Relationship marketing is not about having a "buddy-buddy"
relationship with your customers. Customers do not want that. Relationship
Marketing uses the
event-driven tactics of customer retention
marketing, but treats marketing as a process over time rather
single unconnected events. By molding the marketing message and tactics
to the LifeCycle of the customer, the
Relationship Marketing approach achieves very high customer satisfaction and
is highly profitable.
The relationship marketing process is usually defined as a series of
stages, and there are many different names given to these stages, depending on
the marketing perspective and the type of business. For example,
working from the relationship beginning to the end:
Interaction > Communication > Valuation
Awareness > Comparison > Transaction >
Reinforcement > Advocacy
Suspect > Prospect > Customer > Partner
> Advocate > Former Customer
Using the relationship marketing approach, you customize
programs for individual consumer groups and the stage of the process they
are going through as opposed to some forms of database marketing where
everybody would get virtually the same promotions, with perhaps a change in
offer. The stage in the customer LifeCycle
determines the marketing approach used with the customer.
A simple example of this would be sending new
customers a "Welcome Kit," which might have an incentive to make a second
purchase. If 60 days pass and the customer has not made a second
purchase, you would follow up with an e-mailed discount. You are using
customer behavior over time (the customer LifeCycle) to trigger the
Let's say a customer visits your site
every day and then just stops. Something has happened. They are unhappy with
the content, or they have found an alternative source. Or perhaps they’re
just plain not interested in the subject anymore. This inaction on their part
is a trigger telling you something has happened to
change the way this customer thinks about your site and perhaps your service.
You should react to this
and then look for feedback from the customer. If you improve the content,
e-mail them a notice, and if the customer starts visiting again, the feedback has
been given. The cycle is complete until the next time the data indicates a
change in behavior, and you need to react to the change with
Let’s say this same customer then makes a
first purchase. This is an enormously important piece of data, because it
indicates a very significant change in behavior. You have a new relationship
now, a deeper one. You should react and look for feedback.
You send a welcome
message, thank the customer for the trust they have displayed in your site,
and provide a second purchase discount. Then you await feedback from
the customer, in the form of a second purchase, or increased visits. Perhaps
you get negative feedback, a return of the
first purchase. React to this new feedback and repeat the process.
All of the marketing decisions in the examples above were triggered by
customer behavior, the actions of the customer as tracked by their activity
(or lack of activity). This activity tracked over time is the customer LifeCycle.
If you can track customer LifeCycles, you can begin to predict them, and if
you can predict them, you can target your marketing efforts at the most
critical trigger points in the customer LifeCycle. This approach
eliminates a lot of wasted marketing spending, and creates very high ROI
marketing campaigns. You spend less money overall, and the money you
spend is much more effective.
All of the above is accomplished by using the
data customers create through their interactions with you to build simple
LifeCycle models or rules to follow. The relationship marketing approach
then uses this LifeCycle model as a "timing blueprint" to follow,
targeting the right customers at the right time, with the most profitable
This site and the Drilling Down book are
teaching you how to build and use LifeCycle models yourself in 30 minutes
with an Excel spreadsheet. If you want to increase
sales while reducing the costs of customer
marketing, you have to get this book.