Enhance customer loyalty with relationship marketing

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43 L 48.796875 43 C 48.275261 38.532432 44.604108 35 40 35 z M 40 37 C 43.877484 37 47 40.122516 47 44 C 47 47.877484 43.877484 51 40 51 C 36.122516 51 33 47.877484 33 44 C 33 40.122516 36.122516 37 40 37 z M 18 46 C 10.306206 46 4 52.306206 4 60 L 4 64 L 26.269531 64 C 25.457834 65.84109 25 67.868987 25 70 L 25 74 L 55 74 L 55 71 L 55 70 C 55 67.868987 54.542166 65.84109 53.730469 64 L 76 64 L 76 60 C 76 52.306206 69.693794 46 62 46 C 55.158556 46 49.446319 50.988522 48.257812 57.503906 C 45.884282 55.926028 43.045242 55 40 55 C 36.954758 55 34.115718 55.926028 31.742188 57.503906 C 30.553681 50.988522 24.841444 46 18 46 z M 18 48 C 24.245162 48 29.37815 52.832416 29.921875 58.941406 C 28.934708 59.842395 28.067924 60.868215 27.347656 62 L 6 62 L 6 60 C 6 53.397794 11.397794 48 18 48 z M 62 48 C 68.602206 48 74 53.397794 74 60 L 74 62 L 52.652344 62 C 51.932076 60.868215 51.065292 59.842395 50.078125 58.941406 C 50.62185 52.832416 55.754838 48 62 48 z M 40 57 C 47.153388 57 53 62.846612 53 70 L 53 72 L 27 72 L 27 70 C 27 62.846612 32.846612 57 40 57 z M 8 58 C 7.449 58 7 58.449 7 59 C 7 59.551 7.449 60 8 60 C 8.551 60 9 59.551 9 59 C 9 58.449 8.551 58 8 58 z M 12 58 C 11.449 58 11 58.449 11 59 C 11 59.551 11.449 60 12 60 C 12.551 60 13 59.551 13 59 C 13 58.449 12.551 58 12 58 z M 16 58 C 15.449 58 15 58.449 15 59 C 15 59.551 15.449 60 16 60 C 16.551 60 17 59.551 17 59 C 17 58.449 16.551 58 16 58 z M 20 58 C 19.449 58 19 58.449 19 59 C 19 59.551 19.449 60 20 60 C 20.551 60 21 59.551 21 59 C 21 58.449 20.551 58 20 58 z M 24 58 C 23.449 58 23 58.449 23 59 C 23 59.551 23.449 60 24 60 C 24.551 60 25 59.551 25 59 C 25 58.449 24.551 58 24 58 z M 28 58 C 27.449 58 27 58.449 27 59 C 27 59.551 27.449 60 28 60 C 28.551 60 29 59.551 29 59 C 29 58.449 28.551 58 28 58 z M 52 58 C 51.449 58 51 58.449 51 59 C 51 59.551 51.449 60 52 60 C 52.551 60 53 59.551 53 59 C 53 58.449 52.551 58 52 58 z M 56 58 C 55.449 58 55 58.449 55 59 C 55 59.551 55.449 60 56 60 C 56.551 60 57 59.551 57 59 C 57 58.449 56.551 58 56 58 z M 60 58 C 59.449 58 59 58.449 59 59 C 59 59.551 59.449 60 60 60 C 60.551 60 61 59.551 61 59 C 61 58.449 60.551 58 60 58 z M 64 58 C 63.449 58 63 58.449 63 59 C 63 59.551 63.449 60 64 60 C 64.551 60 65 59.551 65 59 C 65 58.449 64.551 58 64 58 z M 68 58 C 67.449 58 67 58.449 67 59 C 67 59.551 67.449 60 68 60 C 68.551 60 69 59.551 69 59 C 69 58.449 68.551 58 68 58 z M 72 58 C 71.449 58 71 58.449 71 59 C 71 59.551 71.449 60 72 60 C 72.551 60 73 59.551 73 59 C 73 58.449 72.551 58 72 58 z M 30 68 C 29.449 68 29 68.449 29 69 C 29 69.551 29.449 70 30 70 C 30.551 70 31 69.551 31 69 C 31 68.449 30.551 68 30 68 z M 34 68 C 33.449 68 33 68.449 33 69 C 33 69.551 33.449 70 34 70 C 34.551 70 35 69.551 35 69 C 35 68.449 34.551 68 34 68 z M 38 68 C 37.449 68 37 68.449 37 69 C 37 69.551 37.449 70 38 70 C 38.551 70 39 69.551 39 69 C 39 68.449 38.551 68 38 68 z M 42 68 C 41.449 68 41 68.449 41 69 C 41 69.551 41.449 70 42 70 C 42.551 70 43 69.551 43 69 C 43 68.449 42.551 68 42 68 z M 46 68 C 45.449 68 45 68.449 45 69 C 45 69.551 45.449 70 46 70 C 46.551 70 47 69.551 47 69 C 47 68.449 46.551 68 46 68 z M 50 68 C 49.449 68 49 68.449 49 69 C 49 69.551 49.449 70 50 70 C 50.551 70 51 69.551 51 69 C 51 68.449 50.551 68 50 68 z"/></svg> </a> </div> <main id="site-main" class="site-main outer site-main-post has-post-image"> <div class="feature-post-wrapper"> <article class="post-full post tag-customer-and-market-research tag-customer-marketing tag-article tag-customer-retention "> <section class="post-full-content Customer and market research"> <header class="post-full-header"> <div class="post-full-header-wrapper"> <section class="post-full-meta"> <time class="post-full-meta-date" datetime=" 2022-08-26">26 August 2022</time> <span class="reading-time">7 min read</span> </section> <h1 class="post-full-title">Enhance customer loyalty with relationship marketing</h1> <section class="post-full-meta"> <a href="/tag/customer-and-market-research/">Customer and market research</a> </section> <div class="post-author-with-linkedin-wrapper"> <div class="post-author-wrapper"> <section class="post-full-authors"> <section class="author-card"> <a href="/author/daniel/"> <img class="author-profile-image" src="/content/images/size/w300/2022/08/Daniel-Hopper.jpeg" alt="Daniel Hopper" /> <section class="author-card-content"> <h4 class="author-card-name">Daniel Hopper</h4> <div class="post-full-footer-right"> <div class="author-card-button">Read More</div> </div> </section> </a> </section> </section> </div> </div> </div> <div class="post-full-image" style="background-image: url(/content/images/2022/08/humberto-arellano-N_G2Sqdy9QY-unsplash--1-.jpg);"> </div> </header> <div class="post-content"> <aside class="toc-container"> </aside> <p>It costs less to retain existing customers than it does to attract new ones.</p><p>Loyal customers are profitable.</p><p>They purchase from a business more than once.</p><p>They tell their friends.</p><p>Businesses do not need to invest as much into marketing to attract new customer leads.</p><p>We all want loyal customers, right?</p><p>This article explores the relationship marketing strategy and tactics businesses can use to encourage loyalty from their target customers.</p><figure class="kg-card kg-embed-card"><iframe src="https://cdn.embedly.com/widgets/media.html?src=https%3A%2F%2Fwww.youtube.com%2Fembed%2FqN8DlZP0e0E%3Ffeature%3Doembed&display_name=YouTube&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DqN8DlZP0e0E&key=a19fcc184b9711e1b4764040d3dc5c07&type=text%2Fhtml&schema=youtube" allowfullscreen="" frameborder="0" height="480" width="854" title="How to Use Relationship Marketing to Enhance Customer Loyalty" class="fp aq as ag cf" scrolling="auto" style="box-sizing: inherit; height: 388.938px; top: 0px; left: 0px; width: 692px; position: absolute;"></iframe></figure><h2 id="what-is-loyalty"><strong>What is Loyalty?</strong></h2><p>The mass-marketing approaches of the ’60s and ’70s ignored the role of customer loyalty as an essential parameter of marketing activities. There has long been a shift from this transaction based-approach into a relationship-based strategy.</p><p>The focus changes from acquisition to retention. The new goal is to enhance customer loyalty by focusing on existing customers' lifetime value, considered just as important as attracting new customers.</p><p>Loyalty is the ongoing trust in a person or thing, fostering strong feelings of support or allegiance. A person feels a strong sense of belonging to that relationship. In business, this feeling of loyalty a customer feels to a brand or business yields a deeply held commitment for consistent future consumption. Often, companies use repeat purchases as an indicator of loyalty.</p><p>I use the term customer loyalty in this article instead of brand loyalty to emphasise that loyalty is a feature of people rather than a brand's characteristic.</p><blockquote><em><em><em>“Customer loyalty is difficult to define. In general, there are three distinctive approaches to measure loyalty: behavioural measurements; attitudinal measurement; and composite measurements.” (Nyadzayo & Khajehzadeh, 2016)</em></em></em></blockquote><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/700/0*9EBYCeNdR3qFQmQh.png" class="kg-image" alt loading="lazy"><figcaption>Conceptualisations of Customer Loyalty (Uncles, Dowling & Hammond, 2003)</figcaption></figure><h3 id="loyalty-pays-off"><strong>Loyalty pays off</strong></h3><p>Customer loyalty is profitable. One study found that:</p><blockquote>“when a company retains just 5 percent more of its customers, profits increase by 25 percent to 125 percent…” (Bowen & Chen, 2001).</blockquote><p>Loyal customers provide more repeat business and are less likely to shop around; this higher retention of existing customers reduces marketing costs.</p><p>When a brand has generated loyalty from customers, its customer base becomes less sensitive to competitors' marketing efforts. It makes sense that business focus their energy on strengthening relationships with customers to enhance their loyalty.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/700/0*uMqh2nz9d6DqYCgc.png" class="kg-image" alt="process of building customer relationships" loading="lazy"><figcaption>The effect of value-adding strategies in a long-term relationship (Ravald & Grönroos, 1996)</figcaption></figure><h2 id="relationship-marketing"><strong>Relationship marketing</strong></h2><p>A relationship marketing strategy is:</p><blockquote><em>“A core service around which to build a customer relationship, customizing the relationship to the individual customer, augmenting the core service with extra benefits, pricing services to encourage customer loyalty, and marketing to employees so that they, in turn, will perform well for customers.” (Berry, 1983)</em></blockquote><p>Relationship marketing attracts, develops, maintains, enhances customer satisfaction and fosters customer retention.</p><p>The focus is the customer's lifetime value rather than the value of a single transaction –the underlying assumption being that establishing and maintaining relationships with customers will foster customer retention. Businesses use strategies to bond with their customers to enhance their commitment.</p><p>As you can see in the model above, trust is a component that comes before loyalty.</p><p>Trust is one of the foundations of relationship marketing, and it is a customer’s willingness to rely on a specific business or brand. Trust reduces uncertainty and vulnerability, giving customers a good reason to stay in a relationship as they can value relationships that they do not have to monitor.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/640/1*P7WFAiVxT60khoNF_Rvcqw.png" class="kg-image" alt="model of relationship marketing" loading="lazy"><figcaption>A model of relationship marketing</figcaption></figure><p>Building a relationship is based on the formation of a bond. This bond is the psychological, emotional, economic, or physical attachment that binds parties together. The strength of this bond can determine a customer’s commitment and loyalty to a brand.</p><p>Some customers will only bond with the company based on price.</p><p>The first level of relationship marketing relies primarily on pricing incentives to secure customers’ loyalty, where businesses bond with customers to save money. Service providers often reward loyal customers with special price offers.</p><p>This advantage is unsustainable, and customer bonds based on price will never foster true loyalty.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/700/0*7MEJ4UhN78urW6qH.png" class="kg-image" alt="three levels of relationship marketing" loading="lazy"><figcaption>Levels of customer relationships (Berry, 199%)</figcaption></figure><p>Practising higher levels of relationship marketing gives the more significant potential for sustained competitive advantage.</p><p>Level two is a social bond, and level three is a structural bond.</p><p>Structural bonds provide solutions to significant customer problems, as discussed by Berry (1995):</p><blockquote><em>“When relationship marketers can offer to target customers value-adding benefits that are difficult or expensive for customers to provide and that are not readily available elsewhere, they create a strong foundation for maintaining and enhancing relationships.” (Berry, 1995)</em></blockquote><h2 id="targeting-profitable-customers"><strong>Targeting Profitable Customers</strong></h2><p>Some customers will be more profitable to a business than others. Some customers are more ‘loyalty-prone’ if they receive good service, which means they are happy to use one brand or company.</p><p>Other customers are ‘deal-prone’, always on the lookout for alternative and discount offers.</p><p>These types of customers are stayers and switches. <strong><strong>Stayers</strong></strong> have the possibility of lifetime value, as their motivation is to reduce their available choices and repeatedly use certain suppliers to simplify the process. It reduces the perceived risks of consumption.</p><p><strong><strong>Switchers</strong></strong> do not exhibit loyalty and have a repertoire of brands from which they regularly choose.</p><p>Having systems to recognise customers' characteristics is vital to help us target customers who are more likely to stay.</p><h3 id="customer-satisfaction"><strong>Customer satisfaction</strong></h3><p>Customer satisfaction is one of the most important criteria for customer loyalty.</p><p>When satisfaction levels are high, the potential for loyalty is high; and when satisfaction is low, there is a meagre chance of retaining customers. Satisfaction is a popular measurement that marketers use to determine how happy customers are with their company’s services and products.</p><p><a href="https://brandyourselfbetter.com/blog/post/90754/using-research-to-better-understand-your-target-market?ref=customermarketingalliance.com" rel="noopener ugc nofollow">Businesses can use research</a>, such as customer surveys to determine how happy their customers are and improve their experiences. Happy customers are more likely to tell their friends about their experience, as there is a relationship between being highly satisfied and the likelihood of spreading positive word of mouth.</p><p>The same also goes with loyalty — loyal customers are more likely to spread positive word-of-mouth and recommend your business to others.</p><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/700/1*O7bGIQ-8pwYaEIchWBYGlQ.jpeg" class="kg-image" alt="Tools to enhance customer loyalty" loading="lazy"><figcaption>Tools to enhance customer loyalty (source: author)</figcaption></figure><h2 id="tools-to-enhance-customer-loyalty"><strong>Tools to enhance customer loyalty</strong></h2><p>The cost of replacing defected customers is significantly higher than the price of retaining them. There are several tools a business can use to enhance customer loyalty; I will discuss four options: Loyalty programs, benchmarking performance, CRM, and branding.</p><h3 id="loyalty-programs"><strong>Loyalty programs</strong></h3><p>A popular strategy for maintaining customer loyalty is through loyalty programs. For example, a popular one is the coffee card at your local café, often getting the tenth coffee free. This strategy only tends to work if the frequency of consumption is high.</p><p>Loyalty programs provide financial and relationship rewards to customers, and there are two aims:</p><ul><li>One is to increase sales revenues through increased purchase levels and/or expanding the range of products consumed.</li><li>The second is a defensive aim, to build a closer bond between the brand and current customers, to maintain them in the existing customer base.</li></ul><h3 id="benchmarking-performance"><strong>Benchmarking performance</strong></h3><p>The second strategy for enhancing customer loyalty is by benchmarking service quality. Improving service quality should increase customer loyalty.</p><p>Relationship marketing and service improvement go hand in hand. Businesses should do everything they can to keep improving their customer experience. This service quality adds more value to the core product, enhancing customer satisfaction, strengthening relationship bonds, and increasing loyalty.</p><p>Benchmarking the level of performance, you expect from your staff and/or systems helps ensure keeping the level of quality high.</p><p>Use customer surveys to analyse your services and take the results of your loyal customers.</p><p>Use this as internal benchmarks for customer service quality. Benchmarking sets a minimum standard of service quality. Holding your business to a strict standard does not ensure every customer will return, but there will be an increase in loyalty.</p><p>Furthermore, often dissatisfaction is because of a negative customer service experience rather than the product or service itself.</p><h3 id="crm-%E2%80%94-customer-relationship-management"><strong>CRM — Customer Relationship Management</strong></h3><p>Advances in technology have removed many barriers for businesses to maintain relationships with clients or customers over the past thirty years.</p><p>CRM manages all of your company’s relationships and interactions with customers and potential customers. Email database management, for example, enables businesses to be in contact with customers regularly. Because past experiences impact customer satisfaction, a CRM's quality can mediate how customer satisfaction translates into loyalty.</p><p>When customers perceive a higher quality of CRM, this strengthens relationships.</p><blockquote><em>“CRM quality comprising of trust and commitment is crucial in building and maintaining long-term relationships and enhancing customer loyalty.” (Nyadzayo & Khajehzadeh, 2016)</em></blockquote><figure class="kg-card kg-image-card kg-card-hascaption"><img src="https://miro.medium.com/max/441/0*DK9qpNDkwSbfXG9B.png" class="kg-image" alt loading="lazy"><figcaption>Model of customer loyalty (Nyadzayo & Khajehzadeh, 2016)</figcaption></figure><h3 id="brand-image"><strong>Brand image</strong></h3><p>The fourth way to increase customer loyalty is by investing in your branding and the image you portray in customers' minds. Your brand can be a mediator of the link between satisfaction and loyalty.</p><blockquote><em>A strong brand “increases customers’ trust of invisible products, while helping them to better understand and visualise what they are buying.” (Berry, 2000)</em></blockquote><p>The more customers connect with your brand, the more they trust you. Research has shown (see Nyadzayo & Khajehzadeh, 2016) that a stronger brand image can lead to better customer relationships and enhanced loyalty. Just look at Apple around ten years ago!</p><h2 id="final-words"><strong>Final Words</strong></h2><p>In conclusion, customer loyalty is an ongoing positive relationship between a customer and a business, resulting in increased profitability. It costs less to retain customers than it does to attract new ones.</p><p>The article has explored practical strategies that businesses can use to enhance their customer loyalty through relationship marketing.</p><p><strong><strong>Thank you for reading.</strong></strong></p><p>I hope you learnt something new!<br></p> </div> <aside class="post-upgrade-cta hidden-upgrade"> <div class="post-upgrade-cta-content"> <img src="/content/images/2024/07/android-chrome-192x192--1--1.png" alt="Customer Marketing Alliance icon" class="site-logo" /> <h2>Like what you see? 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No page unturned. </p> <div class="post-upgrade-buttons-wrapper"> <a class="button large primary" href="https://certified.productmarketingalliance.com/p/product-marketing-certified-core" target="_blank">Get certified</a> </div> </div> </aside> <section class="post-full-authors post-full-authors-with-bio"> <section class="author-card"> <div class="post-full-authors-content"> <p>Written by: </p> </div> <a href="/author/daniel/"> <img class="author-profile-image" src="/content/images/size/w300/2022/08/Daniel-Hopper.jpeg" alt="Daniel Hopper" /> <section class="author-card-content"> <h4 class="author-card-name">Daniel Hopper</h4> <p>Daniel Hopper is the Assistant Project Manager at Orb Property Consultants. He helps businesses create a unique identity with content that positions you as an expert and illustrates your value. </p> <div class="post-full-footer-right"> <div class="author-card-button">Read More</div> </div> </section> </a> </section> </section> </section> <section class="subscribe-form"> <p>Get industry insights</p> <form data-members-form="subscribe"> <input data-members-email type="email" required="true" placeholder="youremail@example.com" /> <br> <button type="submit">Join</button> </form> </section> <aside class="read-next"> <aside class="read-more-wrap outer"> <header class="read-next-card-header"> <h3><span>More in</span> <a href="/tag/customer-and-market-research/">Customer and market research</a></h3> </header> <div class="read-more inner"> <article class="post-card"> <a class="post-card-image-link" href="/five-strategies-for-an-anti-fragile-approach-to-marketing-what-your-cmo-should-know/"> <img class="post-card-image" src="/content/images/size/w800/2024/11/5-strategies-for-an-anti-fragile-approach-to-marketing---What--your-CMO-should-know.png" alt="5 strategies for an anti-fragile approach to marketing: What your CMO should know" /> </a> <div class="post-card-content"> <div class="post-visibility-public" href="/signin">Members-only</div> <a class="post-card-content-link" href="/five-strategies-for-an-anti-fragile-approach-to-marketing-what-your-cmo-should-know/"> <header class="post-card-header"> <h2 class="post-card-title">5 strategies for an anti-fragile approach to marketing: What your CMO should know</h2> </header> <section class="post-card-excerpt"> <p>During a recession, it’s inevitable that budgets are cut, teams reduced, and plans scaled back. 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At first, building your customer marketing function may seem like an overwhelming task to take on. But we've got your back. Keep these key ideas in mind, and you’ll nail it the first time round....</p> </section> </a> <footer class="post-card-meta"> <ul class="author-list"> </ul> <span class="reading-time">7 min read</span> </footer> </div> </article> <article class="post-card"> <a class="post-card-image-link" href="/privacy-vs-personalization-in-customer-marketing/"> <img class="post-card-image" src="/content/images/size/w800/2024/06/dayne-topkin-u5Zt-HoocrM-unsplash--1-.jpg" alt="Privacy vs personalization: Striking the balance with customer marketing techniques" /> </a> <div class="post-card-content"> <div class="post-visibility-public" href="/signin">Members-only</div> <a class="post-card-content-link" href="/privacy-vs-personalization-in-customer-marketing/"> <header class="post-card-header"> <h2 class="post-card-title">Privacy vs personalization: Striking the balance with customer marketing techniques</h2> </header> <section class="post-card-excerpt"> <p>With personalization being so important, how do you accomplish it without compromising your customer’s data or privacy? 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intervalId = null; } }); } else { console.error("Could not find #ghost-portal-root iframe, retrying..."); if (!intervalId) { intervalId = setInterval(callPortalIframe, 1000); } } } document.addEventListener("DOMContentLoaded", function() { console.log("DOM fully loaded"); let currentUrl = window.location.href; let link = document.querySelector('a[href="https://www.customermarketingalliance.com/#/portal/signup/"]'); if(link){ link.addEventListener('click', function(event) { console.log('Link was clicked!'); callPortalIframe(); }); } else { console.log('The link was not found on the page'); } if ( currentUrl === "https://www.customermarketingalliance.com/#/portal/signup/" || currentUrl === "https://www.customermarketingalliance.com/#/portal/account/plans/" ) { callPortalIframe(); console.log("You are on the signup page"); } else if ( currentUrl === "https://www.customermarketingalliance.com/#/portal" || currentUrl === "https://www.customermarketingalliance.com/account-free/#/portal" || currentUrl === "https://www.customermarketingalliance.com/pro-plus-membership-dashboard/#/portal" || currentUrl === "https://www.customermarketingalliance.com/account/#/portal" ) { callPortalIframe(); console.log("You are on the portal/viewplans page"); } else { console.log("You are not on the signup/plan page"); } // Start observing the target node for configured mutations const targetNodePortalRoot = document.getElementById("ghost-portal-root"); if (targetNodePortalRoot) { const config = { attributes: true, childList: true, subtree: true }; const poratalObserver = new MutationObserver(function() { callPortalIframe(); }); poratalObserver.observe(targetNodePortalRoot, config); } else { console.error("Could not find #ghost-portal-root element"); } }); })(); </script>  <script type="text/javascript" src="https://www.customermarketingalliance.com/assets/built/jquery.js?v=945d8828d2" ></script> <script type="text/javascript" src="https://www.customermarketingalliance.com/assets/built/jquery.fitvids.js?v=945d8828d2" ></script> <script type="text/javascript" src="https://www.customermarketingalliance.com/assets/built/ghost-lunr.js?v=945d8828d2" defer></script> <script type="text/javascript" src="https://www.customermarketingalliance.com/assets/built/search.js?v=945d8828d2" defer></script> <script type="text/javascript" src="https://www.customermarketingalliance.com/assets/%20built/jquery.fitvids.js?v=945d8828d2"></script> <script> // NOTE: Scroll performance is poor in Safari // - this appears to be due to the events firing much more slowly in Safari. // Dropping the scroll event and using only a raf loop results in smoother // scrolling but continuous processing even when not scrolling $(document).ready(function () { // Start fitVids var $postContent = $(".post-full-content"); 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