Relationship marketing vital during downturn

Alastair Digby, marketing manager at Nido Marketing, has considered the importance of relationship marketing in the current difficult financial climate.

We all know that times are tough, budgets are stretched and businesses everywhere are feeling the pinch.

You could be forgiven for thinking there is little positivity left as we are constantly bombarded with stories of doom and gloom every time we open a browser or switch on the television.

Ultimately we are all being forced to look closely at how we operate and assess how we can improve, consolidate and streamline to help the bottom line.

Marketing is one area that companies can mistakenly sacrifice when faced with adversity but this can be extremely costly and lead to your competitors increasing their market share and clients not receiving the service they deserve.

This can also be coupled with decreased levels of new business and now more than ever potential clients will be benchmarking you to see how you measure up against your competitors and this is where relationship marketing can separate you from the crowd.

It may sound obvious but spending a little more time ensuring your clients feel loved and valued will help to improve your bottom line and combat decreased levels of new business.

You may have heard the maxim that the cost of attracting a new client is five times the cost of keeping a current client.

With this in mind, and taking into consideration marketing budgets are being squeezed to a minimum, then it makes sense to focus more attention on hanging on to your current clients than attracting new ones.

A small increase in customer care can radically improve your retention rate, helping to improve sales forecasting, planning marketing activity and most importantly profitability.

It has been said that a five per cent improvement in customer retention can lead to a increase in profitability of between 25-85 per cent dependent on the industry.

These figures can make your finance director sit up and take notice and think twice about assessing the value of the marketing function and its effect on the company.

Adopting a relationship marketing approach will further increase your retention rate by increased customer collaboration, personalisation of service and continually deepening communication with multiple contacts.

The more you interact with your clients at various levels throughout the organisation the more you are demonstrating your value to the client and the importance of your product or service.

You need to embrace the idea that marketing and customer service are inseparable and should be treated as single activity.

This will also have wider implications such as helping to improve recommendations and word-of-mouth referrals, which are usually easier to close than a cold prospect.

Your brand will become attributed to offering good customer service as well as the products and services you supply.

The ultimate aim is to create long-term relationships with clients and not view them as a one-off sale shifting focus from attaining new clients to keeping your current ones.

Moving away from one-way short-term transactions and shifting towards two-way ongoing relationships with your clients is the first step.

Closing a sale should be viewed as the starting point of your relationship and be sustained by increased marketing to ensure they stay with you.

Sounds simple in theory, but in practical terms for this approach to be successful everyone in your business must be heavily marketing orientated and realise the importance of why.

Some businesses will tell you that they are already doing this, however, research has shown that 80 per cent of companies believe they provide a superior client experience but only eight per cent of their clients agree.

It can be easy to become complacent with your clients when in actual fact they should be the main focus of your marketing efforts.

The longer a client stays with you, the less inclined they are to switch to a competitor because they have become accustomed to how you work and the services you provide.

Other strategies to help keep your client churn to a minimum is by offering loyalty schemes and incentives, product bundling and cross promotions.

Bear this in mind, increased customer retention will make your employees jobs easier and more satisfying meaning happy employees and better customer satisfaction.

The process can be made easier and more targeted by utilising customer relationship management software, such as Salesforce or Goldmine, to record specific information about your client's individual requirements and sales history.

This will enable anyone within your organisation to access key information with all client communications maintaining that personalised feel.

Having the right information accessible for all your team is vital and can really make the difference when dealing with enquiries or support issues.

We have all had experience of being passed from pillar to post to resolve an issue with no one being able to help or know who to talk to, which can be very frustrating.

Utilising the internet and web applications can also work in the same way.

One of the best examples being Amazon, which over time builds a personal buyer profile that can then recommend related products based on previous purchase history.

The same principle should be used in your own marketing activity to encourage more spend from your clients and increase your return-on-investment and this further strengthens the relationship.

When relationship marketing is applied well the benefits go far beyond just the value of the sale itself and lead to other organisational benefits.

Clients will tend to buy a broader range of products and services so keep them aware of what else you can offer them to add value.

On an operational level clients will cost less to maintain as they will become accustomed to your business practices and processes.

A major benefit is that over time price will no longer be such as key issues due to the added benefits they receive through ongoing customer communication and service.

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