Chapter: 5

Developing and Implementing of Relationship Strategy

01. What is a Relationship Marketing Strategy?

A relationship marketing strategy is a mix of tactics used by companies to build strong

relationships with customers, including methods to improve customer experiences. The goal of a
relationship marketing strategy is to retain customers and promote lifetime brand loyalty.

Remembering, the purpose of using relationship development strategies in marketing is to create

lifelong customers. This means focusing heavily on customer experience.
One of the ways one can do this is by making it easier to shop with one’s brand.
Here’s a look at other relationship marketing examples:
 Creating loyalty rewards programs
 Asking for and listening to customer requests and feedback
 Sending birthday and holiday greetings
 Sending corporate gifts to one’s customers
 Implement Omni channel marketing
 Creating personalized communications
 Simplifying your website and checkout process (and other customer actions)

02. Several types of activities of relationship marketing

There are several types of activities brands can use to facilitate relationship marketing, including:

 Provide exceptional customer service, as customers who are consistently impressed by

a brand’s customer service are more likely to remain loyal to the brand.
 Thank customers through a social media post or with a surprise gift card.
 Solicit customer feedback through surveys, polls and phone calls, which can create a
positive impression that customer opinions are valued and help to create better products
and services.
 Launch a loyalty program that rewards customers for their continued patronage.
 Hold customer events to connect with customers and build a community.
 Create customer advocacy or brand advocacy programs to reward customers who
provide word-of-mouth advertising on a brand’s behalf.
 Offer discounts or bonuses to long-time or repeat customers.
03. What are the Different Phases of Relationship Marketing?

As a small-business owner, you are no doubt concerned with building solid relationships with your
customers. Relationship marketing is focused on building a customer base and catering to the
wants and needs of those customers. There are three phases to building a relationship marketing
strategy.
There are some fundamental phases of relationship marketing strategies:

1. Visibility
Your small business needs to be visible in order to attract customers. This starts with identifying
your unique selling point or your organization's brand. To gain visibility of the brand, you'll have
to engage in some creative marketing tactics. Advertising, sales promotions, having a web
presence and using social media sites are all ways to engage customers. The goal should be to
present your company as the best option in the marketplace. And never underestimate the power
of the spoken word. Word-of-mouth marketing can be your best friend if you create solid
relationships with your customers. They'll tell their friends and colleagues about your company
thereby increasing your brand visibility without costing you a dime.

2. Credibility
Once you've established visibility as a brand, you need to start focusing on credibility. Credibility
is about building trust with your customers. Can they trust you to provide quality goods and
services at a reasonable price? Do you respond well to criticism and customer complaints? Are
you able to always maintain professionalism? If you can answer these questions affirmatively, then
you're well on the way to establishing credibility with your customers.

3. Profitability
Of course, as a small-business owner you are interested in making money. Turning a profit,
however, should be the third concern you have after building visibility and credibility. The good
news is that profitability will come naturally to your business if you have branded the company
effectively and if you are efficient at establishing trust with your customers. The goal here is to
build a mutually beneficial relationship: customers don't mind giving you repeat business because
they feel connected to your brand and to the quality products and services you provide.

04. What Are the Challenges of Relationship Marketing?

Figuring out how relationship marketing can help build a loyal customer base is one thing.
Overcoming the common challenges you’ll face while implementing it is another.
 New customers are treated as a secondary commodity.
You want to retain your best customers, but you also sometimes need new customers to meet your
budget goals. With relationship marketing, the focus of a brand and business is placed first on
retaining and supporting the current customer base. This causes new customers to be overlooked
and possibly ignored.
 Negative information can ruin a relationship marketing campaign.
Because of the amount of sharing that happens today, all it takes is one negative experience that
gets shared with others to cause this type of marketing to fail. Many consumers are focused on
immediate, short-term values.
If you fail to provide them, then those customers aren’t going to look at long-term benefits. They’ll
look to see who can provide them with immediate gratification from your competitors.
 It takes time for relationship marketing to be effective.
Many customers feel like a brand and business which wants a relationship with them should be
able to make time for them. This means there will be customers that want to receive direct answers
from employees or representatives instead of finding the information on their own. Not only does
it take time to develop the relationship, but many workers will also be asked to increase their 1-
on-1-time commitments to continue the process.
 Relationships can become to close sometimes.
Having a strong relationship with a customer is a good thing. Having a relationship that becomes
close to intimate, however, can be a bad thing. When managers are paying too much attention to
the needs of their customers, then they are not paying enough attention to their direct reports or
tasks that need to be completed.
This can cause the brand and business to lose on the back end of a successful relationship
marketing campaign.
 Value propositions change over time, so the marketing efforts need to change too.
Some products always have a certain amount of perceived value. Take coffee, for instance.
Millions enjoy a cup or two of coffee in the morning as part of their routine. It always has a basic
value. What if one brand comes up with a type of vanilla flavored coffee that costs $2 less than the
regular coffee of another brand that has been successful?
Now the value ratios have changed. Not only can a consumer get flavored coffee, but it costs them
less to do so. Without a change in the marketing approach, the brand selling regular coffee will
find themselves lacking customers over time.
 It can require a culture change.
A brand or business cannot implement a relationship marketing strategy without having the culture
of the organization supporting it. If a customer comes to the brand, expecting a supportive
experience, but receives something else, then the likely outcome is a shift in business to the
competition.
The worst negative reviews come when customers vote with their money and your brand and
business isn’t on the ballot.
 Some returning customers may expect a discount.
There will always be some customers who expect to be treated better by a brand and business
because they are returning for another purchase. They want discounts that go beyond the normal
sales and offers that might be part of a marketing effort. Without that “extra” benefit, they may
say they’ll go to the competition – sometimes even under the threat of leaving a negative review.
05.’’Relationships as a Source of Value.” Explain the statement in brief.

Creating value, and, more specifically, customer value, is increasingly seen as the next source of
competitive advantage. There are several reasons for emphasizing value in the broader context of
relationship marketing.

 Value has traditionally been concerned with ‘the value customers create for a firm’
rather than the ‘value the firm creates for the customer’ – and even then, there has
been too much focus on a narrow transactional perspective.
 Value in marketing has mainly focused on the transaction or exchange and has not
taken sufficient account of the value of ongoing relationships after the sale.
 The role of value in the context of the multiple stakeholder view of relationship
marketing has been largely ignored.

 Recent developments in value research:

Academic research has play vital role in the value process. Practitioners and academics have grown
increasingly interested in shareholder value. Management’s main goal is generally agreed to be to
increase shareholder value. But maximizing shareholder value may come at the expense of other
stakeholders. For example- in the short term a business could enhance shareholder value by
reducing customer value through, for instance, cutting customer service budgets.
Firms need to consider customer value and shareholder value together. Placing too much emphasis
on either one of them at the expense of the other could have an adverse long-term impact. Some
organizations might deliver high customer value with poor shareholder value, for instance, while
others might maximize shareholder value while reducing customer value. Firms also need to take
into account the role employees and internal processes play in creating value. Creating value
involves acknowledging the ongoing interactions over time between a company and its customers.
Value is created over time and is subject to changes and external influences such as other
stakeholders.

 A framework for relationship value management:

The framework represents a strategic approach to managing an organization in order to maximize
value to customers and the organization through the integrated management of relevant
stakeholders. There are two main elements to the framework: the central value process and the
surrounding stakeholder interaction processes. The aim of the central value process is to determine
a value proposition for the organization, and involves four sequential value-based activities: value
determination, value creation, value delivery and value assessment.
The framework also illustrates linkages between the value process and specific stakeholders. All
stakeholders in the six markets model potentially play a role. These stakeholders are represented
in the three circular stakeholder groupings: customers, employees and external stakeholders.
Shareholders are a particularly important group of stakeholders in public companies.

Each of the six market domains is represented within the three circular groups. These are: customer
markets and referral markets (within the customer group); internal markets and recruitment
markets (within the employee group); and influence markets – including shareholders – and
supplier and alliance markets (within the external stakeholder group). Each of the three major
stakeholder groups represents opportunities to create and deliver value.

 From customer value to stakeholder value:

Employees, customers and shareholders are particularly important in creating value.
06. How do you choice of Relationship Strategy for your renowned company? (
A company will probably need different types of relationship strategy for different types of
customer. Factors affecting the choice of relationship strategy might include an uncertain and
volatile marketing environment, the degree of commoditization and hence price sensitivity of the

market and the size of transaction costs. In particular, the firm’s overarching business strategy will
influence the kind of relationships it chooses. In this ‘contingency’ approach to relationship
marketing strategy companies will find the three ‘generic’ business strategies identified by Treacy
and Wiersema. Treacy and Wiersema called these three routes to success ‘value disciplines. While
these three ‘disciplines’ or ‘generic’ strategies are not mutually exclusive, companies tend to have
different strengths – or weaknesses – in each of the three. This are-

Operational excellence - mean-providing customers with reliable products or services at

Operationa
competitive prices, delivered with minimal difficulty or inconvenience. This requires a company
l excellence
to be creative in ways to reduce production costs or delivery methods so that delivery to the
customer is convenient and economical. Product
Leadership
While challenging, Operational Excellence is possible by following three main principles:

 Personnel Management – Encourage a culture of efficiency and cost reduction among

Customer
employees Intimacy
  Transaction Management – Maximize efficiency of every transaction across the supply
chain
 Measurement System Management – Focus on high quality and cost control at all times
and measure improvements in each area.

Product leadership - mean providing products that continually redefine the state of the art. It
requires significant investment in product research and development, as well as continued
investment in order to stay a step ahead of the competition. In order to be successful at Product
Leadership, a company needs to excel in three main areas:

 Creativity – Ideas often need to be explored that are beyond a company’s current scope.
 Commercialism – Ideas need to be processed internally at a fast pace in order to be
available for sale before the competition.
 Relentlessness – Companies need to be continually in search of ways to improve on
products, even their own, in order to maintain their space and competitive edge in the
market.

Customer intimacy - mean selling the customer a total solution not just a product or service. The
point of creating a high level of intimacy with customers is to differentiate a company from the
competition, therefore create the ability to provide a higher value, and therefore charge a premium
price. While it may seem that measuring Customer Intimacy would be a challenge, there are three
ways it can be successfully evaluated:

 Reach and range – This involves the prevalence and availability of ways the customer can
access service, as well as the number of various types of channels in which serviced can be
reached.
 Cycle time – This is the measurement of the time between the customer’s need being
discovered and the problem being solved.
 Product identification – This is the ability to figure out what new products or services are
needed by the customer.

07. Show the Connection between Treacy and Wiersema’s three value
disciplines and the six markets model.
In order to become a leader through one or other of these generic strategies a company will need
to vary the emphasis it places on each of the six markets in the overall marketing strategy of the
business.

So, for example, organizations seeking to follow the discipline of ‘operational excellence’ will
need an internal culture that is based on efficiency. In other words, the focus of the internal
marketing effort should be on continuous improvement, multi-skilling and activities such as
quality circles that lead to greater internal efficiency. The organization should also place
significant emphasis on the supplier market domain since materials and supplies account for a
major proportion of many organizations’ total cost. By working more closely with suppliers, the
organization will identify many opportunities to reduce cost and improve quality. Likewise, the
firm will also need to manage closely the interface with downstream intermediaries such as
distributors and retailers. Using electronic data interchange (EDI) and other forms of electronic
commerce, for example, firms can often significantly enhance the responsiveness and cost-
effectiveness of the supply chain.

Businesses seeking product leadership will also need to focus on their relationship with suppliers.
In many industries today, suppliers drive a significant proportion of innovation. Bringing suppliers
into the product development process can often lead to breakthroughs in design and functionality.
Most of the innovative features that we now take for granted in motor cars, for example, originated
with the suppliers. Companies seeking product leadership will also benefit from developing
alliances with other organizations to gain access to their specific skills, knowledge bases and
market understanding.

Companies choosing to pursue a strategy of ‘customer intimacy’, meanwhile, will need to put their
emphasis on developing ever closer, more customized – even personalized – relationships with
customers. As such, the ‘internal’ market is critically important to them. Many studies now confirm
the impact of employee motivation and commitment on customer satisfaction.

08. What is successful marketer planning for six Markets? (Md. Mekail Hossain
192538)

1. Internal Markets: Internal Markets comprises of employees who have the ability to determine
the style and ethics of the business environment with their actions and beliefs. It is believed that
developing values in support of customer oriented corporate culture is a critical requirement for
sustained success in the market place. Example: Educating employees on the company's long-term
goals and values.

2. Referral Markets: Referral Markets are an effective source of new business. Referral can be
in the form of professional advice such as doctors, lawyers. Bank managers and accountants, and
also from existing satisfied customers.
Building relationship from these sources through word of mouth recommendation is an integral
part of marketing strategy. Example: Google, Uber.
3. Influence Markets: Influence Markets comprises of individuals and organizations who have
the ability to positively or negatively influence the marketing environment in which the company
competes. Hence, public relation exercises become an integral part of the relationship marketing
process.
Companies tend to have good relationship with critical sources of influencers relevant to their
markets to be successful in the business environment. Example: BMW. When BMW launched its
new 1 Series sedan, it decided to break its own mold and conduct its very TikTok influencer
campaign.

4. Employee Markets: Employee markets form a focal point for relationship marketing. To
further the aims of the company in marketplace, there is a need to recruit employees and to retain
such employees.
The aim should be to change the organization that is attractive to people who share the values of
the company.

5. Supplier Markets: Supplier markets refer to the network of organizations that provide the
materials, products and services to the organization. It is only recently that many companies have
come to recognize the importance of building close and mutually beneficial relationships with
suppliers.
Such companies have reaped significant benefits such as better quality, faster reach-to-market,
original and creative products and lower levels of inventory.

6. Customer Markets: Customer Markets represent all the people or the organizations that buy
goods or services. They can be either consumers or intermediaries. In more markets today,
‘customer service’ proves to be the major factor differentiating the company from its competitors.
Example: Examples of consumer markets include financial services, consumer electronics, food
and beverages, apparel and accessories, leisure and entertainment, and healthcare.

09. How One can generate knowledge through dialogue?

When developing effective relationship marketing strategies companies need to ensure that they
use the third element to ‘close the loop’. But communication has to become more of a two-way
process or dialogue within a relationship.

Directing effective and efficient communications at external markets is a fundamental marketing

responsibility. But, despite the potential afforded by direct marketing, the Internet and customer
relationship management (CRM) systems, this communication is too often one-way. Relationship
marketing also recognizes that developing relationships in the six markets can provide a solid
platform for generating new knowledge about business conditions, opportunities and constraints.
Companies gain this new knowledge through purposefully interacting with their stakeholders – as
well as formal market research.

By focusing on integrating outgoing marketing communications, marketers are curtailing the long-
term potential to develop value exchanges with customers. Instead, they should be listening to
customers and learning what they consider to be valuable, so shifting the marketing
communication strategy from one-way messaging to two-way communication, with the emphasis
on interaction and the potential for dialogue. This in turn supports the development of ongoing
value exchanges between the various parties.

10. Discuss the Organizational change in case of relationship marketing.

(Suraiya Akter-192554)

Managing change is strategic. Getting support from senior management as a sponsor of change is
critical. What is really at stake is an ‘organizational transition’ to collaborative management that
will help align the major company-wide processes of innovation, demand/supply chain and
customer relationship management. Having said that, a company will need to take a number of
definite steps, each of which will involve doing things differently – a process of ‘learning by doing’
in effect. A company needs to plan these steps, set up and complete individual projects to achieve
them and put in place motivational and organizational structures. Incremental changes generate
new knowledge and applying that knowledge leads to new incremental change processes.

1. People and process: In relationship marketing there is a recursive (that is, backwards and
forwards) relationship between people (who are involved in work processes) and processes
(which involve people). Each is the key to the effectiveness of the other. But achieving
change through people-process drivers poses a potential challenge to marketing managers’
influence and authority.
2. Resistance points in any organization-wide change process: Implementing relationship
marketing across the six markets involves a radical shift, over time, in the way people work
with each other and the responsibility they take for that work. We have identified four
phases of organizational commitment to change that represent a collaborative change
process to realign work activity across functional borders within the internal market (see
Figure 6.11).
The process starts with those people who are already committed and therefore, most active. They
derive their legitimacy and support from the senior executive in charge of the change process. This
vanguard group should be identified early as change agents for the whole process. After all, there
is a political component to change and those people most committed to the process – including
managers – will need to be supported and trained in persuasion and influencing skills.

3. Project teams as internal networks: The key to managing organization-wide change is

to create structural supports or ‘safety nets’ that allow staff to move from what they know,
based on past experience, to what is unknowable – the future. We recommend that small
teams should work on internal market issues. The role of leader for a small team of, say,
three to five people, can easily be shared between members of the team, according to the
talents of the individuals and the changing maintenance needs of the team.

How Do You Implement an Effective Relationship Marketing Strate

It requires understanding the various methods available and then selecting the best for one’s
particular audience.
One may find that Instagram isn’t the right venue for one’s B2B, yet LinkedIn may be. Let’s review
some of the ways B2B marketers can use relationship marketing within their strategy.
Listen to Customer Feedback (and Make Changes)
We’ve seen this with IKEA, but you’ll also find this strategy used by companies across industries.
The internet has made it easier to not only see your customers, but hear their complaints and
feedback as well.
Taking advantage of this by soliciting One’s customers for their requests, ideas, and challenges so
one can better accommodate them. One can do this via email, SMS, or a survey/poll on social
media.

Invest in Technologies that Help Customer Relationship Management

There are various tools on the market one can use to deliver a great customer experience.
For example, one can use CRM (customer relationship management) software to manage
customers, personalize messages, and maintain communication.
Another option is to implement an ERP (enterprise resource management) platform to streamline
One’s operations and eliminate departmental silos.
Then one can opt for unorthodox tools like a platform for sending branded swag and personalized
gifts. One can use this to send and track corporate gifts sent to new and existing customers (or
leads who are still on the border).

Build an Excellent Customer Service Team

One factor that can make or break a customer’s experience with a brand is its customer service. If
one staff aren’t knowledgeable enough, uncourteous, or unresponsive, it’ll fluster customers.
Invest one time and money into hiring and training a team to support one client base’s needs.
Consider creating a customer service Q&A template based on the demands of different customers.
This will help one team navigate through positive and negative situations.
Take an Omni channel Approach
People today are used to engaging with brands in different ways. They may visit their website one
day and then reach out to the company via its Facebook or LinkedIn page the next day.
Making it convenient for one audience to interact with your business in the way they’re most
comfortable is vital.
This means having a presence on the right social media channels, email, SMS, phone, fax, and
online chat. If one can incorporate a chat bot, even better.

Reward Customer Loyalty

Now, there are different ways one can go about this. One can create a loyalty program where
customers earn points. For instance, if one is a SaaS, One can offer points for using one’s product
regularly, which can be used to reduce their next month’s bill.
One can also reward customers for referring leads that convert into paying customers.
Nurture Relationships with Email Marketing

If one don’t already have segmented campaigns for one customers, then one is going to need one.
Email marketing is a useful tool for nurturing leads into buyers and customers into loyal fans. But
one need to deliver the right message at the right time. This will require implementing tools that
can assist with this — like a CRM and CDP (customer data platform) with AI capabilities.
This way, one can quickly analyze customer behavioral data and use it within one’s campaigns.
For example, if one see customers asking about a new product, one can send an email about its
features. Maybe even include links to your blog, showcasing how it can benefit them.

Incorporate Proactive Retention Methods

One can either sit back or hope they remember to renew. Or one can reach out and remind them
before the date passes and drive customer retention proactively.
By going with the latter, one can boost the odds of customers completing the renewal process. One
don’t want to use a reactive approach because it can be challenging to get customers to return after
allowing their subscription to relapse.
One can even send along a corporate gift as a friendly reminder vs. a typical email.

Automate Your Customer Communications

Just because customers desire a personal touch doesn’t mean you have to send each message
manually. You can implement automation tools that are faster and more reliable.
For instance, you can create lead nurturing emails that are automatically sent to new customers.
Or you can use triggers to automate relevant emails to be sent.
For example, when a customer is logged in and visits a series of blog posts, you can trigger an
email with a download for an eBook on a relevant topic.
But email isn’t the only thing you can automate; you can do the same with SMS messages, social
media posting, and chat bots.

Make Tracking Detailed Customer Data a Priority

It’s nearly impossible to win customers’ hearts without collecting lots of the right data. Besides
gathering information, such as their name, company, salary, and technologies used, one can track
the following:
 Past purchases
 Browsing habits
 Birthdays and anniversaries (excellent time to send a corporate gift)
  Engagements with your brand (across all departments and channels)
This is easier to pull off when using the right data management platforms.

Track and Analyze Your Relationship Management Campaign

Not every method is worth adding to a relationship management strategy. And while it’s good to
test different options, you want to ensure your tactics are actually working.
To ensure this, one need to use tracking tools to determine whether specific metrics are improving,
declining, or stagnant.
Some of the metrics one should be tracking includes:
 Customer lifetime value
 Conversion rates
 of referral conversions
 Strength of your network (are your followers engaged?)
 Website metrics (traffic, social monitoring, CX ratings)
 Customer support team metrics (case resolution time, duration of calls, of follow ups,
etc.)
 Onboarding success
Whatever methods one is using within your campaign, be sure one is tracking the right metrics to
determine success.

12. Best Practices for Relationship Marketing

Building a relationship marketing strategy with a solid foundation is possible when one instill best
practices.
Here’s a rundown of what to focus on when adding relationship development strategies in
marketing:
 Focus on the needs of your customers
 Listen to the feedback one’s customers give
 Be available on one’s customers’ terms
 Be authentic and informative with one’s content and message
 Add a personal touch to one’s customer experience (i.e., personalized offers)
 Offer ongoing support to customers
 Show customers one’s appreciate them (i.e., send gifts or use loyalty programs)