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Relationship marketing (loyalty marketing) (Benefits of RM (Loyal customer…
Relationship marketing (loyalty marketing)
Building and maintaining long-term mutually beneficial and profitable relationship between the firm and its customer
Before the advent (the concept was born) of RM, we used to have transactional marketing -> one-off relationship between firm and customer
Benefits of RM
Loyal customer can spread positive word of mouth recommendation
Leads to more effective customer targeting
Loyal customer become brand advocates
Provide suggestions for improvement
It is 7 times cheaper to retain an existent customer than to attract a new one
Pareto's principles: 80% of the company's profit come from 20% of customer who are loyal.
Loyal customer spend more due to repeat purchases
Loyal customers are often insensitive to price changes
Relationship marketing ladder
Customers
Someone who has actually bought the product
Client
Someone who buys regularly
Prospects
Anyone who is actually interested in buying a company's product
Supporter
Buys regularly but also promotes the product as well as gives the company ideas for improvement
Suspects
Anyone who might be interested in the company's product
Advocates
Buys regularly, promotes the brand, gives ideas for improvemnet and lastly defends the brand in public
Relationship marketing techniques
Data based management
Customer research (helps the company make better understand customers and hence firm is in a better position to serve customers well)
Provide high level of customer support
Compelling brand values
Loyalty schemes/cards
Provide good quality products (deliver on your promises about product
Expectations: what we think before buying product
Perceptions: what we think after using the product
If perceptions far exceed expectation: customer delight
If expectation exceeds perceptions: customer dissatisfaction
If perception exceed expectations: customer satisfaction