For centuries, the customer relationship techniques were in existence, and it was practiced by merchants and traders but this practice was prevalent only in traditional and small markets. In order to achieve economies of scale, the businesses adopted mass production and mass communication.
The manufactures were only focusing on production and efficient ways to cut costs but they never thought of having direct contact with their customers.
Also, the intermediaries between the manufacturer and the customers such as distributors, wholesalers and retailers have a driven a huge wedge between them. All these things together, cause a negative impact on the relationship between the customer and the manufacturer.
Re-emergence of Relationship Marketing
Later in the post-industrial era or information era, this concept re-emerged due to the following reasons:
- Rapid technological advancements
- Intense competition in the global markets
- Increase in service sector units
- Take over of Total Quality Management (TQM) programs
With the advent of new technologies and growing population, the demand for new products in the global market has increased. The competitors in the market are also growing, due to which there are many challenges faced by companies so that their products survive. For that, they need to get new customers as well as retain the existing customers.
Now, let us take an example of apparel market. These big apparels need customers to visit their shops every now and then, for which they use a strategy called EOSS (End Of Season Sales) for bringing back the old, loyal customers as well as to attract new customers.
Understanding the Customer's Needs
It is very important for a company to know what products their customer needs. In order to get these data, they categorize their customer into different tiers and analyze their shopping behavior. For example, suppose a customer had previously bought a lot of formal shirts in a shop and now, for some reasons, he is now not shopping there.
Using Brand Relationship Management Programs
Brand Relationship Management (BRM) program is an integrated effort to create brand loyalty in a customer. This process is focusing on generating trials and repeat purchases. The key driving force for a customer to choose the particular brand and the customer response for each market stimuli should be first identified and then targeted.
Categorizing the Customers
When you consider a shop, there will be three categories of customers.
- The 'first group' includes the loyal customers who visit the shop very often and contribute to almost 30% to 40% of the total income of the business.
- The 'second group' includes the customers who don't come to the shop as frequently as the loyal customers.
- The 'third group' includes the new customers.
The marketers need to categorize their customers according to the profitability, frequency of purchase, etc. The loyal customers and high share customers will get more benefits from the shopkeepers, like offers and they will also earn points on their purchases, which they can redeem on their next purchases.
Implementing Effective Communication Methods
There are two kinds of communication methods used in marketing: Above the line marketing and Below the line marketing.
Customers from whom, good profit can be achieved, are targeted through 'below the line marketing' technique.
Employing Statistics to Study the Customer's Behavior
With huge amount of data available with the company, sales and analytics department plays a vital role in predicting customer behavior and trends.
Customer Relationship Management (CRM) is a business management subject which deals with the study of understanding the customer and various other strategies to improve the business.
- Identifying the factors important to the customers
- Creating efficient automation techniques involved in analyzing customer data
It is important to understand that, without targeting customer satisfaction, there is no method to improve any business. This is what Zig Ziglar said, "The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer".