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Relationship Marketing Using the Internet

By on January 17th, 2022 in Social Issues

With the advent of the internet and big data analysis, organizations have been able to use relationship marketing and database mining as powerful marketing tools. This combination of the internet, technology and relationship marketing is referred to as customer relationship management.

Customer relationship marketing uses direct marketing, relationship marketing and database mining to create useful customer relationship marketing strategies. Direct marketing serves to deliver product communication as well as the product itself to individual consumers. The relationship marketing theory gives the foundation to customer relationship management. Database mining serves as the technology platform to store and use consumer-related information.

The biggest advantage of the internet from relationship marketing is interactivity. Organizations through email and online chat can establish customer relationships and data collected from this interaction serves as a base for future product offerings and other personalized services.

Concept of Relationship Marketing

The development of relationship marketing is closely associated with the way marketing has evolved. Organizations often, to achieve economies of scale restore to standardization and mass customization. The products were sold on the basis of interpersonal relationships. In the last couple of decades, with the increase in competition, the focus has moved to differentiation. To achieve this differentiation it is important to understand consumer needs and requirements. Thus marketing moved from mass appeal to customer-focused marketing.

The main focus of relationship marketing is to retain customers and make them frequent buyers. The existing customers are the main focus of relationship marketing. The reason for targeting the existing customer base is that there is no customer acquisition cost, lesser extent, of discount or vouchers, reduced price sensitivity, increase probability of referral and assured revenue growth.

Now within a defined existing customer base, organizations need to develop strategies to maximize return on relationship investments. The existing customers are divided into three broad categories like most valued customers, most potential customers and no value customers. The most valued customers as the name suggest are frequent buyers and their loyalty is highest towards the company. So companies need to develop strategies to retain them. For most potential customers’ companies need to develop strategies under which they become frequent buyers.

Customer Lifecycle Management

A customer lifecycle management from an organization perspective contains selection, acquisition, retention, and an extension of the customer.

Selection: at this stage organization defines customers for whom marketing strategies will be developed. This also includes developing marketing strategies for customer acquisition, retention and extension.

Acquisition: at this stage organizations attempt to form relationships with new customers at minimal acquisition cost. This includes targeting high potential and value customers.

Retention: at this stage organization develops strategies to retain the existing set of customers. This includes identifying product offerings based on customer profiles.

Extension: as this stage organization develops strategies to improve buying behaviour of existing customers. This includes upsell, cross-sell, re-sell and lead generation.

Implementing electronic customer relationship management

Organizations execute the following strategies to implement e-CRM:

Increase Web Traffic: here the aim is to attract more and more visitors to the e-commerce website. But the focus is to attract quality visitors who are likely to make purchases. This increased visibility of the website can be done through online or offline promotion.

Satisfactory Web Experience: the newcomers to the website should find the experience of navigating through the website satisfactory. They should be able to get the desired information and browse the website for extended periods for sell activity to happen. There should be enough incentives for consumers to make the first purchase.

Profiling: companies should be able to capture maximum consumer information during the purchase action. The online forms should be easy to operate for their completion.

Communication: companies need to build relationships through communication. This is done by sending periodic emails highlighting the current happenings of the website. This also includes showcasing specific customer information after logging in, for example, purchase history, related products etc.

Virtual Groups: companies promote the development of virtual groups where products and services are discussed. This group can help in resolving consumer queries and also serve in lead generation.

Privacy: Companies should not get overboard with regard to consumer information. They should not share the information without prior consent and knowledge of the consumer.

It is very apparent that to create differentiation and retain loyal customers, companies need to invest in the relationship market. The internet provides an alternate and effective way through which this can be achieved.