Relationship marketing

The strategy of relationship marketing is to develop and manage a trusting, long-term association with customers and other markets that have links with the company.

How it works

Relationship marketing aims to replicate the type of interaction that village stores once had with their customers, offering a high level of personalized service to win them over for a lifetime. While small, local businesses naturally work this way, large corporations have now changed their focus from making the sale to relationships, and from short-term reward to long-term gain. The marketer can extend the network beyond the engaged customer to include employees, suppliers, and others.

Six markets model

Relationship marketing has established a strategy for communicating with the customer. This strategy defines six markets—not just traditional customer markets—where companies should direct their marketing efforts.

Influence markets To maintain good public
relations, the company works with regulators and consumer or environmental groups.

Supplier markets Building a relationship of collaboration with
suppliers makes good commercial sense.

Referral markets Customers can be word-ofmouth advocates for a company. Related businesses may also refer trade.

Internal markets A company’s employees are its internal customers, working together to represent its goals, mission, and strategy.

Recruitment markets To attract the best
employees, a company may market itself by offering incentives to staff.

Customer markets The main marketing focus is on customers, but activities are based more on building long-term customer relationships than on acquiring new customers.

CASE STUDY

Starbucks
The strategy of coffee-shop chain Starbucks exemplifies effective relationship marketing. Centered on core customer and internal markets, it also involves suppliers, referrals, and recruitment (employee) markets.

Marketing to customers

• ❯ Social media
• ❯ Business crowdsourcing
• ❯ Familiarity with customers
• ❯ Loyalty program
• ❯ Reward card app
• ❯ Mobile payments

Marketing internally

• ❯ Barista training
• ❯ Tech development opportunities

Marketing to employees

• ❯ Stock options
• ❯ Medical insurance
• ❯ Partnership

Marketing to suppliers

• ❯ Fairtrade programs
• ❯ Quality control

NEED TO KNOW

❯ Key account management (KAM) System that coordinates departments in a businessto-business (B2B) company to serve big clients

❯ Frequency marketing Promotion aimed at increasing repeat sales by rewarding customers for repeat purchases

❯ Direct response (DR) Marketing that invites consumers to respond directly to the advertiser, by mail, telephone, or email

❯ Transaction marketing Strategy that aims to persuade customers to make additional one-time purchases at the point of sale

“Ignore the human element of marketing
at your own peril.”

Bob Garfield