Relationship Marketing: Engendering Customer Loyalty

By M. Isi Eromosele

Relationship marketing is based on creating a mutually beneficial exchange between business partners. This often requires personal communication with the customer.

The objective of many marketing strategies in the last decade has been building the customer’s commitment to a brand. This has taken three forms:

1. Creating customer satisfaction - delivering superior quality products and services
2. Building brand equity - the sum of the intangible assets of a brand.  
3. Creating and maintaining relationships

 Success with any of the above strategies results in high levels of repeat purchase, insulation from price increases and improved responsiveness to marketing communications by customers.

There has been an evolution of marketing thought and strategies over this last decade. Initially, customer satisfaction was the ultimate goal of marketing programs. However, as satisfied customers were shown to defect to other brands or providers at relatively high rates, marketers have looked to creating a greater commitment with the customer.

Two ways to achieve this are to build brand equity and to build relationships with customers. Brand equity uses mass media marketing, corporate citizenship and public events sponsorship to build a brand image.

Relationship marketing seeks to build interdependence between sellers and buyers and relies on one-to-one communications, delivered through the Internet and social media platforms.

The growth in relationship marketing took inspiration from mass customization technologies and applied them to marketing communications. This was based on the marketer’s ability to communicate a unique message to individual customers based on the company’s knowledge of their interests.

Engendering Customer Commitment And Loyalty

Relationship marketing encourages customer loyalty from consumers. Marketers need to retain their customers on a long-term basis. Even small improvements in customer retention can as much as double company profits. This is because:

1. It costs less to serve long-term customers.

2.  Loyal customers will pay a price premium.

3. Loyal customers will generate word-of-mouth referrals to other prospective customers.

Higher levels of loyalty have been correlated with positive marketing outcomes but  different definitions of loyalty can have selected effects on either market share or price premiums.

Knowing the buying motivations of customers has been an important part of understanding customer loyalty and brand switching behavior. Brand loyalty has three components: commitment, preference and repeat purchase.

There are four levels of loyalty based on these components:

1. Cognitive – one brand is preferable based on superior brand attributes.
2. Affective – liking towards brand has developed over the course of multiple purchase situations that were satisfying.
3. Conative – Affective stage with the express intention to re-buy.
4. Action – Conative stage plus the active desire to overcome situational influences and marketing efforts that may have the potential to cause switching behavior.

On reaching the action phase, the customer possesses a deep commitment to repurchase but also is active in blocking the influence of alternative brands.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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