Relationship Marketing

"The process of developing relationships with customers"

Gronroos defined relationship marketing in 1994 as building, preserving, and reinforcing relationships with customers and the parties related to the organization which could help achieving the goals and keeping the promises of all these parties through cooperative and mutual exchange. In order to understand the idea or philosophy of relationship marketing with customers, we should focus on the process of attracting customers and preserving them. Figure (1) explains the process of relationship development with customers and this figure explains the philosophy of relationship marketing.

The beginning point in the application of relationship marketing is that the organization studies the market to define the suspect customers who want to buy the commodities and services of the organization. Some of those customers have information about the commodities and services of the organization but they are hesitant to buy. Therefore, studying those customers helps the organization in defining potential customers, and this is the second step; meaning that identifying customers who are expected to buy the offers of the organization. In the view of the organization, potential customers are the customers who have strong interest in the commodities of the organization and they have the ability to buy them. This step studies potential customers in order to filter them by dividing them into qualified potential customers and disqualified potential customers.

The meaning of disqualified customers is the customers who are rejected or excluded by the organization, or the organization does not target them for many reasons; including non-profitable customers for the organization. The qualified customers are those who make up the element of attraction to the organization and that the organization can deal with them according to their resources and available capabilities, whereas the third step is to convert potential customers who are eligible to first-time customer meaning that they buy goods and services of the Organization for the first time through the production of goods and services consistent with their needs and desires, and the intensification of promotional efforts directed to these customers.

The fourth step is represented in the follow-up of first-time customers who buy for the first time and study the suitability of goods and services of the organization to the needs and wishes of customers. However, the organization could lose some of the new customers who have purchased for the first time for many reasons some of them may be dissatisfaction, while there are first-time customers, who buy for the first time, are satisfying with the goods and the services. Therefore, the Organization should encourage them to repeat the purchase again in order to convert them into repeat customer. When customers repeat purchase and become satisfied with the repeat of purchase, they would become regular customers.

The fifth step is that the organization studies those customers to identify the privileged customers, thereby reducing the concentration of the Organization's efforts on the unprivileged customers, whereas the privileged customers are treated specially. The goal of that is to turn them from customers to members, where organizations are applying program entitled "Membership Program". This program offers a range of benefits to privileged customers, and none is involved but the privileged customers, but it may happen that some privileged customers refuse to participate in such a program.

The sixth step is represented in turning the participating members to advocates of the organization through the special benefits offered by the organization to them. Those members turn into salesmen free of charge; where those members advise their family and friends to buy goods and services of the organization.

The last step is a challenge to the organization; as it seeks to convert these subscribers to partners, where both: members and the organization work with each other to achieve their common goals actively.

Note that in each step of the model of developing the relationship with customers some customers are excluded or withdrawn for some reasons which may include dissatisfaction, or lack of profitability, or because some customers have their own problems, or customers move to a remote area until the rest reaches the stage of partnership with the organization.

(Figure 1) The process of developing relationships with customers

References:

1- Kotler P. G. Armstrong, J. Saunders and V. Wong, )2005), "Principles of Marketing", (2nd European ed), (Subsequent editions in 1999, 2001, and 2005) Prentice Hall Europe, Harlow.

2- Kotler, P & Keller, Kevin Lane, (2006), "Marketing Management", 12th edition, Upper Saddle River, NJ: Prentice-Hall.

3- Kotler P & Keller, Kevin Lane, (2009), "Marketing Management", 13th edition, Upper Saddle River, NJ: Prentice-Hall.