The term relationship marketing refers to a business selling strategy where stress is laid on building
long term relationships with customers, rather than on individual transactions. This is a long term process, because care
is taken to know and understand the customer’s needs and provide solutions for them.
Cultivating a relationship with the customers in business is an approach that is mainly concerned
with maintaining an affiliation with current customers rather than on acquiring new ones. This utilizes a wide range of marketing,
sales, communication, and customer care techniques and processes, to identify individual customer’s needs and create
a relationship between a company and these customers. The primary goal of relationship marketing is to build and maintain
a base of committed customers who are profitable for the organization.
The initial research was done by Leonard Berry at Texas A&M (Berry, L. 1982) and Jag Sheth at
Emory, both of whom were the initial users of the term "Relationship Marketing", and by marketing theorist Theodore Levitt
at Harvard (Levitt, T. 1983) who broadened the scope of marketing, from individual transactions to personalizing the consumer-producer
Central to this concept is the idea of ‘customer retention’, which concentrates on the
preservation of customer loyalty. According to Gordon, relationship marketing
involves the creation of new and mutual value between a supplier and individual customer. Novelty and mutuality deepen, extend
and prolong relationships, creating yet more opportunities for customer and supplier to benefit one another. Statistics of
industries have revealed that the cost of retaining an existing customer is only about 10% of the cost of acquiring a new
customer so it can often make economic sense to pay more attention to existing customers. (Wikipedia, the Free Encyclopedia)
A marketing website, jimnovo.com identifies two major factors that are to be kept in mind pursuing a relationship-marketing
strategy. The first is the ‘life cycle’ which determines the marketing approach used with the customer, and the
second is the ‘trigger’ which is dependant on customer behavior over time (the customer life cycle), to trigger
the marketing approach.
Relationship Marketing is dependant on the event-driven tactics of customer retention marketing, but treats marketing
as a process over time rather than single unconnected events.
By molding the marketing message and tactics to the life cycle of the customer, the Relationship Marketing approach achieves
very high customer satisfaction and is highly profitable.
Adrian Payne (1991) from Cranfield University
identifies six markets which he claims are central to relationship marketing. They are:
Relationship marketing stresses on what it calls internal
marketing. This refers to using marketing techniques within the organization itself. According to this theory, every employee,
team, or department in the company is simultaneously a supplier and a customer of services and products. Referral marketing is developing and implementing a marketing plan to stimulate referrals. This may take months,
but it ensures returns. Marketing to suppliers is aimed at ensuring a long-term
conflict-free relationship in which all parties understand each other's needs and exceed each other's expectations. Such a
strategy can reduce costs and improve quality.
Influence markets, on the other hand, involve a wide range of sub-markets including: government
regulators, standards bodies, lobbyists, stockholders, bankers, venture capitalists, financial analysts, stockbrokers, consumer
associations, environmental associations, and labour associations. These activities are typically carried out by the public
relations department, but relationship marketers feel that marketing to all six markets is the responsibility of everyone
in the organization. (Wikipedia, the Free Encyclopedia)
Berry, Leonard (1983). Relationship Marketing. American Marketing Association, Chicago,
146. ISBN 0877571619
Levitt, T. (1983) "After the sale is over", Harvard Business Review, Sept-Oct, 1983
Gordon, Ian (1999). Relationship Marketing: New Strategies, Techniques and Technologies to Win the
Customers You Want and Keep Them Forever. John Wiley and Sons Publishers, 336. ISBN
Wikipedia, the free enclycolopedia
Available from: www.wikipedia.org/wiki/ Relationship_marketing