Recent studies have emphasized the importance of developing relationships for effective marketing. Companies have also acknowledged relationship-building with customers as a critical component for sustaining competitive advantage.
One way to gain a unique competitive advantage is to invest in building strong, long-term, and interactive relationships with your customers - Invest your time, effort, and resources in building profitable relationships. In other words, your business objective should be to create, maintain and strengthen customer relationships profitable and in a way that is beneficial to all parties.
By capitalizing on strong customer relationships, this helpful perspective in approaching marketing provides mutual rewards for both you and your customers. Of these rewards, loyalty is considered the base for building relationships with customers. Real human exchanges are far richer in their connections than traditional marketing. To put it differently, this approach is less transactional and more personal. Research indicates that relationships have a greater influence on customer loyalty and retention when the aim of the relationship is the individual.
Furthermore, although the prominence of investing in relationships with customers focuses both on customer acquisition and retention, the emphasis of this concept is quite often directed to retaining customers or customer retention strategies. This is due to a notion advocated by academics who claim that it is between five and ten times more expensive to win a new customer than it is to recruit an existing one. In other words, your existing customers are cheaper. Hence, logically, companies should seek to keep current customers happy instead of dedicating excessive marketing efforts to attracting new customers. To put it another way, focusing on retention strategies and securing customer loyalty is more profitable for a company in the long run.
Let us explain how this can provide a unique advantage.
By investing heavily in strong customer relationships, you are creating a value-added strategy or adding value to your already existing marketing strategy. Value is considered an important component or a life-supporting process in marketing activities. As a matter of fact, providing superior value to customers is deemed one of the most effective competitive strategies.
By adding more value to your core product or service, whereby you are investing in strong, long-term customer relationships, this puts you in a position to obtain valuable insights on how to best serve your customers better than your competition, thus generating long-term advantage.
This will further strengthen the bonds between you and your customers by first improving customer satisfaction which is an essential criterion for value and customer loyalty. This means that, through enhanced customer service, strengthened customer loyalty can thereby be achieved. Customer loyalty is an important foundation for developing a sustainable competitive advantage.
This simple supporting process is a means of differentiation and a key to finding a sustainable competitive advantage. For instance, product differentiation is based on tangible features and can be easily copied; on the contrary, exceptional customer relationships as a differentiation tool are intangible, thus making it more difficult for your competitors to copy. This is where your unique advantage derives. Clearly, customer relationships cannot be reproduced by competitors and thus offer a unique and sustainable competitive advantage.
To be more competitive, firms need to give customers more than what they expect or think they need. In other words, they supplement or add value to their core products. Hence, a well-executed marketing strategy with customer-oriented value-added elements is an excellent way for a firm to distinguish itself from competitors.
In all, one must remember that building relationships with customers is valued differently in various sectors. Hence, if relationship building is not valued in your sector, this article may not apply to you. Nonetheless, it is important to realize that the ultimate objective mentioned in this article, i.e., gaining a unique competitive advantage, is unattainable if the value-added component to your core product or service is not customer-oriented.
N.B: This article is the first of a six-part series. The reference list below represents the total of all six articles.
Reference List:
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Ndubisi, N.O., 2007. Relationship marketing and customer loyalty. Marketing intelligence & planning
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