It’s almost a contradiction in terms, isn’t it?
Relationship and marketing are fueled by different objectives: marketing with driving sales now and relationship marketing with the long-term.
So how is it we’re obsessed with using marketing to drive relationships now with our followers and customers?
Though they may seem opposites, when combined in relationship marketing, you can build trust, promote loyalty and boost satisfaction, helping you sell more today and in the future.
But as the sharing economy develops, it’s important to revisit relationship marketing to be sure you’re getting every benefit it can offer.
Keep reading to learn:
- How we’re shifting to a subscription economy
- The importance of business-consumer relationships in that shift
- 7 Tips for building a strong relationship with your customers
The Rise of the Subscription Economy
Today’s consumers show an increased interest in paying for access rather than outright ownership.
And it turns out to be a profitable change for businesses.
In 2017, subscription businesses grew revenues 8x faster than S&P 500 company revenues and 5x faster than US retail sales, according to a study by Zuora.
And it doesn’t take a total revamp of your business to see results.
Brands that have made only a small part of their business subscription-based (less than 10% of usage-based billing) grew twice as fast as companies with no usage-based billing at all.
While a shift to an access-driven economy isn’t an easy transition, it’s worth the effort.
For instance, back in 2009 and 2010, the auto industry was nervous that the millennial generation wasn’t buying as many cars as their parents, the Boomers, did in their day.
It turns out millennials just had a late start. Their share of the car ownership market reached 28%, outpacing Boomers for the first time, in 2015. The worry was much better redirected towards the recession.
In the auto industry, you can clearly see the shift from ownership to access-driven growth. And it’s a good measure considering how popular car-sharing and ride-hailing services have become.
Companies like Getaround, Zipcar, Uber, and Lyft have been doing well for the past few years, but guess who else is using them apart from millennials…
It’s everyone else.
Even Boomers who move to the city with their cars usually end up selling them because they don’t need them with their workplaces so near their homes. Having a car in the city is now an expensive inconvenience to many!
A look at other industries reveals a similar trend. In entertainment and housing, you can find behemoths like Netflix and Airbnb. Further out is crowdfunding, peer-to-peer lending, co-working, reselling, and knowledge- and talent-sharing, among others.
As technology, urbanization, adventure, and other factors continue to fuel the sharing economy, consumers find it more economical to access than to own.
They are also getting accustomed to organizations interacting with them on a more personal basis — essentially changing from a transaction-driven approach to a relationship one.
Relationship in a Subscription Economy
When success depends on subscribers’ loyalty, organizations nurture leads. They like to listen and help. And they often emphasize their 24/7 customer support.
Their goal: building and maintaining lasting relationships with customers.
This is often seen as a radical shift in focus. But ironically, it’s nothing new.
Even back in the days of the Silk Road and Spice Route, commodities like gold, silk, silver, and spices were traded on the basis of relationships built over time — relationships that depended on trust, satisfaction, and loyalty.
If you could analyze the list of a spice seller’s most loyal customers, you’d find that the same families had been buying spices from the same seller for generations. They trusted him to give them the quality products they needed.
Throughout history, it shows up again and again. Businesses are built on a solid foundation of long-term relationships between buyers and sellers.
Realizing this, businesses have also come to understand that it’s cheaper to keep a customer buying than to acquire a new one. The best way to do that is by reaching out and building a relationship.
A Customer-First Mindset
The social web has forced a return to relationship marketing. From product design to development and marketing, everything must be designed for the customer’s needs, comforts, and optimal satisfaction.
And of course, the customer is going to appreciate the effort.
As consumers, we’ve become used to being courted by organizations and expect individual attention. Or we won’t buy 🙂
Emotion drives our purchasing decisions. And we buy most often from the brands that make us feel comfortable and valued.
“Brand” is now defined by customer experience rather than the old amplification of desirability and uniqueness.
Nowhere is this truer than in subscription-based companies…
You provide good customer service, or customers will cancel their subscription and look to your competitor.
You’re nice to your customers, or they start a tweet-storm.
You can read about some businesses that made their customers happy on this post about 10 cases of great customer service.
How to Play Your Part in the Relationship
You don’t just wake up to lifelong fans. It takes strategic effort on your part to get their attention, liking, and trust.
The key: relationship marketing that turns customers into fans over time.
Here are 7 tips to help you do it:
1. Focus on repeat sales
Once-and-done sales aren’t a thing in relationship marketing.
Unlike transaction-based sales that focus on an immediate one-time sale, relationship marketing is based on the trust and loyalty of customers.
Companies that take this approach enjoy not just the customer’s repeat purchases but also free word-of-mouth marketing, brand advocates, and an audience committed to your success.
In addition to improved customer retention, you’ll see profitability from:
Less customer churn. Your customers are less likely to leave if you bond with them.
Lower price sensitivity. They understand your pricing and product quality, eliminating the need to justify it to them.
Word-of-mouth. Your Net Promoter Score — the chance that your customer will refer your business to someone else — will often increase as your customers become more loyal.
Easier expansion and diversification. Your customer will tell you the features and products they want. And once you launch them, your customers will be excited to try them out.
Lower cost of acquisition. Referrals from happy customers can lower your acquisition costs.
2. Leverage risk, salience, and emotion
Risk, salience, and emotion are three important relationship drivers that you can take advantage of. Here’s how each works:
Risk. According to marketing scholars, the higher the perceived risk in a decision, the more likely a customer will want to engage with you personally.
When making the purchasing decision, a consumer’s knowledge and experience determine whether they make a quick purchase or do more research. When they have to do more research, they are said to be in high-involvement with the buying decision.
This level of involvement reflects both their interest in the product and the risk of making a mistake when buying.
Some products that result in high-involvement of buyers include a car, a house, insurance coverage, and health products.
While they aren’t purchased often, these items are very important to the buyer and, unlike low-involvement purchases like a cup of coffee or magazine, the buyer must spend more time comparing features, benefits, warranties, prices, etc.
On top of all this, the buyer often suffer from post-purchase dissonance where anxiety makes them question the wisdom of their decision. If they could help it, they would.
Luckily, they can.
Relationship marketing strategies lower the perceived risk as the buyer gets to know you. This is a clear opportunity to build trust in high-risk purchases.
Salience. This is the prominence or level of importance of the relationship. In other words, how important is it to the buyer that you’re friends?
In the case of high-risk purchases, for instance, you’re their trusted expert who saves them the worry of wasting money or being harmed. Your friendship matters in that way.
In situations like these where high-risk and salience are in play, the buyer typically enters the exchange with expectations and intense emotion. To reduce the risk and uncertainty, they want reassurance from an expert.
The close ties and frequent communication you provide in relationship marketing can definitely benefit such situations.
Emotion. Certain products and services — think beauty and clothing — naturally arouse emotions. Such products are usually highly personal and associated with self-worth. The benefits provided by the product are usually more emotional than physical.
Generally, when emotions run high, you’ll also find that the buyers perceive risk and salience. They’re careful not to make mistakes.
3. Aim to inspire trust and commitment
In every relationship, trust plays an important role in the long-term success of the relationship.
Consumers value trust because it helps them spend less time shopping, select the best option for their needs, and spend less in the process.
With time, these benefits make them committed and loyal customers. In general, trust helps:
- Generate cooperative behavior, making the business process easier and more successful.
- Eliminate potentially harmful conflict.
- Reduce transaction costs.
- Reduce feelings of uncertainty and vulnerability.
As not every business can afford to cultivate a long-term relationship with all their customers, considerations must be made.
You might need to prioritize: Identify your Most Valuable Customers (MVCs) and focus on building a relationship with them first. This allows you to concentrate your resources on a small segment that can give you a good return on your efforts. Here are some ways to know your MVCs.
To build relationship with your customers, you need to know them — including their desires and motivation. This will help you target your customer support, your ads, and marketing campaign.
But you can’t know your customers unless you listen keenly to them. So, how do you become an effective listener?
Take time to create a sound strategy and put together a budget, especially if you’re restructuring or starting a new campaign.
Locate your real audience. Your audience gives you the best insight into the right message and medium for your campaign. Figure out who your best customers are, then look for where they hang out online.
Ask open-ended questions. You need comprehensive feedback from previous buyers. Ask them, “What do you think of our product” and “Can you give me an example…?” “Why?” questions also do well.
Don’t stereotype. Stereotyping is not only offensive to people, it will also leave you with inaccurate information and a poor understanding of your market.
Make use of the tools at your disposal. Thanks to technological advances, there are plenty of social listening tools to help you listen to your audience better. The best ones are easy to use, feature-packed, and offer good customer support. Don’t forget live chat on your website, email, SMSs, and IM.
5. Communicate in clear and honest language
Relationship marketing relies on straightforward and authentic communication.
As in everyday relationships, people are more connected with a brand when they feel it respects them and tells them the truth. This should be reflected in your content, your web copy, and your messaging.
6. Make sure your customer is satisfied
When your customers are satisfied, they’re more likely to recommend your products and buy more. It’s important, then, to track customer satisfaction.
Here are some ways to do that:
Surveys. Surveys allow you to get direct feedback from your customers. From the data you collect, you can calculate the Customer Satisfaction Index (CSI) for individual customers and your customers as a whole.
Customer help desk. When customers speak with your representatives, they often more honest and direct than when filling out a survey. Direct your customer service team to ask questions that give you a good measure of whether your customers are satisfied.
Complaints, concerns, and question. Customers may share their complaints and concerns in forums and on social media. Make sure you’re monitoring them so you know the conversations that are taking place.
7. You say “Thank You!”
Something as simple as thanking a customer can generate positive emotions while boosting trust and commitment.
Generally, gratitude enhances relationship marketing in three ways:
- Customers feel obligated to reciprocate for something you did by reflecting it in their behavior.
- Trust generated by gratitude, in turn, promotes commitment leading to a tighter bond.
- Long-term reciprocation of gratitude creates a cycle that contributes towards the relationship basket.
Bonus: Relationship Stages
Remember, your customers are all at different stages of the relationship with you. Here are 5 stages your customers will move through on their way to a strong, healthy relationship:
Awareness: The prospect is just shopping and you’re qualifying your leads. One of you may even have already identified the other as a likely exchange partner.
Exploration: Nothing has happened yet, so the buyer is free to do trials and a bit more research. This is the stage where they also realize the benefits of dealing with one seller they trust.
Expansion: You’ve been meeting for a while and you both see the benefits of working together. You realize how interdependent you are.
Commitment: This is where you promise each other to continue in relational transactions.
Dissolution: There’s always room for falling out so let’s leave this slot open, just in case.
Relationship matters. It matters a lot.
Your success depends on people knowing, liking, and trusting you, and relationship marketing is the #1 way to make that happen.
What are you doing to build relationship with your customers? And what are your biggest challenges?
About the Author: Maxwell Marx is a freelance copywriter with four years experience in 2018. This is his best attempt.