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What is Relationship Marketing?

By working actively with relationship marketing you have a lot to gain. More and more loyal customers mean you generate better results – no matter what you sell. In addition, you get a completely different long-term view of the business than if you focus solely on acquiring new customers.

Let’s start by looking at what a customer relationship really is. As we see it, a customer relationship is characterized by three conditions:

  • Added value
  • Trust
  • protractedness

Often, one or two of the prerequisites for creating a long-term and fruitful customer relationship is not enough. It is the combination of these that together form the strength of a customer relationship. At the same time, it might be a good idea to take a look at each of the conditions.

Added value

In the customer relationship, added value is the perceived customer value that is added in addition to the value that the product or service inherently imposes. The added value is usually something that the consumer does not actively think about or reflect on, but equally exists and often plays a crucial role in the buying decision. It can also make the decision in choosing between competing alternatives.

For example, an added value can be about an extra nice treat, a nicer packaging or getting something extra that you did not expect or asked for in connection with the purchase.

For example, say you have been to a cafe for many years. You have memories and feelings associated with the cafe. Then it may matter less if the buns are bigger elsewhere or if the coffee here is a little more expensive. You know the environment and it gives you a recognizable and positive stimulus. So the cafe visit is about more than eating buns and drinking coffee. It is an experience where added value plays a central role.

Trust

For a good customer relationship, trust is perhaps the most crucial prerequisite. If the customer loses trust in you, it is usually synonymous that you lose the customer and much is needed to repair a relationship where the trust has once been seriously disrupted.
Just compare with private relationships where a friend has let you down. A failed customer relationship is about exactly the same feelings of disappointment, discomfort, uncertainty and so on. If a customer relationship is about to go in the wrong direction, it is necessary to do everything as soon as possible to restore trust – even if it costs much more than the purchase itself (more on the latter).

Trust is crucial to not losing a customer, but trust is also crucial to winning customers. Trust is a result of good relationship marketing, but it is also a method of achieving good relationship marketing.

It is with confidence in the pot that the strongest and most profitable brands are built and of course not only the trust in the relationship itself but also the service or product. Should Rolex sell watches that gained a reputation for stopping or Mercedes becoming known for making cars that do not hold, their brands and customer relationships would quickly be watered down. Trust is something that must be won and earned.

The same applies in a broader sense to companies that do not fulfill stated or unspoken promises. McDonald’s is a fast-food chain that may not be known for offering variety in its offering, but which, in turn, offers availability and the feeling of knowing what you are getting. A Big Mac tastes just as good in Köping as in Cape Town, and it has tasted the same for decades.
What would happen if a McDonald’s restaurant first opened at three in the afternoon like any pub restaurant?

What would happen if they didn’t offer the same Big Mac like any other McDonald’s restaurant? It would break the entire concept of accessibility and predictability that the fast-food giant has gradually built up over the years and, by extension, the trust that McDonald’s has gained from consumers would be broken when customers no longer get what they expect.

Long-term

A good customer relationship is characterized by being long-lasting. Just as with the stated and unspoken customer promises that are about trust, the customer relationship holds that the higher the customer’s expectations about the longevity of the relationship, the better the prospect that you can create loyal and loyal regular customers.

However, as I have said, long-term is not sufficient in itself, just as we have pointed out before. For example, a customer who chooses the surplus company for their clothing purchases on recurring occasions can do so only because the price there is lower than at H&M. Many companies compete with sales price as the main competitive advantage, but relationship marketing is also important for such companies.

Even if the customer first considers the surplus company as a spot market where they can find the lowest prices, he or she can choose to visit the surplus company over time because it feels a confidence in the business. Good relationship marketing in this situation is about getting the customer to visit the surplus company and shop there, even though the already cheap clothes might be even cheaper to buy elsewhere.

Longevity in the customer relationship is basically about endurance. It is about feeding the relationship with enough time and energy for it to develop and deepen. Companies that compete with price often see themselves as players in spot markets where it is for the customer to find the best price only for the moment and for the individual occasion.

This theoretical view contrasts with relationship marketing, which instead wants to emphasize that customers who prioritize the best price are not really looking for the best price at every single moment, but the best price at all times! They then choose to become long-term customers at certain low-price chains for which they have confidence, without comparing whether there are actually cheaper alternatives for each of the individual buying opportunities.

In economics theory, where the idea that customers are looking for the best price in spot markets originates, there is very often an assumption that all customers have perfect information about where the price is best. In reality, we, economists and others, know that no consumer has such perfect information.

Instead, it is for companies with a low-price profile to build long-term relationships with customers who are assured that the company can deliver low prices at all times, although at each of these occasions there may be a better price elsewhere on the market.

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