Relationship marketing is a new way of running a business - instead of concentrating on selling stuff that you make or supply, the theory is that you should develop relationships with potential markets, growing those markets into happy, satisfied, loyal and profitable customers. It sounds easy and it is really, but it is a little bit different to how business has been traditionally carried out and the advice is a little bit at odds with that given by advertising agencies over the past 50 years or so.

Ideally, the best (and easiest) thing for you to do is to contact us at SeeRM and we'll come and talk to you about adopting relationship marketing in your organisation. However, for anyone interested in reading a little bit more first, here's a short paper on what Relationship Marketing is and does. Enjoy...

Relationship marketing refers to a long-term and mutually beneficial arrangement where both the buyer and seller focus on value enhancement with the goal of providing a more satisfying exchange. This approach attempts to transcend the simple purchase-exchange process with customer to make more meaningful and richer contact by providing a more holistic, personalized purchase, and use the consumption experience to create stronger ties.

The practice of relationship marketing has been facilitated by several generations of customer relationship management software that allow tracking and analyzing of each customer's preferences, activities, tastes, likes, dislikes, and complaints. For example, a manufacturer maintaining a database of when and how repeat customers buy their products, the options they choose, the way they finance the purchase etc., is in a powerful position to develop one-to-one marketing offers and product benefits.

The increased profitability associated with customer retention efforts occurs because of several factors that occur once a relationship has been established with a customer.

• The cost of acquisition occurs only at the beginning of a relationship, so the longer the relationship, the lower the amortized cost.
• Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
• Long-term customers tend to be less inclined to switch, and also tend to be less price sensitive. This can result in stable unit sales volume and increases in sales volume.
• Long-term customers may initiate free word of mouth promotions and referrals.
• Long-term customers are more likely to purchase ancillary products and high margin supplemental products.
• Customers that stay with you tend to be satisfied with the relationship and are less likely to switch to competitors, making it difficult for competitors to enter the market or gain market share.
• Regular customers tend to be less expensive to service because they are familiar with the process, require less "education", and are consistent in their order placement.
• Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous circle.

In web applications, the consumer shopping profile is built as the person shops on the website. This information is then used to compute what can be his or her likely preferences in other categories. These predicted offerings can then be shown to the customer through cross-sell, email recommendation and other channels.

Relationship marketers speak of the "relationship ladder of customer loyalty". It groups types of customers according to their level of loyalty. The ladder's first rung consists of "prospects", that is, people that have not purchased yet but are likely to in the future. This is followed by the successive rungs of "customer", "client", "supporter", "advocate", and "partner". The relationship marketer's objective is to "help" customers get as high up the ladder as possible. This usually involves providing more personalized service and providing service quality that exceeds expectations at each step.

As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization. Together with the creation of Sales Force Automation (SFA), where electronic methods were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as "Social CRM" today. We can define Social CRM as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customer’s specific needs.

CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.

The transformation that’s sparked the need for Social CRM seems to have occurred in 2004. It has been a social revolution in how we communicate, not a revolution in how we do business per se. All institutions that humans interact with have been affected by things like the cellphone/smartphone, the new social web tools and the instant availability of information in an aggregated and organized way that provides intelligence to the person on the street, not just the enterprise. Part of that transformation affects how we trust and thus who we trust. Since 2004, “someone like me” is the most trusted source, not businesses, NGOs, government agencies or corporate leaders.  That means that peer trust is how influence and impact germinates and then propagates most effectively - at least as of now.

The lesson for business, in terms of Social CRM is that we are now at a point that the customers’ expectations are so great and their demands so empowered that our Social CRM business strategy needs to be built around collaboration and customer engagement, not traditional operational customer management.

SeeRM is Northern Ireland's first specialised Digital Relationship Marketing and Social CRM consultancy and is working to help organisations adopt and benefit from the latest digital marketing strategies and technologies to create and manage new mutually profitable relationships with their customers and audiences.