Relationship Marketing - Literature review Example

Relationship Marketing According to Allan et al (2001), relationship marketing is a process of trying to attract clients and in so doing enhancing the relationship between the company and the clients. Customer Retention on the other hand is an approach by an organization to have clients willing to come back for more every time, for an organization to succeed in customer retention, the current and past customer behavior should be considered as the two will greatly influence the client’s future behavior. It is good to note that customer/consumer satisfaction will not be an end in itself to the purpose of any business and/or organization. Since according to Frederick (1996), customer satisfaction will only be of benefit to the company/business to the actual extent that the satisfaction of the client will lead to repeat business in the future. This implies that the only when the customer does come back for more is customer satisfaction considered viable to the business; this contradicts the assertion by Frederick (1996), that consumer loyalty bears no fruit. Customer satisfaction entails a clear distinction between the satisfied customers, the satisfied and those who are not sure whether their needs have been met or not. The distinction thus brings out the issue of satisfaction and loyalty to a business and/ their products. The difference between the two is that one is a product of the other and in business the main aim is to try as much as possible to retain your clients and this means that a business whose ole purpose is to make their customers happy is most likely to incur looses since the same could have been got through low prices. On the other hand, if a business aims at retaining their clients; then they will try and make them happy but not by offering extravagant discounts (Wong, 1999). For the businesses, the issue of customer/consumer loyalty is very important since it has a very tremendous effect on the sales and profits. On average, a company within the United States will lose half their clientele in a span of every five years, this will equate to 13% of their annual loss of customers. The same company will thus be fighting a loosing battle over the years since as per the annual looses; their customer base is diminishing faster than they can retain their customers. This average company faces an uphill battle when trying to grow, because its customer base keeps draining away. If the same company is able to achieve a minimum 1% annual growth; it would thus require they increase their sales to the few remaining and/or new customers by 14%. This goes a long way to prove why the issue of reducing customer loss within any given business may significantly improve their business growth (Carrol, 1992). The other thing worth noting is that if and/or when consumer loyalty increases, the issue of marketing and investment become very efficient and easy for those concerned. Furthermore when the company has been able to learn their loyal customer’s profiles it then stands to gain a higher caliber of newer clients having excellent lifetime value to their business. The increase of customer retention by a mare five percent can notably raise the business profits by 50% and/or more. Some customers are on transit from one business to another and if the business spends some much time and/or effort tying to retain the same group, two things are bound to happen; the business could turn them into future loyal customers worth more than their original transient status (they will go ahead and tell their friends about the good services you offer) or the business will incur major looses tying to make a transient customer loyal. This will come about since the loyal customers will have the know of working with your company and on the other hand they are less price sensitive and do not require orientation to the business unlike the new transient customers. According to The International Customer Service Standard (2009), in marketing, loyalty is of so much great value to the business. When and it attention is given to the loyal customers, then the result is an energized company that will stand a better chance in the current business rivalry. Doubts of whether the loyalty strategy does work should be put to rest when and if one is able to look at a highly successful business within your area of specialty and ask yourself; Do they have any loyal customers and/or Do they owe their long term success to their loyal customers, or would they be where they are minus their loyal customers? If the answer to both questions above is, “Yes”, then your company is at a task of implementing the same as facts have shown that consumer loyalty will lead to an energized company. On the other hand if the answers to the Questions above are “No”, then consumer loyalty has nothing to do with you and thus would be said to be a total waste of time. Word of mouth marketing is a very constrictive way to boost a business and their image but the same would do severe damage to a business if the word of moth was being done to discredit the business in question. The personal nature of communications between the individual customers and/or future customers is vital to the very existence of a business, according to Chestnut (1989), asserts that a layer of credibility is added to a business through word of mouth marketing and vice versa. Research has gone ahead and proven that individuals tend to believe ‘WOMM’ more than they would for the other forms of promotional methods; the receiver of the information will believe their would be informer with a notion that they are telling the truth as they are most unlikely to be receiving any benefits from the same business. According to a resent research by The International Customer Service Standard (2009), competitive advantage occurs when a company is able to offer goods and/or services at a lower level than their business rivals thus gaining an edge in the market; the min goal is usually to sustenance and the two competitive advantages mentioned by Michael Porter are; cost advantage (the same benefits are offered to their customers at a lower rate) and the differentiation advantage (the benefits will exceed those offered by the rival company). The goal with this approach is for a business to gain a competitive advantage thus creating a superior value for their customers with the end goal being profits for the business. The advantage created by competitive advantage is that it leads to consumer loyalty and since the main goal of competitive advantage is to have a higher profit margin, then one can say that the same will be achieved once loyal customers are created and maintained in the business (Podsakoff et al, 2003). Imagine that you own a supermarket and it has a website where clients can purchase what they want to, the website will be accessed by many groups of individuals; There will be people who will be perfect demographic matches for the site, but they have never ever made any purchase online Then there will be individuals outside your websites core demographic range, but they have been able to repeatedly purchase online on many different sites A 20% offer sent to the two groups will have very dissimilar outcomes since the first group will have no interest at al while the second group of potential clients will be very interested in the promotion. This does to show that the demographically targeted group and their current or past behavior can be used to predict their future behavior trends; one can not thus use demographic characteristics to predict future customer purchases. In essence a given company will be able to determine its clients defect or retention in their business by their behavior and thus once behavior can be determined, then the business has a big shot at retaining the client in the future (Berry, 1983). The International Customer Service Standard (2009), retained clients are the satisfied clients since the dissatisfied will rarely come back unless they are sure of better services next time. The happy retained customers are a lot that feel that they are in total control of the choices they make; this is where the marketers will take advantage of the situation by offering promotions and/or discounts to this group. Promotions may take the form of sweepstakes and/or discounts, a simple thank you note or a birthday card; all these will help in customer retention. According to Gordon (1999), the promotions will help encourage the interaction of customers and the company, even if you it is just the sending a birthday card or newsletter. The end result will be that the company or business will make more money. Customer/consumer loyalty describes the tendency of a customer to choose one business or product over another for a particular need.  Within the packaged goods industry consumers of the packed goods are mainly termed as loyal to a given brand for instance Heineken the issue of consumer choice becomes evident when the consumers choose a brand over another, consumer satisfaction may be mistaken by some managers as equaling to consumer loyalty. Some times consumers may be satisfied but they will display Loyalty by their actions, i.e. coming back next time for more Customer/consumer loyalty can be said to be as a result of very properly managed customer programs aimed at retention; customers targeted by any given retention program will demonstrate high loyalty to the business or products n question.  Majority if not all the customer retention programs will heavily rely on the communicating between the managers and customers, the managers thus being in a position to give them encouragements to remain actively involved with the business and their choice to do business with them. Conclusion According to Frederick (1996), customer satisfaction will only be of benefit to the company/business to the actual extent that the satisfaction of the client will lead to repeat business in the future. This implies that the only when the customer does come back for more is customer satisfaction considered viable to the business; this contradicts the assertion by Keller (1998) that consumer loyalty bears no fruit. Some customers are on transit from one business to another and if the business spends some much time and/or effort tying to retain the same group, two things are bound to happen; the business could turn them into future loyal customers worth more than their original transient status or the business will incur major looses tying to make a transient customer loyal. Any given company willing to capitalize on the issue of consumer loyalty must put in place the consideration of whether the clients in question do actually portray a potential of loyally as has been shown by transient customers who are ready to perch when a suitable business meeting their needs is noticed. As per the information above, it will thus not be entirely incorrect for one to rule that "once a loyal customer, always a loyal customer" George, (1990), Journal of Business Research. Since the consumer preferences will always keep changing. The solution would thus be for the marketers to work towards the maintaining of their consumer loyalty which will then lead to a very competitive advantage compared to the other competitors in the market. The issue of customer/consumer satisfaction will thus go a long way to translates into the consumers/customer loyalty and then customer/customer retention (Narayandas, 1997).  REFERENCES Burnham TA, Fels JK, Mahajan V (2003). Consumer switching costs: a typology, antecedents, and consequences. London: J Acad Mark Sci.   Jacoby J, Chestnut RW (1978). Brand loyalty: measurement and management. New York, NY: Wiley.   Keller KL (1998). Strategic brand management. Upper Saddle River, NJ: Prentice-Hall;   Narayandas N (1972). 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