What are the Benefits of Relationship Marketing?

Discover how relationship marketing transforms customer engagement into a winning strategy, increasing loyalty, satisfaction and revenue. Essential for any company aiming for sustainable growth.
Morgan Hugoboom
22 February 2024
Blog
5
Les avantages du marketing relationnel

And Why Your Business Needs It

Customers have more options than ever when purchasing a product or service. Businesses need to stand out from competitors and establish a base of loyal customers. Part of this strategy involves building positive, continued relationships with customers. 

Relationship marketing is becoming an integral part of any brand’s customer relationship management (CRM) strategy. In fact, over 90% of businesses today use AI-driven personalization to generate growth. Relationship marketing allows brands to continue reaping the benefits gained from customer acquisition. By continuing customer engagements, brands can achieve long-term goals.

Benefits of relationship marketing include financial gains like a higher customer lifetime value (CLV). Additional benefits include increased awareness, referral marketing, customer loyalty, and opportunities for repeat purchases.

When just 20% of customers drive 80% of sales, building long-term customer connections through relationship marketing is one strategy a business shouldn’t ignore.

What is Relationship Marketing?

Relationship marketing is a strategy that focuses on building long-term relationships and connections with customers to enhance customer retention, brand awareness, and overall customer lifetime value (CLV). Through loyalty programs, feedback, and other personalization strategies, a brand can meet a customer’s needs and establish itself as a valued resource. By developing this relationship, a brand maximizes long-term benefits that pay dividends long after the initial acquisition and sale.

What are the Benefits of Relationship Marketing?

The benefits of relationship marketing are as many as they are varied: increased customer lifetime value (CLV), improved customer retention, targeted campaigns with higher conversions, and more. Relationship marketing invests in long-term goals to maintain loyal customers with future opportunities for sales. 

Benefits of relationship marketing include:

  • Higher ROI than customer acquisition alone
  • Increased customer lifetime value (CLV)
  • Higher customer satisfaction
  • More targeted, optimized customer journey
  • Lower marketing and advertising costs
  • Brand loyalty and customer retention
  • Referral and word-of-mouth marketing
  • Increased brand awareness
  • Repeat purchases, cross-selling, and upselling
  • Increased positive feedback and customer reviews
  • Stronger understanding of customers
  • Better organizational coordination and focus
  • Loyalty when things go awry

Higher ROI than Customer Acquisition Alone

Acquiring a new customer is costly. In some industries, acquiring a new customer can cost 25 times more than keeping an existing one. And while keeping an existing customer is cheaper, returning customers typically spend 67% more money than their newer counterparts. Implementing a relationship marketing strategy maximizes any potential ROI from the initial acquisition by continuing to nurture positive customer engagements.

Increased Customer Lifetime Value (CLV)

All benefits of relationship marketing lead to one major perk: increased customer lifetime value (CLV). When a customer develops a trusted, valued relationship with a brand, they are more likely to return for repeat purchases. The customer also delivers other benefits outside of direct sales: word-of-mouth referrals, brand awareness, and positive feedback and reviews.  

Higher Customer Satisfaction

A customer who feels more connected to a brand is also likely to feel more satisfied with their experience. This satisfaction is also a natural consequence of relationship marketing as a whole. From soliciting feedback to creating personalized experiences, relationship marketing strategies prioritize catering to a customer’s needs and providing excellent customer service.

More Targeted, Optimized Customer Journey

Relationship marketing will typically involve monitoring customer behaviors or collecting data to understand opportunities. By understanding their customers and those marketing opportunities better, brands can optimize each customer journey for higher conversion. 

Lower Marketing and Advertising Costs

Relationship marketing provides more targeted campaigns while requiring fewer resources. From automating campaigns and responsive marketing to optimizing performance through targeted campaigns and messaging, brands can maximize the impact of each resource. Other benefits of relationship marketing help reduce marketing and advertising costs. For example, referral marketing and user-generated content offer free (or low-cost) promotion.

Brand Loyalty and Customer Retention

Building a positive relationship with customers establishes valuable brand loyalty. This stronger loyalty reduces customer turnover and the need to invest heavily in high-cost strategies like customer acquisition. A loyal customer is also more likely to be a repeat customer, increasing the potential for future engagement and sales. 

Referral and Word-of-Mouth Marketing

Customers with positive experiences and a deeper connection to a brand are more likely to recommend it to friends and family. This offers free or no-cost marketing opportunities to companies. Existing customers organically market the brand through their own efforts.

This referral marketing optimizes potential conversion rates. Referrals help generate trust from the beginning of a relationship. People are more apt to buy a product or service that has been recommended to them by a trusted source.

Increased Brand Awareness

All of the customer reviews, word-of-mouth referrals, and other positive engagement that come from relationship marketing also come with another benefit: increased brand awareness. A potential customer who has heard positive things about a brand is more likely to turn to it for future sales.

If they have received valuable content from a brand, they’re more likely to trust that brand to solve their future needs. This not only increases potential sales, but it reduces the overall cost to acquire that customer, move them through the funnel, and generate that first purchase.

Repeat Purchases, Cross-selling, and Upselling

Opportunities for future sales is one of the most valuable benefits of relationship marketing. A customer who has already had a positive experience will remember that when another need arises. Now, the brand has an audience that is already highly attuned to the brand and more likely to convert again. This creates opportunities for cross-selling new products, upselling related products, or targeting customers when a favorite product releases a new design or comes back in stock.

Increased Positive Feedback and Customer Reviews

An important relationship marketing strategy is soliciting customer feedback. Not only does this provide valuable customer data and social proof, but it improves the relationship between a brand and its customers. Customers feel like their opinions matter and a brand genuinely cares about their thoughts and experiences.

This creates a cycle where customers are more likely to leave reviews and feedback because they feel valued, brands gain customer insights for improving customer experience, and customers continue to enjoy positive brand experiences. Customers feel more positively toward a brand, and a company gains customer data, referral marketing, and social proof.

Stronger Understanding of Customer

A brand builds a closer relationship with its customers by gaining a stronger understanding of them. A brand that invests in knowing its customers gains a heightened awareness of customer behaviors, needs, and details. This customer knowledge allows a brand to make better marketing and strategic decisions at every level of its business. With data-backed strategies, a brand can reduce waste, target efforts for better conversion, and improve profits. 

Better Organizational Coordination and Focus

Brands that prioritize relationship marketing also build stronger, more coordinated efforts within their organization. Teams work across departments with the common goal of providing an excellent customer experience.

For example, a brand utilizing relationship marketing might coordinate campaigns across email, SMS, and other digital and in-person touchpoints. Each channel might be customized to the respective audience, but it serves a common goal and shares a single brand voice. This reduces organizational silos, provides a branded experience for customers at every touchpoint, and streamlines company operations. 

Loyalty When Things Go Awry

Is a popular item suddenly out of stock? Is an unexpected production or shipping delay causing customer ire? Is there a minor public relations issue? Even the most diligent companies will experience the occasional snafu.

Brands with a strong customer relationship and a base of loyal customers are more likely to minimize any potential damage from an issue. A loyal customer who already has a history of positive experiences with a brand is more likely to forgive a misstep, wait for a favorite product to come back in stock, and otherwise stay with that business. 

Examples of Relationship Marketing

Relationship marketing prioritizes excellent, personalized customer experience that establishes a brand as a valuable part of the customer’s life. 

Relationship marketing strategy examples include:

  • Personalizing the customer experience
  • Collecting customer feedback (polls, surveys)
  • Instituting customer loyalty programs
  • Offering incentives, discounts, and rewards
  • Creating a brand philosophy, ethos, or cause
  • Thanking customers for their continued business
  • Using brand ambassadors, advocacy programs, user-generated content marketing
  • Developing content that offers customers value (“develop educational content”)
  • Incorporating technology to better serve customer needs

Looking for more ways to start your own relationship marketing strategy? Check out our guide on incorporating relationship marketing into your business.

Relationship Marketing Benefits All Business

Customers are more likely to do business with a brand they know. Relationship marketing helps businesses connect with their customers on a more impactful level, providing the connection needed to sustain long-term profits and growth. 

A business today cannot succeed without moving beyond the traditional, transactional strategy and incorporating a personalized, customer-focused approach. When repeat customers drive the majority of profits, the biggest opportunities lie in nurturing what a business already has: its customers.

Find out how your business can benefit from Dialog Insight.

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