This article outlines 7 steps for drawing up and implementing an effective customer relationship marketing strategy.

Customer Relationship marketing is often represented as a developmental process, the aim of which is to increase customer loyalty and improve the relationship customers have with an organisation. The 7 step process evolves through a series of stages or steps which reflect the customers' increased importance or value to an organisation. The six stages are: prospect (a potential customer); customer (sale is made); client (repeat sale is made); supporter (regular customer); loyal customer (regular customer who actively supports the organisation); partner (customer working in partnership with the organisation). An organisation's ultimate aim should be to gain as many partner customers as possible and encourage customer service personnel to have the vision, energy and passion to serve customers

 

Definition of customer relationship marketing

Relationship marketing is defined as the building of long-term, loyal, committed and profitable relationships with potential and existing customers through communication and the provision of quality goods and services.

 

Advantages of proper customer relationship marketing

 Increased customer loyalty

 Higher levels of customer satisfaction

 Possible reduction in transaction costs

 Increased long-term profits

 Improved awareness of and interaction within the organisation

 

Disadvantages of customer relationship marketing

 It may sometimes be hard to accurately measure the impact customer relationship marketing efforts and justify the costs associated.

 It may require expenditure on new technologies, such as electronic point of sale equipment or customer databases

 Significant changes in the company culture may be necessary before relationship marketing can be implemented

 

 

7 Action steps for putting together a customer relationship marketing strategy

 

1. Review feasibility of adoption of a customer relationship marketing strategy.

Customer relationship marketing is not a viable option for all companies. Consideration should be given to the company's size and standing within the industry sector - is relationship marketing vital to its competitive edge? Analysis of the product and customer base is vital - a low profit product which customers buy as a one-off transaction rather than repeatedly cannot justify large expenditure on marketing. The long-term commitment required to implement a relationship marketing strategy, the cost in terms of capital investment, staff resources and information technology should all be taken into account.

2. Determine the scope of relationship marketing efforts.

Customer relationship marketing can be implemented on different levels, through a limited initiative, in a specific functional area or on an enterprise-wide level. It may involve targeting a specific range of customers such as those who between them generate 50% of profits; a single customer with very specific needs; or many customers with similar needs to each other.

3. Agree strategic objectives

Customer relationship marketing techniques need to be part of a larger organisation-wide strategy emphasising quality, marketing and customer service. It requires the commitment of senior management and affects the whole organisation, not just the marketing department. Consider who within the organisation will be directly involved or affected, who will be the first point of contact, and how departments will interact with each other in the overall strategy. The views, advice and feedback of these departments are central to the effectiveness and success of the initiative.

4. Identify your customer base

Recognition of customers at every level of contact is the key to implementing a successful strategy. Customer information should be stored on a database. The demographics of customers, their purchasing habits, their needs, their interaction with different departments or divisions of the company must be analysed and understood and potential customers identified. Existing records should be updated and out-of-date information deleted.

5. Categorise customers

It is advisable to rank customers in relation to their value to the company, identifying the top customers who buy regularly or generate a large proportion of the profits; isolating those that cost money or whose custom has slackened off; investigating customers who order occasionally and are important to competitors; and selecting possible new customers. The main focus of relationship marketing efforts can then be directed at the top tier of customers.

6. Interact with customers

The success of a relationship marketing strategy is dependent on the two-way flow of information between supplier and customer. The roots should be grounded in effective after sales service and complaints or feedback procedures as well as the ability to handle angry callers and deal with them effectively. In addition, a variety of techniques, such as direct mail, customer magazines, discounts or loyalty schemes, call centres, web sites, and user clubs will ensure regular customer contact and increased customer retention.

7. Customise products/behaviour/services

The crux of successful relationship marketing lies in customising products or behaviour to meet customers' needs. To have a staff that constantly strives to find a way to say yes! to customers requests. The continuous cycle of collecting customer information, disseminating it, tailoring products/services, marketing to customers and receiving feedback on the success of the product offers an opportunity to constantly update and improve products, service and delivery. Continuous assessment of the success of the overall relationship marketing strategy is vital and its progress should be regularly reviewed and measured.

 

Dos and don'ts of proper customer relationship marketing

Do

 Be clear on the overall strategic objectives

 Plan your strategy to suit the size and circumstances of your organisation and customer base

 Consult on and communicate your objectives

 Forget that relationship marketing demands long-term commitment - profits rarely show in the short-term

Don't

 Neglect to use customer information once it has been collected and analysed