What Relationship Marketing Does?

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Looking for one of the best definitions on relationship marketing?

What Relationship Marketing Does:

  • Focuses on profitable retention
  • Emphasizes customer value
  • Provides longer-term time scale
  • Allows high customer service emphasis
  • Is concerned with relationship quality

—Ronald C. Goodstein, Ph.D.

First, whether in management or sales, make a conscious decision as to how you will market— choosing either to market to the masses or to only a few. Will you spread your time, energy, and resources across the board or concentrate on the few customers and prospects that drive the majority of your revenue and profits?

Before you answer that question, let’s find out what others think and have done.

Once a student leader of the Chinese Tiananmen Square protests, Li Lu is now a hedge-fund manager and in line to become a successor to Warren Buffett at Berkshire Hathaway, Inc. He told investors he has learned a valuable lesson on segmentation. Watching the World Cup, he compared his investment style to soccer.

“You may very well work hard and seldom score,” he said. “But occasionally you get one or two great chances. That’s when you make decisive strikes that really matter” (Wall Street Journal, “From Tiananmen Square to Possible Buffett Successor.” 07/30/10).

Dr. Ronald C. Goodstein, Ph.D., at Georgetown University’s McDonough School of Business, maintains that contemporary relationship marketing includes combining several marketing techniques in order to create a stronger business model. It’s called customer portfolio management, which is a process of having dedicated marketing teams assigned to best customers, next-best customers, etc. and allocating marketing capital proportionately.

Relationships with your B-of-B customers are a source of competitive advantage, Dr. Goodstein says. But companies must know through their client relationships how to choose the right customers.

“We can no longer churn through customers, assuming there will always be another one,” he said. “Neither can we serve them in the old ways. Their expectations are higher and their commitment weaker. Since some customers will cost you money, convert them to profitability or lose them. Think like an investor: buy a customer today, get returns tomorrow. But first, know how to find the right ones.”

In our next post, will continue with Chapter 1 of Contrarian Marketing.  It’s Not Magic, Just Math.

Source:  Excerpt from the Contrarian Marketing Book  Chapter 1:

© 2013  Intelligent Response & Contrarian Marketing

By Nick Mavrick

You can find Nick Mavrick on Google+

 

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