Eshita Hajela | Innovative marketing

Term 4 | 20140121110

Relationship marketing involves forming long-term relationships with all

stakeholders, primarily customers.

The major focus of relationship marketing is on the future i.e. building long
term relations rather than trying to encourage just a one-time sale. It also tries to
promote customer loyalty by providing admirable products and services.
Relationship marketing, by contrast, is usually not linked to a single product or
offer. It involves a company refining the way they do
business in order to maximize the value of that relationship
for the customer.

Doyle (2002) says, the three cornerstones of relationship

marketing are: planning and controlling of customer satisfaction,

customer loyalty and customer value management.

The basic philosophies of relationship marketing are based on the assumption

that company-customer interactions and strategies can earn and keep the loyalty
of customers.
(Berry, 1995).
The basic necessity towards building any relationship invariably is trust. In
market and business, trust implies confidence that a customer or any stakeholder
has in the business to deliver the set goods and services.

Customer satisfaction is important in contributing towards customer loyalty

because satisfied customers are less likely to switch to a competitor. Customer
loyalty and the ability to retain customers are, therefore, highly dependent on the
customer's actual satisfaction; undoubtedly, customer service is a key ingredient
in relationship marketing and consequently, in customer retention
According to Doyle (2002), a highly satisfied customer will exhibit the following
characteristics:
(1) stays in loyal longer,
(2) buys more
(3) talks favourably about the company,
(4) pays less attention to competing brands and advertising
(5) the company will cost less to serve than new customers.

The concept of Relationship marketing is one of the most fundamental and

important changes in the recent years with regard to how marketers look at
marketing and practice their marketing activities.

Relationship marketing looks to establish a

long-term relationship with the customer
based on understanding of mutual needs.
In this way, it is suggested that the
marketer will find it easier to attract and
retain customers through building
customer royalty.

This can be explained using the

ladder of loyalty.

The relationship marketers coined the concept of ladder of customer loyalty.

According to the same, customers are grouped according to their level of loyalty

The loyalty ladder is a tool for marketing

communicators. The idea is that consumers can be
moved along a continuum of loyalty using a number of
integrated marketing communications techniques.
The loyalty ladder is also called branding ladder.

PROSPECT
Lowest rung of the ladder, it denotes
those customers who have set forth to
buy at this stage but have not finalised on
a definite brand or supplier.
They have a need to buy our product/
service & also have the want to possess or
make use of the same.

Although a prospect may not have

bought from the brand, he or she
may have heard or read about us
and thus, may have formed an
opinion about the brand or the
supplier.
Indeed at this stage they might still
decide not to purchase at all. At this
level on the ladder, this group had
no loyalty to any brand or supplier
and will buy from the one that offers
what they feel is the best deal on
offer.
The key task for the marketer at this
stage is acquiring customers and
convincing the prospects then that
they are being offered to do the best
value and may need to offer their
inducements to buy.

CUSTOMER
This second rung on the ladder comprises
of those prospects who have been
persuaded to buy. Even at this rung on
the ladder, the emphasis in the marketers
task switches from acquiring customers to
keeping them.
A customer, as opposed to a prospect, is
someone who, because they might have
bought before, even at this stage have
begun to develop an element of loyalty
to the brand or supplier. Needless to say,
they will only start to do this if they are
satisfied with the experience of the
transaction and the product or service
purchased.

It is essential therefore that the

marketer try to ensure this is the
case by ensuring that the customer
is satisfied both during and after
the exchange. At this level of the
ladder, customer back and aftersales service become important.

CLIENT
A subtle but nevertheless important
difference when moving to this level of
the ladder is that the relationship
between the marketer and the customer
begins to become one of mutual respect
and understanding.

The buyer begins to think of

themselves as being much more
than simply another sale and will
expect to be given priority and a
high level of service.

In turn, the marketer begins to

treat the buyer more as an equal
and certainly valued partner in the
exchange process. The people and
process elements of the marketing
mix begin to become more
important at this stage and the
customers loyalty and support to
the supplier or brand deepens.

SUPPORTER

A supporter is a customer who is not just

happy with a supplier or brand but who
is delighted , so much so that they are
unlikely to switch brands unless they have
a bad experience and even then they may
be reluctant to switch.
At this stage, the buyer is then extremely
loyal to the supplier or brand and will
continue to repeat purchase.

Having customers with this degree

of loyalty is a real marketing asset
and something which a marketer
must strive for.

ADVOCATE

An advocate is so delighted with their

experience of a supplier or brand that
they actively recommend the supplier or
brand to friends and relatives.

Word of mouth
recommendations are known to be
one of the most powerful
influences on supplier and brand
choice.

The emphasis is on retaining the

customers and keeping them
satisfied at all times by offering
highest levels of customer care and
service.
And so, an advocate talks about
you, does your marketing for you
and brings customers to you.

PARTNER

Once achieving the top rung, you are

often described as a trusted advisor, a
true partner. You are considered an
extension of your customers own
business.
They promote your business on your
behalf. They are so happy about your
product/service that they tell others.
They want to see your business go from
strength to strength.

An advocate becomes a partner

when he is earnestly involved in the
judgements of the company and
the brand. A relationship that is
aimed at developing customer
value via various partnering
activities has a greater probability
of creating greater bonding
between marketers and customers .

Everyone in the organization

focuses on the customer and
how they can help create
advocates.

Provisions to understand
customers be made because
effective relationship
marketing needs updated
marketing information
at all times.

Top management run customeroriented environment is created

and sustained.

Customer care, quality and

service are needed to create
and retain supporters and
advocates.

The emphasis shifts

from customer
catching to customer
retention.

A few years ago, most consumer goods marketers spent a large proportion of their
advertising and promotional budgets on trying to lure customers from competitors.
Using a variety of deals and offers, marketers were obsessed with attracting customers
from other suppliers and brands. In doing so, they encouraged the growth of the
customer who had no loyalty to a particular brand or supplier and simply switched
whenever there was a better deal on an offer. These so-called brand promiscuous
customers became a feature of the marketing landscape.
However, with the recognition of the power and commercial sense of relationship
marketing many companies are now refocusing their promotional and marketing
efforts to concentrate on customer retention rather than customer catching.
Most marketers today have turned their attention to how to build customer loyalty
and move their customers up the ladder of loyalty.

Feeling of
gratitude

Investment
on
Relationship
Marketing

Seller performance
outcomes

Gratitude
based
reciprocal
behaviors

Customer
purchase
intention

Customer
trust

Sales and
revenue
growth

Customer
commitment
Customer gratitude

Controls
Customer
size and
competitor
force

The prominence and importance of having a

loyal customer has been clearly acknowledged
and understood. A good, well-maintained
relationship will go a long way in keeping the
customer attached to the brand.
Correct identification of the customer in view of
the ladder of customer loyalty and investing
accordingly helps in gaining customer trust and
commitment that further help in accelerating
sales and revenue and make the customers fall in
love with the brand for ever.

The only possible barriers are customer size and competitor force that need to be
taken care of by targeting the customers cluster wise (on the basis of the loyalty
ladder prospect, customer, client, supporter, advocate, partner) and catering to
their needs and expectations individually.
Having done all of this, the
ladder of customer loyalty
can be made of good use in
times to come and thus, the
resources can be used
further optimally.

Regulatory
compliance

Sales can be worked

upon accordingly

Customer service
improvement

Client management

Profitability
tracking

The ladder of customer loyalty is a pivotal part

of the entire concept of customer relationship
management which in turn is one of the prime
and the most efficient approaches in maintaining
long term relationships of a brand with its
customers.

Once an initial emotional connect is built, it is

extremely simple for a brand to recognize the
actual needs, demands and expectations of the
customer and that further help the organization
to serve them in a much better way.
Improving and expanding on this bonding
accelerates the business of a brand to greater
heights of success.

conceptdraw.com
learnmarketing.net
thepathtodigitaltransformation.com/customer-satisfaction-metrics
wikipedia.org
sitepoint.com
The Perfect Customer Experience - Article by Shaun Smith
(nextup.wordpress.com)
Mohamad Rizan, Ari Warokka and Dewi Listyawati (2014), Journal of Marketing
Research and Case Studies,

Customer service by Patty Rai Smith, University of Kentucky and Barbara

Cunningham.
CIM course book Marketing Fundamentals by Frank Withey and Geoff
Lancaster

THANK
YOU!