Brands primarily focus on transactional marketing to increase sales over a certain period. This mainly entails short-term mass marketing strategies to bring in large numbers over a particular promotional period.
However, these short bursts of sales are just one element of good business performance. To establish a sustainable pattern of healthy revenue for long-term success and scaling, it’s crucial to implement strategies for relationship marketing and foster loyalty in your customers.
What is Relationship Marketing?
Relationship marketing emphasizes customer retention and satisfaction instead of one-off sales transactions and promotions. It focuses on the long-term value of customer relationships developed over time to foster brand loyalty.
Acquiring new customers costs five times more than simply retaining existing customers. Allocating more money to build customer relationships is more cost-effective than merely centering efforts on lead generation and customer acquisition.
Brands succeed when they implement strategies that work hand in hand; after all, you have to bring in new customers to work on retaining them. This is why companies should invest in both transactional and relationship marketing. A healthy balance between the two will lead to healthy revenue for years to come.
Advancements in technology and the popularity of social media have made it much easier for enterprises to cultivate long-term relationships with customers. Customer relationship management (CRM) is a booming industry—the CRM market is set to reach $113.46 billion in value by the end of 2027. It was worth less than $50 billion in 2019. These figures affirm the importance of investing in customer relationships for business success and growth.
CRM provides important data and insight into customer behavior, which can be leveraged into exceptional relationship marketing initiatives.
How Does It Work?
There are many ways to deploy relationship marketing, and each example has its own best practices and methods. They do have one thing in common: centering the customer.
First and foremost, it is all about catering to what the target market wants and needs. Building relationships with customers must be the core of each initiative and strategy. It’s not a transaction but an affiliation, much like how people build relationships with each other.
When a person is celebrating their birthday, you greet them and give them a gift. It is exactly what Starbucks is doing—giving its customers free coffee during their birth month.
A person who works hard to achieve something is rewarded, whether in school or at work. It’s the same with Sephora—the more people spend on their store, the more they are rewarded with perks. Similarly, the more you fly with Delta, the more you will be rewarded.
When it comes to relationships, you usually gravitate towards people whose values you share. Many people also care about brand messaging, which explains the popularity of Fenty Beauty and Savage X Fenty, and Patagonia.
The goal is not just to foster a superficial relationship with the customers but to build a long-lasting one. Customers must be treated as individuals and not transactions, not just another number on paper. They should become part of the brand’s family.
A customer-centric business design will lead to loyalty, which is crucial for the company’s future.
Social media and technology have expanded consumers’ options exponentially. Entrepreneurs can start a business in the comfort of their own homes, with no need for a brick-and-mortar store. As long as they have products and services they believe in, they can begin selling online whenever they want. Just a simple post on Facebook or a few pages on Shopify, and they can start selling. Hundreds of people can do the same, adding to the competition of established brands.
How do you maintain your brand’s audience when there is an ocean of competition out there? This is the essence of relationship marketing, the problem it is meant to solve. When a brand treats customers well, they will not be swayed by newcomers in the niche. It can be akin to a romantic relationship: when trust and loyalty are cultivated, there is no reason for either party to stray.
The best way to proceed with relationship marketing is to consider it a mindset rather than a single campaign. Marketing campaigns tend to focus too much on conversions and sales transactions over a certain period.
When you make this type of marketing a mindset for your brand, the discussions are more in-depth, strategies are developed for the long term, and customer treatment becomes more value-oriented.
Relationship marketing largely depends on branding, or your business personality. Branding is not just a name, logo, and color palette; it’s about the brand’s identity.
In human relationships, personality is an important indicator of compatibility. You are drawn to people who are like you. As they say, birds of the same feather flock together. This also applies to brands and their target audience.
Going back to the previous examples, consumers who are passionate about sustainability are drawn to brands like Patagonia. Makeup enthusiasts with dark skin—long neglected in the beauty industry—happily spend hundreds of dollars on Fenty Beauty for its inclusivity and because the brand caters to them.
Brands that have mastered relationship marketing also end up on a mutual first-name basis with their clientele. People are used to saying, “Let’s get Starbucks” instead of “Let’s get coffee from Starbucks.”
Personalized service: Sephora
When you receive a marketing email, isn’t it better to read: “Dear (your name)” instead of “Dear customer”? Sephora’s marketing strategy includes making every customer feel they are special and assuring them that the brand knows what they want.
It doesn’t end with personalized emails. Sephora Beauty Insider members can access exclusive promotions, discounts, and a ton of extra perks.
Moreover, Sephora provides tiered rewards: Rouge, Very Important Beauty Insider, and Insider. Rouge is the highest tier, where customers are given priority for limited edition and newly launched products. They are also invited to special events. The lower tiers also enjoy important Sephora benefits like exclusive promos and discounts.
“Almost 75% of what drives customer engagement and loyalty are emotional perks,” Allegra Stanley told Forbes in an interview. She is Sephora’s vice president and general manager of loyalty.
Reward loyalty: Starbucks
One of the best ways to encourage customer relationships is by rewarding their loyalty. Many companies offer loyalty rewards, but Starbucks Rewards is among the most famous ones.
The mechanics are simple:
The customer downloads the Starbucks app.
The customer orders and pays for the items.
They earn stars with each purchase. The more a customer buys from Starbucks, the more stars they earn.
Customers can redeem a reward when they reach 25 stars. The rewards can be a free drink or food item.
Starbucks offers birthday treats, too. They also email customers on days they give out double stars.
A well-implemented rewards program will foster customer loyalty, attract new ones, and reduce churn. Starbucks has pricier coffees than other shops and brands; still, people continue to line up every single day.
Of course, they are not just there for the rewards. Good coffee complemented with exciting rewards has kept the business at the top for years.
Brand partnership: Delta
Frequent Flyer Miles is another popular rewards program specific to airlines. Delta has a top-notch Frequent Flyer program called SkyMiles, where customers earn points when they spend money on Delta flights and partner airlines. Accumulated points can be used to purchase another airline ticket, get a seat upgrade, and more.
Delta has partnerships with various brands to further encourage customer loyalty. For example, their partnership with American Express helps customers earn bonus miles.
Delta SkyMiles also offers points for the following:
Staying at partner hotels and Airbnb
Renting vehicles from partner companies like Lyft and Turo
Dining at thousands of partner restaurants
Purchasing items from the SkyMiles shopping portal
Brand message: Fenty Beauty & Savage X Fenty
Who would’ve thought a singer’s underwear brand could compete with a giant like Victoria’s Secret? Singer Rihanna founded Savage X Fenty in 2018. By 2019, Victoria’s Secret had canceled its annual lingerie fashion show for declining viewership and bad messaging.
Savage X Fenty and the cosmetics brand Fenty Beauty are fairly new, but they have already made Rihanna a billionaire. Transactional and relationship marketing worked for both brands, which have a distinct message: inclusivity.
Savage X Fenty fashion shows are known for their racial diversity and body positivity. Models of all colors and sizes walked the runway, as opposed to Victoria’s Secret’s slim and mostly white models.
Fenty Beauty is also praised for its wide range of shades for makeup. When it launched, it offered 40 shades and has now expanded up to 50. Fenty Beauty changed the makeup industry: launching a product with just ten shades of light foundation won’t cut it anymore.
Rihanna’s brands have an altruistic message that works in transactional and relationship marketing. Customers were drawn to their inclusivity because they cater to sizes and skin tones that other brands have not, leading to customer retention and outsized loyalty. Who doesn’t want to support with a positive message?
Environmentally friendly: Patagonia
Outdoor clothing manufacturer Patagonia has opted for a unique marketing strategy. It is not actively telling shoppers to buy its products. Instead, it’s telling them to think twice.
The Don’t Buy This Jacket campaign educated consumers about the environmental impact of manufacturing a jacket. The process uses 36 gallons of water, enough to keep one person’s thirst quenched for several months. Ironically, Patagonia sales increased by 30% following the campaign.
The brand preaches environmental lessons confidently while spearheading sustainable initiatives, such as using solar energy in its California headquarters and selling secondhand Patagonia pieces. It also uses organic materials and donates part of its sales to environmental groups.
How are Patagonia’s environmental principles related to relationship marketing? According to a survey, 45% of consumers want to support brands that are environmentally responsible. It explains why despite Patagonia’s campaign, customers still flock to the store to buy their jackets and other merchandise.
Why is this Kind of Marketing Important?
When you get this type of marketing right, you benefit from the following:
Better customer service
When companies personalize their service, customers will feel special. And when they feel valued, they stay loyal to the brand.
Customers become happily devoted to brands that provide exceptional service at each touchpoint. They are also much more likely to spread the word about their positive experiences to their acquaintances and social circles.
A 5% customer retention can lead to a 75% increase in profitability. Another figure suggests that 80% of the company’s future revenue will come from 20% of its current customers.
It costs more to attract new customers than to retain existing ones, so investing in relationship marketing is a no-brainer.
People close to you are usually much more honest than mere acquaintances. A parallel can be drawn with brands, too.
Loyal customers will be more honest with their feedback—the good and the bad. Listening to their earnest comments will help you improve your products or services and deliver a better experience in the future.
Customer feedback may also lead to new business ideas. Customers may not realize it, but when they provide feedback, they may be helping the management team churn out new concepts, promos, or even new products.
When new ideas are born, brands can solicit opinions from customers before launch. Loyal, long-time customers will not hesitate to share what they think of the concept and how it can be improved before the rest of the customer base is given access.
When loyal customers are happy with the brands they support, they will tell people about it. They will post about their good experience on social media; some may even bring their close family and friends to the store itself. It’s essentially free advertising.
Loyal customers find fulfillment when their favorite brand succeeds—it’s a mutually beneficial relationship.
Customer loyalty + social media = free advertising.
There are 4.65 billion social media users worldwide. They are potential customers you can leverage if you send the right message.
Satisfied customers post their finds on social media, and their social circle will be introduced to your brand. This form of word-of-mouth advertising is vital for lead generation and conversion.
Customer loyalty is the biggest benefit of them all. It will keep revenue flowing.
Loyal customers are prone to advertise the brands on their own time, too, without expecting anything in return. Even better—loyal customers will defend the brand as long as their values align.
It’s not easy to foster loyalty when there is so much competition. Customers may try to check other brands out of curiosity, but they will not abandon a company that has cultivated a solid relationship with them. Thinking practically: it’s not easy to give up accumulated points, rewards, perks, and exclusive promotions.
How to Create a Strategy for Your Brand
We know how important relationship marketing is, so how is it best implemented?
1. Provide top-notch product and customer service
You cannot create a relationship with customers if you don’t have many of them in the first place. It all starts with customer acquisition.
The first step to encouraging customers to continue spending money on your business is by ensuring that you have high-quality products complemented with outstanding customer service. You must sustain this quality and prove your dependability so they will come back again and again.
2. Personalized customer service
To develop a relationship with your customers, you must get to know them. Fortunately, modern consumers are much easier to get in touch with through social media, email newsletters, and other channels.
You can post a question about your service on social media and note your followers’ responses. This simple endeavor will give you an idea about your customers’ mindset and preferences.
Take notice of posts about your brand, whether positive or negative, and engage with them. Ask them what they like or dislike about the product or service they talked about.
Take advantage of email and other forms of communication. Ask your customers for feedback after each purchase—send a personalized email and take the extra step to make your customer feel special. This is the essence of building relationships.
Solicit feedback at every customer touchpoint. For example, they might see pop-up ads when they visit your website. It helps when you ask if the ad was helpful to them or if it was just annoying. The feedback will help you improve every element of your operations.
3. Maximize social media presence
Your brand’s presence on social media is crucial to how your customers perceive you. Use these platforms to engage with your audience, share relevant and value-adding information to establish authority, and build relationships with your followers.
Here are the most popular platforms businesses can use for relationship marketing:
You don’t have to post on every single one of these platforms, but you must be very active in the ones your loyal customers spend the most time on.
Remember to customize your posts on each platform. What works as a Facebook post will not translate well on TikTok. Twitter is completely different from Instagram. You need a creative and versatile social media management team to grow your audiences on various platforms.
4. Reward loyalty
Loyalty programs are some of the most widespread and successful relationship marketing campaigns. They are popular because they work in just about every niche you can name. A person who loves ice cream will not hesitate to dive into the Dairy Queen Rewards Program—the more they eat ice cream, the bigger their chance of getting it for free. It’s a win for their sweet tooth and a win for Dairy Queen for customer retention.
You have to give customers a reason to be loyal. If you don’t offer rewards, you can entice them with discounts and other incentives like exclusive access to promotional products.
5. Create a community
It is to the brand’s advantage when like-minded customers get together and share their love for their favorite products. Being part of a community makes customers feel much more comfortable voicing their enthusiasm and concerns.
It doesn’t have to be complicated, as you can just create a LinkedIn page or Facebook group for your most loyal customers. You can solicit feedback, and they can share stories that will help you know your market better. Make it a safe and fun space for your clientele so you can both benefit.
An online community is also great for sharing exclusive discounts and promotions. You can also organize events for your community to interact with each other in person, in a venue where you can properly thank them for their support.
6. Invest in CRM technology
It’s a lot of work to personalize customer service and customize promotional campaigns. Customer relationship management software will help you manage all the different activities that will help you build long-lasting relationships.
With CRM software, you can personalize emails about new products, exclusive promotions, and sales. The system can also keep track of birthdays so the brand can send a greeting and a personalized gift on the day.
7. Evaluate relationship management campaign
When you launch strategies for customer retention and relationship management, you must assess each element and regularly recalibrate your endeavors. Evaluate retention, conversions, and referrals to determine which areas work and need improvement.
Brands must sustain their impeccable customer service to foster loyalty among clients, new and old. Loyalty is easy to cultivate when you deliver satisfactory products and address issues head-on.
Your brand must be attentive to all of your customers. With customer-centric strategies, you can attain customer loyalty, meaning clients don’t stop at just being first-time buyers. They also become unwitting ambassadors that showcase their brand loyalty on social media, even going as far as recruiting new customers.
A relationship marketing mindset is essential to long-term success and scaling for any business.