The process of acquiring a new customer, known in marketing circles simply as ‘acquisition’, can be an expensive method of generating sales. Encouraging someone who is new to your brand to move through the purchase funnel to the point of a sale usually requires a fairly extensive use of marketing resources. For every one customer you do manage to capture, there may be hundreds that you have spent money trying to persuade.
Relationship marketing is a marketing exercise, which continues after a customer has purchased your product. The exercise attempts to build up a long lasting and profitable bond between your business and the consumer.
It is widely accepted that the cost of acquiring a new customer is significantly higher than retaining an existing one. Here 4 keys to customer retention & relationship marketing.
A good customer retention strategy
Customer retention is an important strategy to adopt whether you have a new or an established business.
Retention is useful as the cost of acquisition only occurs once at the start of the relationship, the longer the relationship the lower the overall costs. Once you have established a long-term customer, they are…
- Less inclined to switch brands and are less price sensitive
- Likely to spread positive word of mouth and refer their contacts
- Likely to buy other products from the same brand
- Less expensive in terms of customer service, as they are familiar with your processes and require less education
- More susceptible to marketing messages, and more likely to act on them
Impeccable Customer Experience
Good all-round customer experience at all customer touch points is crucial for a retention strategy. To hang on to your customers, you need to meet or exceed their expectations in a way that is better than the competition in key areas. This means effective management of the marketing mix, and a constant awareness of competitor behaviours. For example, a customer may decide to stick with you rather than use a competitor due to your superior warranty and customer service, even if the product is identical. Do your job well and customers won’t even need to consider defecting to a competitor.
Understanding your customer loyalty ladder
As customers move up the ‘loyalty ladder’ they will expect a more personalised service and a higher quality of interaction, which should exceed their expectations at every step. Hence, you need to understand the customer loyalty ladder so you can be able to effectively retain them.
- Prospect – A prospect is a potential customer who is aware of your brand and has entered the purchase funnel.
- Customer – A customer is someone who has bought one of your products.
- Client – A client is a previous customer who purchases a second time.
- Supporter – A supporter is a customer who may recommend your brand passively, perhaps with alternatives.
- Advocate – An advocate is a customer who actively talks about your brand unprovoked and tries to convince others to purchase or try your products/services.
An RM checklist
Your relationship marketing material must specifically target your existing customers at every touch point through all the stages of your Purchase funnel.
All elements of your marketing mix must work together towards satisfying and retaining your customers. Hence, your RM strategy must include the following checklists;
- Physical evidence
Establishing a relationship marketing strategy can help generate sales in a more cost effective manner and can create advocates of your brand who will help do your advertising job for you. Ensuring a long-lasting relationship and exceeding expectations at every step of the journey will strengthen your brand and ensure a sustainable future.
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