What is "relationship marketing"?

In today’s world, business has become a lot more complex, and so has the marketing involved with it. But it is no longer sufficient to just market your product. It is equally important to keep your existing customers satisfied. In fact, your existing customers could end up buying more of your product or service provided they are satisfied with your service. Relationship Marketing is the kind of marketing which does exactly this. It emphasizes on consumer retention and continual satisfaction rather than just the per-case individual transaction.

Relationship marketing came into being because of a strange thought that businesses were spending far more time and money to get new customers and almost nothing to retain older ones. This thought led scholars like Leonard Berry (Texas A&M) and Jagdish Sheth (Emory University) to build up on the concept of relationship marketing. In fact, these two individuals were the first to use the term “Relationship Marketing”. Further broadening of the scope of marketing beyond individual transactions was done by the guru of marketing, Theodore Levitt (Harvard). However, although these scholars were ones who recognized its presence, relationship marketing was in use (although to a lesser extent) much prior to its terminology.

Leonard Berry suggested that “relationship marketing can be applied when there are alternatives to choose from, when the consumer makes the selection decision and when there is an ongoing and periodic desire for the product or service”. This sentence has been the foundation of where relationship marketing can be applied. Breaking apart the sentence gives a clearer view that if a customer has alternatives to choose from, and if the customer has to make a selection based on a product or service, which they are going to use for a long term, then consumer satisfaction would be a great priority in the decision making to purchase the product or service.

Relationship marketing aims to satisfy the existing customer and in doing so spreading the word through its satiated customers about how well the product works. It helps people identify good after sales service and customer care with the product and increases trust, which people have in the company selling the product. Relationship marketing helps show the customer that the company cares for its existing customers just as much as the new ones and that satisfaction of the customers over the long run is of prime importance. Retention of existing customers is based on customer satisfaction. Thus relationship marketing aims to retain consumers through various means (such as customer care and after sales services) to ensure future trade with these preexisting consumers by delivering what they want.

The example that best explains relationship marketing is of customer care service for various products and services. Think of a customer purchasing an Internet connection. If that customer has problems with it and the company that provides the connection does nothing to help, the customer is more likely to switch to another Internet service provider. However, if the company bothers to help the customer out and provide him with better care, the customer might go ahead and continue purchasing the service from the same Internet provider. That customer may also go ahead and recommend the service to others, which could help the company get more customers, thus indirectly increasing the company's customer base.

Relationship marketing is a topic that extensively deals with customer loyalty. By satisfying customers, it is the aim of relationship marketing to make customers loyal to buy further products from the company and recommend others to do the same. It is an essential marketing strategy that has to be used in tandem with almost all products and services today for the parent company to remain successful.