We live in a society. We need the support of others and want to build a long term relation with different groups of the society. Without the help of others it is difficult to survive in the society. Tough competition is everywhere. In order to compete and achieve the success in any field, the warm cooperation of different groups or individuals is inevitable.
In this scenario, Relationship Marketing is one of the emerging concepts playing a vital role in the modern marketing. Relationship marketing is the process of building loyal customers and winning back the lost customers. It is also the strategy to develop a long term relationships with customers. Building a satisfied customer is a challenging task which may involve costs but satisfied and loyal customers generate revenue which is higher and lucrative than those costs.
Attracting customers is not important as the customers who made purchase may switch to competitors' brads at any time. Thus, it is most important to retain the customers by building a long term relationship with them. This can be only done through relationship marketing i.e. marketers may have to share responsibilities with the key parties in the market.
The process of customer building and retention is shown in the following diagram:
- Suspects: Most firms start with suspects that constitute of every one who has the possibility to buy the product or service.
- Prospects: Firms identify customer groups who are likely to buy the product or service. All the customers who are not likely to buy the product are recognized as disqualified customers. The firms concentrate its marketing efforts on the prospects only.
- First Time Customers: this is a group of customers who can either be repeat customer or be defector. Here, the satisfied customers become repeat customers while dissatisfied customers go to the ex-buyer pool.
- Repeat Customers: This is a group of customers who has experienced satisfaction in the first time trail and more possibility to become loyal customers. Often customers may experience dissatisfaction in the second or third trail and may switch to competitive brand. Such customers also move to the Ex-buyer pool.
- clients: This is a group that consists of loyal and satisfied buyers who stay with the firm for a longer period of time.
- Advocate: The firm tries to convert clients into advocates. Advocate means a group of customers who praise the firm and its products and encourage others to buy the firm's products.
- Partners: The ultimate challenge of the firm is to convert advocates into partners where both the firm and customers work together actively for mutual benefits.
At the same time, some customers will inevitably become inactive due to several reasons such as bankruptcy, Changing location, dissatisfaction etc. The company's challenge is to reactivate dissatisfied customers through win-back strategies. Comparatively, it is quite easier to re-attract ex-customers than new ones.
The company has to invest adequate amount of money to build a greater customer loyalty. Development of customer loyalty, in any sense, is creative for the firm. How much should a company invest in customer relationship building so that the costs do not exceed the Profits. Here, we have to distinguish different levels of company investment in customer relationship building.
- Basic Marketing: In this marketing, the Marketer simply sells the product. There is no call back system. Here, the smaller consumer items are sold where profit margins are very low. Thus, there is no effort to develop relationship with customer in the basic marketing.
- Reactive Marketing: In this marketing, the marketer sells the products but customers are encouraged to report about their complaints and suggestions. There are numerous byers for the products but profit margin is moderate. Thus, the marketers just attempt to develop relationship with customers.
- Accountable Marketing: in this marketing, the sales person phones the customers a short time after the sale to check whether the product is meeting the customer's expectations. The sales person also asks the customer for any product or service expectations.The sales person also asks the customer for any product or service improvement or any particular disappointment. This information helps the company to continuously improve its performance. In this marketing the profit margins vary with the number of customers and the company can build a good relationship with the customers.
- Proactive Marketing: Here, the salesperson contacts with customers from time to time with suggestions about the improved product uses or helpful new product. This is only possible when number of customers is few and the profit margin may vary with number of customers. The marketer in this marketing may succeed in building friendly relations with customers.
- Partnership Marketing: In this marketing, the company continuously works with the customers to discover ways to uplift the customer saving or help the customer perform better.
Adoption of a level of investment in building relationship with customer depends on the number of customers and size of the profit margin. In this context, most marketing organizations try their best to build relationship with their customers. They try to make customers as their partners to assist them or discover new ways to satisfy unmet wants/needs. Without developing intimacy with customers, it is probably impossible to exist in the competitive market.
Few multinational companies in Nepal are operating under this concept.These companies share the accessory responsibilities with the major local companies so that they can get adequate local support and receive valuable information about the customers in order to improve the existing products or produce a new products. For example, Colgate Palmolive (Nepal) Pvt. Ltd only produces the paste but not the tube and packages required for the product. The company handovers the manufactures of tube and necessary packages to the local company. This is an attempt to operationalize the relationship marketing.
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