This blog post was written by our guest blogger Mark Dengler, President and Owner of Research & Marketing Strategies (RMS) in Baldwinsville, NY.
Relationship marketing is not about having a “buddy-buddy” relationship with your customers. Customers do not want that. Relationship marketing uses the event-driven tactics of customer retention marketing, but treats marketing as a process spanning over time rather than a single, unconnected event. By molding your marketing message and tactics to the lifecycle of the customer, the relationship marketing approach achieves very high customer satisfaction and is highly profitable.
The relationship marketing process is usually defined as a series of stages, and there are many different names given to these stages, depending on the marketing perspective and the type of business. For example, working from the relationship beginning to the end:
- Interaction – Communication – Valuation – Termination
- Awareness – Comparison – Transaction – Reinforcement – Advocacy
- Suspect – Prospect – Customer – Partner – Advocate – Former Customer
Using the relationship marketing approach, you customize programs for individual consumer segments and the stage of the process they are in as opposed to some forms of database marketing where everybody would get virtually the same promotions. The stage in the customer lifecycle determines the marketing approach used with the customer. A simple example of this would be sending new customers a “Welcome Kit,” which might have an incentive to make a second purchase. If 60 days pass and the customer has not made a second purchase, you would follow-up with an e-mailed discount. In this way, you are using customer behavior over time (the customer lifecycle) to trigger the marketing approach.
Let’s say a customer visits your location every day and then just stops. Something has happened. They are unhappy or they have found an alternative. Or, perhaps they’re just plain not interested anymore. This inaction on their part is a trigger telling you something has happened to change the way this customer thinks about you and your service. You should react to this and then look for feedback from the former customer. If you improve your service/product, let them know, and if the individual starts visiting again, the feedback has been given. The cycle is not complete until the next time the data indicates a change in behavior, and you need to react to the change with communication.
Let’s say this same customer makes a new purchase after reconnecting with you. This is an enormously important piece of data, because it indicates a very significant change in behavior. You have a new relationship now, a deeper one. You should react and look for customer feedback yet again. You send a welcome message, thank the customer for the trust they have displayed in your business, and provide a second purchase discount. Then you await feedback from the customer, in the form of a second purchase, or increased visits. Perhaps you get negative feedback, a return of the first purchase. React to this new feedback and repeat the process.
All of these marketing decisions were triggered by customer behavior and the actions of the customer as tracked by their activity (or lack there of activity). This activity tracked over time is the customer lifecycle. If you can track customer lifecycles, you can begin to predict them, and if you can predict them, you can target your marketing efforts at the most critical trigger points in the customer lifecycle. This approach eliminates a lot of wasted marketing spending, and creates very high return on investment (ROI) marketing campaigns. You spend less money overall, and the money you spend is much more effective.
All of the above is accomplished by using the data customers create through their interactions with you to build simple lifecycle models or rules to follow. The relationship marketing approach then uses this lifecycle model as a “timing blueprint” to follow, targeting the right customers at the right time with the most profitable offer. If you are interested in discussing CRM and how market research can optimize customer relationships, contact Mark at RMS by either emailing him at MarkD@RMSresults.com or by phone at 315-635-9802.