Marketing Then and Now: The Evolution of the Customer Relationship The notion of relationship marketing meant companies moved away from authors Bradford Colton Lightcap and William Anthony Peek explain it this. Relationship marketing was first defined as a form of marketing developed from direct response relationship marketing has continued to evolve as technology opens more Firms can relay their relationship marketing message through value statements. .. "What is relationship marketing? definition and meaning". Where has relationship marketing taken companies over the past few years as technology has changed? What does it mean for you?.
The markets, geographies, the consumer segments have changed leading to multi tier and complex networks and relationships. Marketing Managers of today are no longer following the same rules of game that they followed two decades ago.
Technology has changed the rules of the game and competition has become more intense. Instead of concentrating on selling the product, the marketing effort is now directed to expanding the customer base and relationship. By widening the customer base as well as expanding the depth of the customer base using relationship marketing, they see the possibility to lengthen the revenue lines. Therefore Marketing professionals to be will benefit greatly by understanding more about Relationship Marketing as well as direct marketing, service marketing and CRM etc.
From times immemorial including the times when trading used to happen through the silk route, the basis of trading was the relationship that was built on trust, loyalty and previous history of transaction. The same is the case with banker who would extend loan to a well known individual who was personally known or referred by a known person. Even while renting out a house, the owner prefers to let out to a known person or a person referred by a known party where there exists some kind of relationship.
To make a long story short, yes. The fact that relationship marketing is evolving alongside technology isn't surprising — but discovering that you no longer control your brand can be. The old days Back in the day aka, pre-Y2Kbusinesses didn't need to develop relationships with their customers in order to keep their business afloat; they simply needed to have the largest, boldest ad in the yellow pages.
Starting your business name with four A's didn't hurt, either.
Evolution of Relationship Marketing
Whilst this is a broad over-simplification, there was no information superhighway in the 20th century. Consumers fulfilled their needs using businesses they found in the phone book, on the radio, or through a commercial on television. Because channels of communication were so sparse, marketers were able to simply talk at consumers.
Scope[ edit ] Relationship marketing has also been strongly influenced by reengineering.
According to process reengineering theory, organizations should be structured according to complete tasks and processes rather than functions. That is, cross-functional teams should be responsible for a whole process, from beginning to end, rather than having the work go from one functional department to another. Traditional marketing is said to use the functional or 'silo' department approach. The legacy of this can still be seen in the traditional four P's of the marketing mix.
Pricingproduct managementpromotionand placement. According to Gordonthe marketing mix approach is too limited to provide a usable framework for assessing and developing customer relationships in many industries and should be replaced by the relationship marketing alternative model where the focus is on customers, relationships and interaction over time, rather than markets and products. In contrast, relationship marketing is cross-functional marketing.
It is organized around processes that involve all aspects of the organization. In fact, some commentators prefer to call relationship marketing "relationship management" in recognition of the fact that it involves much more than that which is normally included in marketing. Because of its broad scope, relationship marketing can be effective in many contexts.
As well as being relevant to 'for profit' businesses, research indicates that relationship marketing can be useful for organizations in the voluntary sector  and also in the public sector. Satisfaction[ edit ] Relationship marketing relies upon the communication and acquisition of consumer requirements solely from existing customers in a mutually beneficial exchange usually involving permission for contact by the customer through an " opt-in " system.
Although groups targeted through relationship marketing may be large, accuracy of communication and overall relevancy to the customer remains higher than that of direct marketing, but has less potential for generating new leads than direct marketing and is limited to Viral marketing for the acquisition of further customers.
Research by John Fleming and Jim Asplund indicates that engaged customers generate 1. According to Buchanan and Gilles,  the increased profitability associated with customer retention efforts occurs because of several factors that occur once a relationship has been established with a customer. The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost.
Account maintenance costs decline as a percentage of total costs or as a percentage of revenue. Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume. Long-term customers may initiate free word of mouth promotions and referrals.
Long-term customers are more likely to purchase ancillary products and high margin supplemental products. Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share.
Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.
Relationship marketing - Wikipedia
Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle.
Relationship marketers speak of the "relationship ladder of customer loyalty ". It groups types of customers according to their level of loyalty. The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer", "client", "supporter", "advocate", and "partner".
The relationship marketer's objective is to "help" customers get as high up the ladder as possible. This usually involves providing more personalized service and providing service quality that exceeds expectations at each step. Customer retention efforts involve considerations such as the following: Customer valuation — Gordon describes how to value customers and categorize them according to their financial and strategic value so that companies can decide where to invest for deeper relationships and which relationships need to be served differently or even terminated.
Customer retention measurement — Dawkins and Reichheld calculated a company's "customer retention rate". This is simply the percentage of customers at the beginning of the year that are still customers by the end of the year.
This ratio can be used to make comparisons between products, between market segments, and over time. Determine reasons for defection — Look for the root causes, not mere symptoms.