Relationship Marketing

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Relationship Marketing

• Tourism Marketing Communications

2
Relationship Marketing

• Practice of building long term positive
  relationships with key parties

3
Definition

• Has been difficult to define precise nature of
  Relationship Marketing
• Can be seen as purely database marketing, a
  result of improved technology
• Formal and structured interaction between
  organization and customers

4
Relationship Marketing

• Cheaper to retain customers than to acquire new
  customers
• Technology facilitates Relationship Marketing
• Consumers increasingly seek dialogue with
  producers rather than receive passively (The
  Internet)
• Erosion of traditional branding approaches

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Levels of investment in customer relationships

• Basic marketing - Simple transaction
• Reactive marketing - Basic service levels
• Accountable marketing - Producer evaluates
  transaction with customer
• Proactive marketing- Dialogue established with
  customer informing and enquiring
• Partnership marketing -Producer manufactures
  service through dialogue with customer

6
Customer retention and profitability

• High costs (5x) of acquiring new customers in
  increasingly competitive environment
• Existing customers give supplier greater
  proportion of business
• Referrals to new clients from existing clients
• Existing clients less price sensitive

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Relationship Marketing and Multiple Markets
Internal markets
Referral markets
Supplier alliance markets
Customer Markets
Influencer Markets
Recruitment Markets
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Transition to Relationship Marketing
Emphasis on all 6 market domains (especially
customer retention)
Relationship Marketing
Emphasis on customer market domain (especially
customer acquisition)
Transaction Marketing
Cross functionally based marketing
Functionally based marketing
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Three levels of RM (Berry 95)

• Tactical level - RM used as a sales promotion
  tool for instance loyalty schemes
• Strategic level- tying in customers through
  legal, economic and geographical bonds
• Philosophical level- RM as a means of focusing on
  the primacy of customer needs, dealing with
  customer life cycles not product life cycles

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Transactional and RM compared

• Traditional transactional
• marketing
• Focus on single sale
• Short term orientation
• Anonymous buyers
• Salesperson is main interface
• Limited customer commitment
• Quality is responsibility of production

• Relationship marketing
• Focus on customer retention
• Long term orientation
• Tracking of identifiable buyers
• Multiple levels of relationships between buyer
  and seller
• Quality responsibility of all

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Changing focus of marketing
Better service /product design
Better service features
Better relationships
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Stages in buyer seller relationships
Exploration
Awareness
Expansion
Commitment
Dissolution
Strength of relationship
Time
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Customer Loyalty Ladder
Advocate
Emphasis on long term loyalty
Supporter
Client
Emphasis on one off transactions
Customer
Prospect
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Framework for customer retention

• Measure customer retention by segment
• Identify causes of defection, complaint analysis,
  benchmarking
• Corrective action to prevent defection
  endorsement from top management, switching
  barriers
• Develop best practice