How to establish long-term relationships with customers? | AMGCR

Few businesses today can afford to rely on single customer transactions for ongoing commercial success. Long-term relationships with customers from whom higher levels of sales and profitability can be derived is an essential aspect of marketing and the role that communications play in this process is significant.

Why are long-term established customers more profitable? There are six main reasons:

1. Regular customers place frequent, consistent orders, and therefore, usually cost less to serve.

2. They tend to buy more.

3. They sometimes pay premium price.

4. Retaining customers makes it difficult for competitors to enter a market or increase their share.

5. They often refer new customers.

6. The cost of acquiring and serving new customers can be substantial. A higher retention rate implies fewer new customers need to be acquired, and they can be acquired more cheaply.

There are many relationship concepts, but the ones that companies try to accomplish are these three:

1. Trust

Trust is a means of reducing uncertainty in order that effective relationships can develop. Interorganisational trust is based on two main dimensions: credibility and benevolence. Credibility concerns the extent to which one organisation believes that other organisation will undertake and complete its agreed roles and tasks. Benevolence is concerned with goodwill that the other organisation will not act opportunistically, even if conditions for exploitation should arise.

2. Commitment

Commitment is a desire that a relationship continue in order that a valued relationship be maintained or strengthened. The greater the losses anticipated through the termination of a relationship, the greater the commitment will be expressed by the exchange partners. Likewise, when these partners share the same values, commitment increases.

3. Loyalty

In order for customer loyalty to be achieved, there are number of key identifiable stages that the relationship moves through. This is more formally known as the ?Relationship marketing ladder of customer loyalty?. A prospect becomes a purchaser, completed through a market or discrete exchange. Clients emerge from several completed transactions but remain ambivalent towards the seller organisation. Supporters, despite being passive about an organisation, are willing and able to enter into regular transactions. Advocates represent the next and penultimate step because they actively recommend it to others by positive, word-of-mouth communications. Partners, who represent the top rung of the ladder, trust and support an organisation.

James Northon is a marketing consultant currently working on a project based on a task: how to improve eyesight.* He has helped many clients with their marketing communications, such as Dewalt with its Dewalt DW745 and Dewalt DC759.

Please consult a physician before taking any medical advices.

Source: http://www.amgcr.com/2011/06/how-to-establish-long-term-relationships-with-customers/

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