Relationships in Marketing

In the past, the focus of marketing was on finding new customers to make the sale. Organizations have begun to realize that it is a lot cheaper to retain current customers than to attract new ones. This has led to a focus on relationship marketing that involves working closely with customers to build lasting relationships over time. Theodore Levitt says, "One of the surest signs of a bad or declining relationship is the absence of complaints from the customer."

Relationship marketing is establishing, developing, and maintaining successful relational long-term exchanges between organizations and ultimate customers. Understanding relationship marketing requires distinguishing between the discrete transaction (distinct beginning, short duration, and distinct ending) and the relational exchange, which traces to previous agreements and is longer in duration, reflecting an ongoing process. The goal of the discrete transaction is to get customers (short-term goal-oriented), whereas the goal of relationship marketing is to get and keep customers (long term goal-oriented).

Relationship Marketing has gained increased status in recent years in part because research has shown that it costs up to five times as much to acquire a new customer as it does to service an existing one. In addition, studies have shown that fewer than 10% of dissatisfied customers repurchase a product, while these individuals relate their dissatisfaction to others at a rate five times that of satisfied customers. 

The unit of value in business today is relationships. Clearly, marketers have an incentive to keep existing customers satisfied. The key to successful customer retention is superior customer satisfaction. Focused marketing means building relationships with the right people. Organizations have determined that even the loss of a sale in the short run may mean greater profits in a long-term relationship. It is not uncommon for an organization engaged in relationship marketing to recommend a competitor's product if they feel that the competing product would better satisfy the unique needs of the customer. Such a focus on satisfying customer needs helps build the trust that can result in a mutually beneficial and satisfying long-term relationship. 

Relationsare built on value and service. Value for the customer is a result of increased global competition that acts as an unyielding pressure on prices. The consumer receives value from manufacturers operating huge factories and from retailers providing an infinite variety of goods. Yet, service has suffered as individual production facilities and stores have been replaced in this industry trend toward mergers with multiple factories and distribution sites. Service is part of a corporate culture and is the other characteristic of global competition. It is exercised for every transaction, large or small, to every customer. Those who render it will find they keep their customers.