Customer Relationship Marketing in Business Marketing

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Introduction

The marketplace has become dynamic due to pressures of scientific advancement, demographic, economical upheavals, social evolution, and global politics. Business organizations are also experiencing changes and thus the marketing role in these organizations is also transforming. Due to these changes organizations are moving from marketing mix focus to relationship marketing focus. Todays marketing is different from its earlier form and it involves total organization commitment, persuasive throughout the firms operating system and culture (Bruhn 2003). Relationship marketing focuses on customer-driven marketing practices, profitability, and strategic marketing practices. The first objective of relationship marketing is extending the customers lifetime value through strategies that aim at retaining targeted customers. The second objective is the recognition that companies need to create relationships with stakeholders to achieve long-term success in the final marketplace. The third objective is to change marketing from being the sole responsibility of the marketing department but instead being pan-company and cross-functional.

It is very expensive for companies to get new customers than it is to retain and thus companies are working towards giving the best value to their customers to create their loyalty and avoid losing them. When organizations adopt the relationship marketing strategy, they can understand what the customers needs are and thus aim at meeting their needs satisfactorily to make the customer come back. Interaction with the customer helps one to understand the preferences and behaviors of the customers and thus gives a company an edge since it can satisfy the customer, which results in their loyalty and thus makes it hard for the customer to go to a competing company (Peelen 2005).

When a marketer understands the customers preference and behavior it is important to segment the market according to the different behaviors of different customers. The company then comes up with different products and services to meet the different segments. Advertising messages are also customized to target the different market segments appropriately. This creates customer value where the customers feel that the company understands their needs properly and can meet them satisfactorily and thus the customer becomes loyal to the company which makes the company have an edge in the market (Peelen 2005).

Customer relationship management (CRM) is a strategic approach aimed at creating customers value through an appropriate relationship with customers and customer segments it thus integrates the potential of information technology and relationship marketing strategies to deliver profitable, long-term relationships. CRM provides important chances to use data and information to understand customers and also to implement relationship marketing better. This thus requires cross-functional integration of people, marketing capabilities, and operations through information technology and applications.

Relationship marketing helps in customer retention which thus reduces the companys marketing cost. It is very expensive to get a new client than it is to retain an existing one because a lot of money will be used in research and analysis work to get one client. Cost may also be reduced because in some business-to-business markets, the relationship may be fully automated, and also some supply chain relationships may employ electronic data interchange (EDI) that automates the ordering, inventory, and invoicing process.

Relationship marketing also helps in better customer insight. Marketers can get a clear understanding of the customers needs and expectations and on the other hand, customers also understand what the marketers can provide for them. As the relationship becomes strong, commitment and trust also grow because companies are in a better position to identify and satisfy customers wants satisfactorily and profitably because they can sell more products and services to the retained customers (Peelen 2005).

Relationship marketing is important because it helps to drive customer response since, with established interaction with the customers, it is easy for one to get information from them on whether their needs have been met according to their expectations or not. This is important because the company can improve any shortfall that the customers may suggest about the products or services offered. This thus increases the loyalty of the customers which leads to the companys profitability.

Communication and relationship development

The relationship marketing process helps in creating and maintaining a healthy relationship in the exchange process. This results in increased customer commitment and collaboration through the ongoing transformation of the normal routines and norms (Bruhn 2003). Communication is important in developing marketing relationships because it helps in coordinating behavior in an organization and relationship marketing. Communication also assists in bringing together inter-organizational channels of distribution. It provides an understanding of the intentions of the partners involved in an exchange process and creates trust among the partners which helps in developing relationships. A good design of the communication process acts as a decisive role in relationship marketing.

In relationship marketing, communication is a prerequisite and it helps in informing, listening, and answering which involves two-way communication. It is no longer restricted to a small group of people like in the past but suppliers who have deals with customers sometimes act as marketers having the role of the relationship marketing communication (Peelen 2005). Relationship marketing development involves several phases which are the pre-relationship phase, negotiation phase, and relationship development phase.

The pre-relationship phase involves a situation where a customer looks for a new company due to dissatisfaction with the present one. The customer evaluates the services of the new company and compares them to competitors. Information is very important to make the right decision and a customer may get this information from friends about the services offered by a certain company and this forms the basis of linking. The social distance in this phase is large because the partners are not familiar with each others performance both personally and business-wise.

The negotiation phase involves the exchange of wants, issues, and priorities because it is a phase of discussion and bargaining. Arguments may arise in this stage on need uncertainty where a company may be faced with the challenge of understanding the needs of the customers properly. Market uncertainty may also arise where the decision-makers may want to commit themselves to one segment due to the heterogenic nature of the market. The other argument in this phase is transactional uncertainty which results in incompatibility problems between customers and operations of the business about technology and ability of delivery. Good communication can help in decreasing these uncertainties and assist in proper decision-making.

The third phase of relationship development involves increased benefits resulting from the exchange partners and their interdependence (Bruhn 2003). This phase creates trust between the partners and also satisfaction of the customers is achieved thus bringing down the level of uncertainty and the distance between the partners. Customer visits allow the face to face marketing and it helps one to understand the customers problems and their needs are well understood and interpreted.

Relationship marketing and customer loyalty

Relationship marketing results in the creation of customer loyalty. These customers are very profitable to the organization because they are very cheap to serve and are willing to pay a premium price for a certain brand, unlike the nonloyal customers. These customers also preach about the companys products thus attracting other customers through the word of mouth. To understand the customers loyalty and switching behavior, one must know the customers buying motivations (Peelen 2005). Brand loyalty by customers involves three components which are repeat purchase, commitment, and preference. To gain customers loyalty the product offered by the company must be superior according to perception by several segments, for it to be profitable. It should also be in a position to be embedded in a social network and be subject to adoration. Since it is difficult to achieve full commitment by the customer it is important to come up with different loyalty strategies for different segments.

The first segment has the emotive loyalists who are the most loyal type of customers and perceive that their current brand is the best and thus do not frequently reassess their brand. These customers also spend a lot of money because of their over-purchasing behavior. The other segment is inertial loyalists who are not involved with the product and face the high cost of switching which makes them practice repeat purchasing. The third segment is deliberative loyalists who are loyal to a brand because they perceive it to be superior to those of the competitors. They perceive its superiority by comparing its performance and price with other products. These types of customers reassess their purchases quite often depending on new information or other new alternatives (Bruhn 2003).

Customer loyalty is influenced by several factors like ease of switching whereby if the cost of switching a brand is very high then the customers will stick to their current brands. The degree of differentiation also influences the customers loyalty because if a companys product is differentiated unlike the competitors, then the customers will not be ready to switch to the competitors brand. How often interactions are made through service call or other means also influence the level of loyalty because when the interaction is maintained either through face to face, telephone calls, or visits, the customer feels valued and is likely to be loyal to the companys products.

Customer loyalty which is the relationship that a customer has with a product leads to brand equity. Customer equity includes value equity which is the assessment of the brands utility by the customer and it depends on the products price, convenience, and quality. Customer equity also includes brand equity which is an assessment by the customer of the companys image and is influenced by the attitude of the customer towards the brand, the firms citizenship, and brand awareness. Retention equity is also part of customer equity and it is the behavior of the customer liking a brand without assessing it.

Managing customer relationship management

Customer relationship management aims at creating shareholders value by developing a good relationship with customers and customer segments. It brings together the capability of relationship strategies and information technology to create profit and relationships with stakeholders and customers which is long-term. Marketing is a management responsibility and it involves looking for an effective market, coming up with strategies on how to create value, and ensuring a coherent whole. Customer relationship management helps the business to target customers more closely and implement one-to-one marketing strategies (Peelen 2005). The application of customer management principles results in good financial outcomes because it helps the company to get closer to the customers to help the company succeed as a whole. To successfully implement a customer relationship management system, there must be communal coordination in information gathering, serial coordination to get information of customers past behavior, symbolic coordination which will assist an organization to predict the future behavior of the customers, and integral coordination which will help in the company to respond immediately to the customers needs.

Strong internal partnership around the customer relationship (CRM) strategy is important in helping proper implementation. Management needs to form a strong relationship with other areas of an organization to avoid conflicting strategies. Employees can help in the collection of customers information to increase the depth of customer relationships. CRM helps to create, maintain and expand customer relationships (Peelen 2005).

To achieve customer relationships, a marketer should improve on several issues. The first thing is to get clear information by writing all the deals that one has agreed with the customers and share with other team members f the organization. Such details include what the customer said, the date when the customers orders should be delivered, and the date when the customers follow-up should be done. The second thing is that information should be accessed by all the employees in an organization and thus software is important because it will assist in recording, sorting, and sharing information. A company is also required to differentiate itself from the competitors so that the customer can know the difference between the products offered from those of the competitors. A company can achieve this by clearly showing the value they can offer to their customers so that the customers can choose them and leave the competitors. Another area of improvement is on building every customers profile (Peelen 2005). This will help a marketer to know whether these customers are worth transacting business with them and also to know whether the company is meeting their expectations and at the same time earning profits as well.

It is also important to describe the best customers by looking at their lifestyle, demographic issues, and what the company does to retain them and also look at other ways of retaining them. Since acquiring a new customer is more expensive than retaining an existing one, then the company should ensure that the existing customers appreciate the companys products and services to create their loyalty and thus retain them. Customer complaints should be analyzed and solved. The people concerned should be informed about complaints and should be trained so that the same problem does not occur in the future. Finally, customer contact points in a company should be installed so that the customer will feel appreciated which will help in building his loyalty.

Business to business relationship

The business-to-business relationship has been very successful in the application of customer relationship management. Inter organization relationships are created by trust and commitment because marketing to other organizations requires a great understanding of the customers business processes and value creation process. Several people are involved in making a purchasing decision for a business customer and thus a good relationship needs to be established to win the trust and their loyalty. Business-to-business relationship marketing results in better relationships, commitment and trust, cooperation, satisfaction with the relationship, and better relationship policies and practices (Bruhn 2003).

Businesses should always aim at proving the business customers with what they ask for. Businesses need to clearly understand the needs and want of these customers to offer and satisfy their needs as per their expectations. A business relationship helps the company to offer what the customer wants. Business-to-business relationships are created along with groups and are meant to increase the companys capital.

A company should give enough information to these groups or the business customers to convince them to buy the products. These customers want something to satisfy their needs and thus the company should work towards meeting these needs.

Building relationship marketing in an organization

Relationship marketing helps a company to have a competitive edge in the market, it adds value and also enhances the brand. For a company to achieve this, it should apply some strategies which include:

Communicating frequently

An organization needs to keep in contact with the customers either through a phone call or a visit. This will help in updating the customers on the companys new improvements on the product or service provision. The customer will feel valued by the company and thus will be loyal to the companys products. On the other hand, the company will cut down its operating cost because it will be cheaper to retain a customer than attract a new one. The customers loyalty will lead to the companys profitability because the customer will be ready to purchase a product at a premium price and also due to repeat purchases (Peelen 2005).

Enhancing customer service

When a company has good customer service it can add value and have an edge in the competitive market. A company should have an online customer service that will be assisting the customers in case of any uncertainties or problems. This service will help in retaining the existing customers and also attracting more new customers due to the word of mouth by the existing customers about the good reputation of the business. The companys sales will also increase because of repeat purchases and also due to new purchases by new customers.

Visiting the customers

To build a good relationship with the customer, it is important for the businesses, especially those selling to business customers to go and visit them rather than just doing the usual sale calls and the off-shelf marketing tools. This will help one to understand the challenges that the customers go through and thus come up with strategies to help them overcome those challenges (Bruhn 2003).

Building two-way communication

The company should seek to have feedback from the customers to know how they perceive the companys products or services. This interaction can be created through electronic newsletters, websites, online messages, and online surveys. This creates a rapport between the company and the customer and more so the customer feels valued because he has been allowed to air campaigns or compliments.

Holding special events

A company should hold a special event with the customers to create interaction between the customers and the companys staff. This is important because the customers will be free to express their feelings about the companys products or services and also will be loyal to the company due to this special kind of treatment. The company will also be in a position to understand the customers needs properly and also have an edge in the market due to the customers loyalty which it will gain. This special event can be either a summertime pool party, golf outing sponsored by the company, or even an early fall barbecue (Peelen 2005).

Offering customer rewards

This strategy works well for most businesses and the more a customer spends the more the rewards. This strategy helps a company to reward its best customers who are very profitable and at the same time eliminates the customers who are brand switchers (Bruhn 2003).

Conclusion

Marketing is experiencing a paradigm shift from its usual marketing mix to relationship marketing which aims at creating shareholders value and also makes a business gain a competitive end. Communication is very important because it helps a company to achieve a good relationship with the customer. This article has comprehensively explained the importance of relationship marketing in a business and how to build it. It has also looked at customer relationship management (CRM) in an organization and how it creates customer value. The business-to-business relationship is also important and has also been featured in this article.

Reference list

Bruhn, M. (2003) Relationship marketing: management of most custom relationships. Chicago: Financial Times Prentice Hall.

Peelen, E. (2005) Customer relationship management. Chicago: Financial Times Prentice-Hall.

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