Relationship Marketing: Everything You Need to Know

What is Relationship Marketing

Did you know, studies say that if a company could increase their customer retention just by 5%, then their profit could get a boost of 25% to 95%? Moreover, 82% of companies say that retention always needs lesser money as compared to acquisition.

To be specific, investment in retaining existing customers is almost five times lesser than the investment needed for acquiring a new customer.

Therefore, all brands must shift their focus towards retaining customers, which can be easily achieved by Relationship Marketing.

It focuses on the process of retaining a customer by providing them satisfying services and valuing their interest. Therefore, the sole purpose of opting for this type of marketing is to engage your customers and nurture them, instead of acquiring a new one.

While you may think any form of marketing is more so targeted at getting new leads and hence, closing more deals, this particular branch of marketing only wants to handle the deals you have already closed.

The traditional transactional marketing approach had its focus only on the single point sale. Therefore, its approach differs hugely from relationship marketing, and hence, the latter has far more benefits than transactional marketing.

Traditional marketing would help you close the deal. However, using such methods, a customer can only be convinced to select a particular brand once, what about making them choose you again? You want to do that, don’t you?

For that very purpose, your transactional marketing plans won’t suffice. Without more customer-specific marketing in effect, the chances of a customer coming back reduce.

How Relationship Marketing Works

Relationship marketing is a strategy of deepening your relations with customers, and hence, strengthening their loyalty towards your brand.

Therefore, if a business has no consumer base, then it is recommended for them to focus on building a sufficient group of willing consumers first. Businesses with little to no consumer base should focus on brand building and traditional transactional marketing, to begin with.

Moreover, the loyalty of a customer is a result of consistent positive experience from the particular brand they are loyal to. Therefore, if you want to gain their trust, then your primary focus should be: Delivering the most superior products and reassuring services to your existing customers.

The more you strive for your customer’s happiness, the more they will settle for your palette. With time, your services will get you the recognition and large market share you deserve too.

For those brands that already have a market base, they should focus upon gathering as much information as they can about their consumer’s interests. You can collect this data by several means, depending upon the type of your business.

For instance, if you have more offline clients then you can use surveys. However, if the majority of your customer base approaches you through online means, then you can make use of different technological tools such as CRM, etc.

While studying, you should remember that your goal is to get a brief of your consumer’s profile. The profile includes their age, gender, and profession. It’s even better if you can analyze their shopping patterns, expense cycles, and interest data.

Thereafter, based on their behavior, you should focus on the process of analyzing their reason for choosing your product and understand that motivational force which drags them towards you. While these may sound like deep-seated motives, they can be understood with the help of your collected data.

For clarity, you can even reach out to your customers. You can send them questionnaires or surveys to further put a finger on their reasons for entrusting your brand despite all the choices the market had. Good communication always plays a vital role in building a great relationship with customers.

However, before you even start collecting all the tools for this branch of marketing, you should see whether your customer would make use of your services repeatedly or not.

For example, if you are dealing with refrigerators and that’s your main product, then your customer base is less likely to purchase your products very frequently. On the contrary, a business of clothing would get more frequent customers.

You would know the sales pattern for your niche the best. Depending on that, you would have to make a choice between traditional marketing and relationship marketing.

Image Courtesy: Golden West Online

However, you can still make use of some tools of relationship marketing even if your business falls in a more “longer sales tenure” category.

For such brands, it would be all the more crucial to ensure that their clients stay happy, so that when they finally have a need, they do not look any further. Plus, you would always need referrals; happy clients are the best modes of advertisement.

Who says you only have to do one type of marketing at a time? We say you can mix things up, make your own style of marketing. Take the elements that benefit you the most from different types, which will give you the right approach.

For instance, you can mix traditional transactional marketing with relationship marketing.


Traditional marketing is the very first stage of marketing. Its focus only remains on tempting leads into becoming consumers. With this marketing approach, a marketer can launch campaigns to acquire new customers.

However, those businesses with a good market base should focus on building a relationship marketing strategy, along with sparing a little investment in increasing their consumer base with a traditional transitional marketing approach.

When a new customer makes his first purchase, the marketer should pay attention to providing them with a fine experience. A lot of things comprise this experience.

Your customer support and post-sales treatment play a huge role in retaining the consumer, furthermore, your discounts and coupons would help them feel benefited. This way, the consumer that you acquired with the help of traditional transactional marketing is here to stay because you did relationship marketing perfectly.

Why Relationship Marketing is Important

This method of marketing has the potential of keeping customers loyal, and therefore, possesses enormous benefits for any marketer. Some of the various benefits are:

A great way to build loyalty

Relationship marketing focuses on developing a loyal customer base. If you could suffice them with your services, then you could bind them for your services.

There are certain studies which claim that the worth of a loyal customer increases up to 10 times from the time of their first purchase. Not only that, but their value also keeps on increasing with time.

Interestingly, when a customer makes their first purchase, his chances of coming back are 30%; however, when he makes the second purchase, his chances of coming back become a surging 50%.

Therefore, the most important part of building a perfect relationship with the customer is when they make the first and the second purchase respectively.

A company can study the behavior of a customer, and thus, can approach them during these stages to engage them.

Price Becomes Less Important

Bargaining had always been a part of shopping. However, when a more relationship-oriented approach is used, a customer starts sharing a personal bond with their respective companies.

You would observe that over a period of time, they would stop negotiating on the commercials, instead, they would believe in the quality that your brand offers.

What this further appropriates is your pricing. You would make better revenues.

It’s a Word-Of-Mouth Generator

Did you know that 92% of the customers believe more in the recommendations made by their family, friends, and relatives as compared to any kind of advertisement?

Moreover, the chances of selling a product to a completely new lead increase up to 70% if he has been referred by a friend.

Moreover, this mode of advertisement is the cheapest one too. Think about it, you have made zero investments and found new leads. Interestingly, you can get several referrals from a single happy and satisfied customer.

These recommendations could increase your sales exponentially.

You Sell More

This is the best approach to increase your sales because it is easier to sell a product to someone you know was convinced the last time. You know exactly how they are sold and how to work them in.

Various research papers further confirm this, as we find out that the chances of selling a product to an existing customer are approximately 70%; however, the chances drop to 5%-20% when it comes to selling the same product to a new customer.

Cross-sell and Upsell becomes easy

What is Upsell and cross-sell?

Let’s say you launch a new product. You have a database of consumers, to begin with. Would you not naturally try pitching your offering to your existing consumers? You would!

This is an attempt you are making at cross-selling. If the product is priced higher than a product they usually purchase, then you are up-selling too.

If you are new and launching your nascent brand, then also your first step towards attaining decent sales should be creating a loyal customer base with your very first service.

You can drive more traffic, generate more leads, and simultaneously, build a great relationship with a customer using this approach.

It would be a whole lot difficult if you began with a scratch every time you tried expanding your product line and did not have a loyal consumer base to eventually utilize for the more profitable products.

If you have successfully retained a customer, then it becomes easier for you to send them another product of your brand.

Acquisition Cost Is Much Less

Acquisition cost is defined as the investment made into the process of acquiring a customer.

Studies of 2015 on marketing trends show that companies are making more investments in online marketing campaigns. Moreover, big companies are getting more and more interested in inbound marketing. Therefore, it is clear that companies are rapidly increasing their investment in acquiring customers.

However, if you have a good hold over your customer base and the existing numbers are profitable, then you won’t be spending as much on acquiring new customers.

Naturally, your investment would be for nurturing your customer base, which is a far smaller amount than the acquiring cost.

By spending lesser, you would better your profits.

The Five Stages of Relationship Marketing

If you are thinking of implementing this strategy, then you should know where your brand currently lies, and where do you want to take it from here. With this knowledge, you would be able to make the right investment to head in the right direction, i.e. towards gaining more reliable customers.

To start with relationship marketing, you need to start with level 1. Relationship marketing can be divided into five stages or levels. If you want to implement marketing strategies, you would have to be patient and escalate step by step gradually.

Basic Marketing

Essentially, basic marketing could also qualify as a traditional form of marketing. In this mode of marketing, the only goal of a marketer is to tempt his targeted consumers towards his product. They attempt to understand the consumers’ requirements and accordingly narrate to them the benefits of their product.

There is no running behind a customer for the feedback or review in this process. Therefore, this method does not intend to build a healthy relationship with a customer.

This is the first stage and every company starts here. The only purpose of this basic stage is to establish the product in the eyes of the consumers, to simply bring it in their notice.

The first step is to inform consumers about the product.

For example, the logo of Walmart clearly emphasizes on their low prices. It does not include any kind of engagement with their customers. Therefore, with basic marketing, it is all about adding enough value to your brand that could lure new consumers towards your brand.

Other examples include the advertisement for Nike. Their motto was very simple; they said: Whatever sport you like, you can play it with Nike.

Reactive Marketing

As the name itself suggests, this step of marketing involves a little communication between a customer and your brand. At this stage, a consumer is encouraged to give their feedback on the product.

These responses are kept for further marketing strategies. They may include both positive feedback and complaints or critics.

Moreover, this step should not be confused with any typical marketing strategy where new customers are targeted; it is more inbound.

This stage is not only about selling a product to clients. Instead, some efforts are made to build relations with a client you have already bagged. In other words, it is the first stage of building relationships with customers.

One of the best examples of the brands which follow the same strategy is Starbucks. The company remains in touch with its customers through emails of appreciation and information regarding their new offers. If you have recently been to a Starbucks, you may have taken a pic of that cup with your misspelled name on it.

Experts believe that Starbucks does it on purpose to get a reaction out of their customers, which they would do as they share with their friends, laugh about, and post on their Instagram while they also #Starbucks

Accountability marketing

At this stage, a marketer approaches their customer shortly after they purchase their product. This step is of immense importance as through this way a brand builds confidence within their customer about the quality of their product and also elevates the level of their loyalty towards the product.

Moreover, this step encourages a customer to provide an honest review of the product. This not only deepens the relationship between the brand and the customer but also provides the brand with more information regarding their flaws and strengths.

You may at this point consider that the reactive stage was the same, however, in that stage, the consumer isn’t contacted right after the purchase.

The feedback collection would not be timed as per the purchase. Furthermore, the brand would directly reach out to the buyer for feedback or review, unlike in the second stage, where the process of response collection was passive.

However, in this stage, you want to strike out chances of things going wrong in post-sales phases.

Therefore, this stage is all about promising, and thereafter, delivering your services based on their preferences.

Proactive marketing

Based on the collected suggestions, you would aspire to fix things and make your product better at this stage.

A brand attempts to remain in contact with their customers regularly, not occasionally. Thus, it attempts to become more agile, data-driven, and real-time.

A marketer needs to have the data of the extent of the success of their last campaign for this stage. They should know how far they have succeeded in their first campaign and also should study the reasons for their success or the reasons for their failure. This keeps them updated about the goals of their customers.

For example, Tyson foods and hunger management followed the suggestions their readers left on their blogs. It helped them gain further loyalty from their customers, and hence, they advanced a step further in developing a personal relationship with their customers.

Incorporating their feedback would help them feel valued and like a stakeholder of your brand, thus, helping them connect with you more and bringing you more engagement and projections.

Partnership Marketing

Sometimes two or more brands collaborate to increase their reach, and this method of marketing is known as partnership marketing. All the companies involved in this process are benefited by a single campaign.


Two companies have separate loyal customer bases, however, when they come together for collaboration, then, their respective customer base gets introduced to the other brand too. In this way, at a comparatively lower cost, two companies reach a wide range of market base with the help of each other.

One of the most common problems that all businesses face while expanding is funding. In this era of increased acquisition costs, this process can be considered as a relief.

Examples of this strategy are not so difficult to imagine. This is what every brand that aims to flourish on social media is doing as they collaborate with other brands that already have a huge fan base on Insta or YT.

Benefits of Relationship Marketing

Every coin has two faces. Similarly, you may get enormous benefits from relationship marketing, but it has several disadvantages too.

These massive benefits might be able to outnumber and outweigh its disadvantages for some businesses; however, for the remaining businesses, the negative side may not be easy to ignore. So, before you choose this plan for yourself, let’s look at some of the benefits:

Good Return on Investment

Over two-thirds of all the companies agree with the fact that their return on investment increases as they start working on retaining their old customers, as compared to when they work on acquiring new ones.

Moreover, it is cost-effective too. Relationship marketing does not require a lot of investment. Instead, the only investment is in gathering and using the data of the old customers.


No company can survive without a sustainable business model. Relationship marketing is known for building loyalty among customers towards your brand. This loyalty, thus, becomes the reason for a customer to not bounce back to other brands.

Therefore, by incorporating a relationship marketing approach into a business, a marketer can increase the sustainability of his brand. With time, the worth of a customer also increases the same as the snowball effect.

Increases customer lifetime value

What is a customer lifetime value?

Image Courtesy: Oberlo

It is the amount of money, which a company expects to be invested by a customer into their brand within his life span. In short, a company expects a sum of money that the buyer would spend while purchasing the brand’s product.

With relationship marketing in effect, a company can expect more money, because studies say that a loyal customer spends more on his brand as compared to a new customer.

Interestingly, this all happens without any massive investment such as acquiring costs or the investment on inbound marketing.

Disadvantages of Relationship Marketing

Requires a customer base

One of the major disadvantages of this branch of marketing is its inherent discriminative property. It does not benefit everyone equally. It provides benefits to only those businesses which possess a massive customer base in the first place.

While other businesses seek growth by acquiring more customers, this strategy seeks to make a profit from the repetition of the same purchase.

Therefore, it can’t be opted by small startups or businesses. No matter how dense or how deep a strategy your brand might develop, this strategy would benefit only those who have a crowded market base.

More investment of time:

This strategy could be time-consuming in both culmination and execution. Why? The goal of this category of marketing is not acquiring more customers, but maintaining a healthy relationship to build their loyalty towards your brand.

Loyalty is built when a customer repeatedly experiences a positive vibe from your service, and for this, he needs to repeatedly make purchases. To lure them into purchases regularly, you would need to put your resources only behind that.

You would need dedicated members to keep in touch with your clients. You would need to constantly feed their data into your system, for that purpose, a major part of your time would go in collecting that data.

Therefore, this is a time-consuming process.

Difficulties understanding a customer

One of the most basic flaws in this type of marketing is its root, i.e. the necessity of understanding the customer. Most of the established businesses can’t understand their customer base, and there are many others who face difficulty in understanding theirs, which makes the implementation of this process almost impossible.

Even after so many and major flaws, most of the businesses find this technique amazing. This technique might consume a lot of time for marketers, but its benefits still lure a lot of major companies because the value of loyal customers can’t be ignored.

How To Perfect Your Relationship Marketing Strategy

There are a few things we can do to ace our relationship marketing strategies, those are:

How to better your customer experience

The very first step towards planting relationships is providing your customers with amazing customer services. You should focus on solving the issues and queries of your customers as fast you could – irrespective of the means of queries.

Moreover, it is also recommended for new startups to make a serviceable customer services team, because they are the virtually the voice of your company.

Better employee retention can help

Your sales reps are the first physical contact a customer is offered with the brand. In a business such as the insurance or hotel sector, one person is assigned a client for the long haul. They would take care of the deal and the client. Whenever there is a concern, the client would ring them up.

Now, imagine a scenario where constant help is not constant. Every few months, the client finds a new point of contact. That would leave shaky thoughts in their head, furthermore, if the sales rep had developed a friendly relation with the client, they may not feel like continuing with you once their friend has left you.

After all, loyal customers would be loyal to the person who helped them first and then, to the brand they belong to.

Thus, your employee bounce rate is directly proportional to your client bounce rate.

Did you know, studies say that 80% of the employees decide within the first six months of their job whether they are going to stay here for more than a year or not? Therefore, it becomes important for the company to onboard employees and provides them with a healthy environment for work.

Image Courtesy: Referral Rock

Get better consumer insights

It won’t help if your customer support has all the data but doesn’t know how to use it. Therefore, you need to train them on how to be useful.

The data can be used for various jobs such as sending birthday wishes, following back with the answer to their query, etc.

However, if you think that it could hamper the privacy of your consumer, then you would be happy to know that 90% of the customers are fine with sharing their information with the company.

How to give better response to feedback

Feedback from consumers has always been of great use in eradicating the flaws of a business.

There are certain amazing methods using which a brand can respond to feedbacks more progressively.

One such method is ACAF.

ACAF stands for Ask, Categorize, Act, Follow-up. Its first step involves asking and encouraging customers to provide feedback. The second step involves classifying the problem as per its urgency or need.

Depending on the urgency, you would need to act rather immediately with some clients. Once you have acted upon it, you would need to follow-up to check whether the matter got resolved.

If not, then, restart the process.

How to win back lost deals

Rebuilding an old business is easier than building a new business from scratch. You would obviously have a benefit over startups. Why? Consumer’s data!

Over the years, a brand collects data about their customers, and this chunk of information would always be a lot more than the data a newbie has got. Therefore, you can make use of that information you have of your customers and from that information, you can try winning back the customers that may have gone passive.

How to promote loyalty

One of the most effective options for improving loyalty is to provide your customers with rewards.

The trend of rewarding your customers has gradually become a very significant part of relationship marketing. Why would it work? It is because this technique has a lot to do with human emotions and needs. Humans like being rewarded.

Moreover, who won’t like a free feast? If customers would get something from your brand, then they would come back to you.

Get the right help

The increase in the stats of businesses making use of CRM is not hidden. However, the question of why the use is booming at such a massive pace is still in the queue.

CRM is one of the most important tools to execute relationship marketing. The services of CRM for storing personal information of employees, recording their purchases, and their other personal information are unparalleled.

Furthermore, you can use a CRM tool to send automated emails on their birthdays, anniversaries, which would help a consumer feel more cherished. You can also use deal pipelines to structure your processes to further ensure that your client gets a top-notch treatment.

Moreover, there are special apps and software curate to help you do relationship marketing successfully.

If you use relationship marketing tools integrated with your CRM, you would make better profits from your marketing strategy.

For this purpose, we are going to list down the top 5 relationship marketing tools you should pick from:

Top 5 relationship marketing tools

#1. EngageBay

EngageBay is a complete package for those who need a CRM tool and a marketing tool both. It will help you streamline and automate your mundane tasks, but at the same time, it will also help you collect and process recorded data.

EngageBay provides amazing email services, including email reports and email sequence. With these services, a marketer can conveniently decide which message needs to be sent to whom.

Apart from this service, it provides amazing tools for deal management, live chat, ticket management, service automation, etc.

Using these features, you can help your customers feel heard and helped instantly. EngageBay further provides a marketing package, Marketing Bay, to address all your marketing needs. You can try it for yourself. Click here!

#2. SurveyMonkey

An under-rated part of marketing is conducting surveys, and for that purpose, you should keep a tool handy.

SurveyMonkey makes surveying quite simple and easy.

With SurveyMonkey’s powerful feature of online surveys, you can collect the views of your targeted customers about your product. The data will then be crunched into meaningful insights and charts for your marketing team’s next move.

#3. Podium

Podium is an online reputation management platform, which facilitates easy interaction with customers.

It helps you convert online prospects into offline customers, by letting you get in touch with them in a smooth and effortlessly convenient way.

With Podium, you get to manage your customer’s queries from different channels through a simple comprehensive inbox. Furthermore, the system intuitively helps you assign chats to the right people at the right team. This is crucial when it comes to pre-sales and post-sales treatment.

A customer would not wait around for too long, so Podium can help you reduce that gap.

#4. Hootsuite

Did you know, according to a study held in 2019, there were almost 2.95 billion people on social media worldwide?

Good marketers understand that social media is a very good means of reaching consumers.

Hootsuite is a platform that helps in maintaining one’s social media account. To keep them engaged you need to manage your social media existence along with maintaining a decent reputation.

Its services include automatic posting, post planning, and social analytics. Therefore, by just embedding this tool into your marketing campaign, you can save time and focus more on managing and interacting with your targeted customers.

#5. MailChimp

MailChimp is a powerful tool with all the features of a Customer Relationship Management system. Small startups might find it useful for aggregating, organizing, and managing the data of their potential audience.

MailChimp has often been pitched as one of the best all-in-one integrated marketing platforms with every marketing feature you could ask for.

MailChimp can be easily integrated with all CRM systems, thus, making it easy for customers of varied needs to be satisfied.

We would recommend loading your backpack with these five tools, shall you decide to try relationship marketing.

Akanksha Holani

Akanksha Holani is a multimedia content creator. She writes informative, research-based guide blogs for EngageBay about all things CRM.

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