesses need to consider if Relationship Marketing is important for them.

Here are some points to consider to help determine if your business needs to pursue an active course in Relationship Marketing:

• There is a constant need for the product or service, perhaps entertainment or medical services.
• Your customers can choose from a vast array of possibilities e.g. picking a restaurant or a car-rental firm.
• The customer has a possibility to choose something entirely different but still get what he wants e.g. he might to choose to go by train instead of renting a car.

Development of strong relationships between customers and providers offers opportunities and benefits for both parties. There are some distinct benefits to service organisations: as relationships develop, customers often spend more, attributing this to the trust they have of the provider. Increased purchases leads to partnerships rather than classical purchaser-provider roles. This may in turn lead further to lower costs for both participants as perceived start-up expenses connected with finding new clients are higher than the amount of money needed to keep a customer. In keeping customers the notion of lifetime value is often used by companies producing physical products rather than services, but it works well for the services industries as well. In addition, by getting close to your customers you are developing sustainable competitive advantage in comparison to your competitors.

In Social Media Marketing, word of mouth cannot be overestimated; this is exactly the desired outcome of your Relationship Marketing plan. The obvious outcome of Relationship Marketing is higher profits. Studies performed in various businesses show a substantial increase of 25-65%, sometimes higher, when thought-through Relationship Marketing has been applied as a guiding line in sales organisations (Jobber & Fahy, 2008).

How then, is Relationship Marketing used? Two main ideas of how purchaser and provider are bonded together are offered by Berry and Parasuraman:

1. At first, the bond between purchaser and provider is mostly purely economic in nature. Discounts are offered for large quantities or frequent travellers accounts add value to future interactions for the customer. What the marketer must closely monitor here is the response of competitors. Will they follow suit and lower prices with a mass campaign?
2. If the marketer combines up-to-date competitor awareness and pursues to further integrate key-customers, they must realise that higher levels of bonding relies on much more than lower prices. Skilled Key-Account Managers construct bonds based on social interactions and encounters as much as he utilises financial incentives. The main idea is to turn the customer from a purchaser to a partner. To achieve this the marketer must find out how to offer specialised services, effective communication-channels, and an in-depth understanding of their client’s personal preferences.

To conclude, it might be argued that service quality is a most crucial aspect of Relationship Marketing. It largely means that the marketer must try to gain a close understanding of his customers in order to be able to boost customer satisfaction, to do this, he might use several Social Media Marketing tools and above all, the marketer must put large efforts in building relations with customers and find out how to match and exceed expectations.

Further Reading:
Ahmed, P.K and Mohammed, R. (2003) Internal Marketing: Issues and Challenges.
Berry, L.L and Parasuraman, A. (1991) Marketing Services.
Roberts, K., Varki, S. and Brodie, R. (2003) Measuring the Quality of Relationships in Consumer Services: An Empirical Study.

Sources:
Heraclous, L., Wirtz, J. and Johnston, R. (2004) Cost-effective Service Lessons from Singapore Airlines
Reichheld, F. and Sasser, W.E. (1990) Zero Defections: Qualities Comes to Services
Jobber, D. and Fahy, J. (2008) Services Marketing Management

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