Ultimate Guide to Relationship Marketing and Customer Loyalty

Customer acquisitions can cost up to 25 times more than customer retention, therefore the ability to build relationships is key. 

This comprehensive guide will define what relationship marketing is and how vital it is in helping to keep customers loyal. It will analyze whether customer loyalty and relationship marketing are indeed a match made in heaven.

What is Relationship Marketing? 

Relationship marketing combines the ability to win over a target audience with keeping them as long-term loyal customers. According to leading marketing scholar Evert Gummesson, it is a “strategy in which the management of interactions, relationships, and networks is a fundamental issue.” 

Gronroos states that it aims to “establish and maintain lasting relationships between firms and their customers for mutual benefit.” The main goal is to maximize profitability and customer loyalty by providing the best possible service.

Key Virtues of Relationship Marketing

To provide excellent customer service, four key virtues are essential: Trust, Commitment, Communication, and Conflict Handling. Let’s explore each virtue in detail and how they can enhance customer loyalty.

Trust

Trust in relationship marketing is the willingness to rely on a partner in whom you have confidence. Keeping promises and ensuring the quality of those promises are crucial. An Edelman study found that 81% of consumers need to trust a brand to buy from them. Trust is vital for retaining existing customers, as they need a genuine reason to stay.
 

Salespeople can build trust through follow-up calls and personalized messages that create a bond between the company and the customer. Email marketing and social media interactions also play a significant role.

Break of trust

Crucially, a break of trust between the customer and the company can lead to a defection which could create a poorer reputation. 1 in 3 customers will leave a brand they love after just one bad experience, while 92% would completely abandon a company after two or three negative interactions. 

A key contemporary example where a loss of trust has been detrimental to a company can be reflected in the United Airlines passenger incident in 2017. Here, David Dao was dragged from an overbooked flight by staff after refusing to leave voluntarily. This incident caused a worldwide backlash and a significant drop in stock. 
 

In order to keep a customer loyal, trust is vital. As you have seen making sure that a break of trust does not occur is just as important.  

Commitment

Commitment in relationship marketing reflects a dedication to making a relationship succeed mutually. There are two types of commitment: calculative and affective. Calculative commitment focuses on economic reasoning and product quality, while affective commitment is about developing a personal connection between a customer and a firm.

A key objective of relationship marketing is to foster customer loyalty and deeply held commitment to rebuy preferred products or services. Social media is a powerful tool for creating such relationships, as it allows for direct, two-way communication with customers, leading to stronger bonds and trust.

This communication channel leads to a creation of stronger bonds, commitment and if handled right: trust. However, there is a balance needs to be struck. Any problems should handled with the utmost amount of care, social media disasters have tarnished many a brand’s reputation. 

Communication

Effective communication means keeping in touch with valued customers promptly and transparently, especially when problems arise. Clear communication builds trust and commitment, essential for a strong customer relationship.

Improving communication through loyalty programs

Loyalty programs offer an excellent platform for communication, keeping in touch through apps, push notifications, and more. Tiered loyalty programs can help segment the customer audience, fostering collective commitment and trust. 

Ensure your loyalty program provides true value to the customer, leveraging marketing modules for targeted messaging and active campaigns.

In addition, another important aspect of creating your own loyalty program is to ensure that your program is genuinely attractive to customers and provides true value to the customer. The possibilities provided by marketing modules within loyalty programs include push notifications, active campaigns and targeted messaging. 

All this helps to keep the customer engaged which is crucial to the success of a loyalty program. Have a look at the marketing module that White Label offers here.

Conflict Handling

The ability to perceive and handle conflicts effectively is crucial in relationship marketing. Proper conflict handling can be the difference between retaining a customer and losing one. 

Conflict handling in practice

One recent way that a brand managed to deal with a major incident in a pragmatic manner was KFC’s management of the chicken shortage that led to 700 stores closing. Their jovial tone whilst offering transparency on their social media in response to this crisis reflected a tactic of handling conflict successfully. 

So much so that it didn’t lead to the possible irreparable damage that could have been garnered from such a mistake. This reflects another way in which social media can build a relationship with a customer.
 

Customer loyalty means keeping customers around and the principle way to do this is to build a relationship with them. Moreover, they need to be seen as a company that treats customers as individual people and VIPs. This is to ensure that customers don't feel ignored and that the company and customer relationship is intact.

What do customer loyalty and relationship marketing have in common? 

Relationship marketing and customer loyalty are interlinked. There is a need for both schools of thought to harmonise in order to create the perfect customer experience. In order to have customer loyalty, the principles of relationship marketing need to be put into place. 
 

As you have seen, trust, commitment, communication and conflict-handling are all key components of relationship marketing and each offer their own merits. However, a combination of all four is crucial to ensure a balanced relationship and to ensure customer loyalty. 

Are you seeking a trusted partner for your loyalty journey who can allow you to build a lasting relationship with customers? 

Look no further. You’re in the right place. White Label Loyalty is here for you.