Marketing

Five Priorities For Profitable Customer Relationship Marketing

With most products and services competing in largely parity landscapes, the relationship your business has with it's customers is often your only competitive advantage. The simple truth is, businesses with strong customer relationships are usually leaders. And when the relationships are with heavy category users they are also profit leaders. So, if customer relationship marketing is important to building my business, the question becomes, "How do I do it?"

Before we launch into the "how to," lets put some perspective in place. We're not suggesting your business becomes friends with its customers. If customers feel a degree of affinity toward the business, if there's equity in the relationship, i.e., your customers see value beyond functional benefits, we've succeeded, and all things being equal they will choose your business over the competition.

"OK, that's all well and good, but how do I do it? How do I use customer relationship marketing to build my business?"

Five Customer Relationship Marketing Priorities that Drive Profitable Growth

1. Focus on Best Customers. Typically a small percentage of your customers contribute the majority of your volume and profit. These are your best customers. They are also typically heavy category users and generate the majority of the category's volume. Understand who they are and what they need. It's not what the majority needs.
2. It's a commercial relationship. It is easy and often useful to associate the principles of personal relationships with relationship marketing. There is a key flaw in this thinking. There are significant differences between the relationships we have with friends and family, and our commercial relationships. For example, in a commercial relationship an exchange of tangible value is expected. Keep this in mind as you develop your customer relationship marketing strategy.
3. Relationships don't just happen. You have to work at it. They need to be built over time. Relationship equity is achieved when value is delivered that's beyond the functional benefits of your product or service. This is the heart of branding and is often misunderstood. There are a lot of products with names masquerading as brands because they haven't delivered additional value to constituents; they haven't built relationship equity with heavy category users.
4. Relationships are dynamic. They go through stages. And each stage has a unique degree of intensity. This is obvious from your experience with personal relationships. Commercial relationships also go through stages. Each requires different emphasis on contact frequency and content. Use the following to describe the stages: Prospecting, Consideration, Purchase, Connection and Loyalty. Note, the purchase happens in the middle, between Prospecting and Connection, not at the end. Connection is the most important stage in terms of ROI and probably the least understood and exploited.
5. Maintain the relationship. Once the relationship is established maintaining it is vital. It isn't hard but it does require active involvement. Good customers, and they know who they are, expect to be rewarded. And it's rewarded, not bribed. Relationship marketing doesn't preclude sales messages. In fact, because it's a commercial relationship, targeted, relevant sales offers add value and can contribute to building relationship equity, but they have to be targeted and relevant, or it's just noise.

Conclusion

Build your business by focusing on your best customers. Recognize that it's a commercial relationship where value is exchanged for value, and deliver value beyond what's expected. Understand that relationship marketing is a business strategy and takes time. Communicate with your customers in a manner that's appropriate for where they are in the purchase cycle. Reward your best customers and they will reward you.

James Hipkin, understands the practice of marketing as only someone with decades of practical experience can. His multi-disciplined background and broad exposure to major B2C brands in Europe and the US give him a unique perspective that leaders of businesses, big and small, can benefit from. James is available for consulting assignments and is an accomplished speaker. For more of his thoughts on Marketing Strategy, Customer Relationship Marketing and innovation go to Hipkin's Hip Shots - Quick tips for business success.

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