I. What Is Relationship Marketing?
Relationship marketing is a business strategy that nurtures long-term personal connections between your brand and your customers, increasing customer engagement, satisfaction, and retention.
With increasingly expensive customer acquisition costs, customer retention is one of the most critical factors in a company’s success. Studies have shown that a 5% increase in customer retention efforts can result in a 25-95% increase in company revenues.
Relationship marketing is a force multiplier. How? Strong relationships deepen the trust and devotion customers have for your brand. Engaging with your customers through ongoing, quality conversations and interactions creates bonds that competitors struggle to break. The result: repeat purchases that increase your CLV (customer lifetime value) exponentially and even generate new leads.
According to Hubspot, there are three assumptions you should make about recurring revenue:
- There is a finite number of customers your business can acquire
- The best revenue is recurring revenue
- Growth requires new customers and recurring revenue
The best way to address and capitalize on these three assumptions is by investing in relationship marketing.
II. Relationship Marketing Stages
Four primary stages comprise relationship marketing. Each stage builds on the previous one, creating a solid foundation for long-term success.
- Attracting Customers: Capture customers’ attention using various methods, including traditional advertising, ads, email marketing, and social media, to generate curiosity and interest in your business.
- Converting Customers: Convincing customers to take the next step requires ensuring that your product or service solves their problem. Customers must have enough trust in your brand and messaging that they are willing to take a chance on you.
- Retaining Customers: It’s more difficult to attract a new customer than keep an existing one. Retaining customers means supporting them along their buying journey and beyond. Providing excellent customer service goes a long way in making customers feel valued. 96% of customers say customer service is an essential factor in their choice of loyalty to a brand.
- Delighting Customers: Express appreciation for your customers by offering loyalty discounts, recommending complementary products they might like, or free shipping. Try reaching out when they least expect it – a surprise birthday discount often makes a customer feel more “seen” than traditional seasonal offers.
Bonus! Creating Brand Ambassadors: The grand slam of relationship marketing happens when customers are not only loyal to you but advocate for you. Word of mouth is invaluable in creating trust. Brand advocates share first-person experiences that inspire others to buy and become customers themselves.
III. Benefits of Relationship Marketing
Higher Customer Retention
Relationship marketing creates happy, loyal customers who buy more and more often. Studies show that customers who are fully engaged spend 23% more than unengaged customers.
Return on investment is a key performance indicator (KPI) that often determines a marketing strategy's success or failure. Increased retention drives customer acquisition costs down, making more marketing dollars available for long-term relationship marketing efforts.
Enhanced Brand Reputation
Happy customers are your most important asset, not only in repeat business but in word-of-mouth advertising. Satisfied customers often use social media platforms to talk about their experience with companies, both good and bad. Inspiring your one-time customers to sing your praises enhances your brand reputation, leading to new customers and repeat sales.
II. 5 Relationship Marketing Examples
Who’s doing relationship marketing right? Here are five businesses that are hitting it out of the park.
Patagonia has created a brand identity that solidifies its standing as an eco-friendly and environmentally conscious business. Their brand appeals to consumers who value using recycled and organic materials. They have proven it by encouraging customers to purchase used Patagonia clothing rather than new. They have also offered customers clothing repairs from a mobile repair shop, mending broken zippers and tears and offering DIY solutions -- without charge.
Like-minded consumers believe that Patagonia stands for a higher purpose than turning a profit and are inspired to support a brand that concretely demonstrates their values.
Starbucks helped make getting a cup of coffee what it is today. Starbucks is as much a cultural icon as it is a business, showcasing its ubiquitous cups in social media posts on Instagram, Facebook, Twitter, and Pinterest. Starbucks’ tagline on Pinterest reads, “Inspiring and nurturing the human spirit – one person, one cup, and one neighborhood at a time.”
Starbucks sends frequent emails to their customers, keeping them informed of offers and product launches. They also share customer content on their social channels. Their tight-knit community often lines up before sunrise for the chance of obtaining their latest holiday-themed cup or specialty beverage.
General Electric (GE) is a multinational conglomerate whose tagline is “building a world that works.” GE has set itself apart from traditional energy companies by positioning itself as an innovator, thought leader, and sustainable technology company. GE has focused on employee participation and compelling storytelling to craft an identity as a global content marketer.
Their GE Reports website is an excellent example of content marketing, including podcasts, articles, videos, and infographics that help build strong customer relationships. They achieve their goal of informing and educating their shareholders and the public about relevant topics through curated content for segmented markets.
American Express (commonly known as AmEx) has successfully mastered the customer journey. Its strategic marketing approach encompasses account applications, onboarding, engagement, cross-selling, and referrals, making it one of the most successful credit card businesses today.
Their account opening process is customer-friendly and straightforward, taking only 30 seconds to complete. New customers receive bonuses via direct mail, including discounts and travel perks. Their multichannel "Share the Love" referral program (promoted online, on social media, and via email marketing) is strong, granting the referring party 15,000 bonus points.
In an attempt to capture the elusive millennial market, T-Mobile began offering consumers mobile service without contracts. This approach (unorthodox for telecom carriers) proved wildly successful, improving customer satisfaction, engagement, and referral business.
T-Mobile provided weekly thank-you gifts and customer rewards to participants. They focused on their mobile app, offering reward redemption opportunities and targeted offers that captured customers’ attention and enhanced engagement. According to Nielsen, T-Mobile went from No. 4 to No. 1 in service satisfaction as a result.
III. How to Get Started With Relationship Marketing
Ready to get started in relationship marketing? CM.com’s Mobile Marketing Cloud enables you to reach your customers on their favorite mobile channels, sending hyper-personalized messages that resonate and spark engagement.
Mobile Marketing Cloud is an omnichannel marketing platform built specifically for B2C marketers. It provides the user-friendly tools you need to create smart audience segments and dynamic workflows for hyper-personalized mobile campaigns, kick-starting your relationship marketing strategy.
Request a demo of the Mobile Marketing Cloud today!