INTRODUCTION:

Relationship Marketing was first defined as a form of marketing, developed from direct
response marketing campaigns which emphasizes customer retention and satisfaction, rather
than a dominant focus on sales transactions.

As a practice, Relationship Marketing differs from other forms of marketing in that it

recognizes the long term value of customer relationships and extends communication beyond
intrusive advertising and sales promotional messages.

With the growth of the internet and mobile platforms, Relationship Marketing has continued
to evolve and move forward as technology opens more collaborative and social
communication channels. This includes tools for managing relationships with customers that
goes beyond simple demographic and customer service data. Relationship Marketing extends
to include Inbound Marketing efforts (a combination of search optimization and Strategic
Content), PR, Social Media and Application Development.

Just like Customer relationship management(CRM), Relationship Marketing is a broadly

recognized, widely-implemented strategy for managing and nurturing a company’s
interactions with clients and sales prospects. It also involves using technology to, organize,
synchronize business processes (principally sales and marketing activities) and most
importantly, automate those marketing and communication activities on concrete marketing
sequences that could run in autopilot (also known as marketing sequences). The overall goals
are to find, attract, and win new clients, nurture and retain those the company already has,
entice former clients back into the fold, and reduce the costs of marketing and client service.
[1] Once simply a label for a category of software tools, today, it generally denotes a
company-wide business strategy embracing all client-facing departments and even beyond.
When an implementation is effective, people, processes, and technology work in synergy to
increase profitability, and reduce operational costs.

Development
Relationship Marketing refers to a long-term and mutually beneficial arrangement where both
the buyer and seller have an interest in providing a more satisfying exchange. This approach
attempts to transcend the simple purchase-exchange process with a customer to make more
meaningful and richer contact by providing a more holistic, personalized purchase, and uses
the experience to create stronger ties.

According to Liam Alvey, relationship marketing can be applied when there are competitive
product alternatives for customers to choose from; and when there is an ongoing and periodic
desire for the product or service.

Fornell and Wernerfelt used the term "defensive marketing" to describe attempts to reduce
customer turnover and increase customer loyalty. This customer-retention approach was
contrasted with "offensive marketing" which involved obtaining new customers and
increasing customers' purchase frequency. Defensive marketing focused on reducing or
managing the dissatisfaction of your customers, while offensive marketing focused on
"liberating" dissatisfied customers from your competition and generating new customers.
There are two components to defensive marketing: increasing customer satisfaction and
increasing switching barriers

Modern consumer marketing originated in the 1950s and 1960s as companies found it more
profitable to sell relatively low-value products to masses of customers. Over the decades,
attempts have been made to broaden the scope of marketing, relationship marketing being
one of these attempts. Arguably, customer value has been greatly enriched by these
contributions.

The practice of relationship marketing has been facilitated by several generations of customer
relationship management software that allow tracking and analyzing of each customer's
preferences, activities, tastes, likes, dislikes, and complaints. For example, an automobile
manufacturer maintaining a database of when and how repeat customers buy their products,
the options they choose, the way they finance the purchase etc., is in a powerful position to
develop one-to-one marketing offers and product benefits.

In web applications, the consumer shopping profile can be built as the person shops on the
website. This information is then used to compute what can be his or her likely preferences in
other categories. These predicted offerings can then be shown to the customer through cross-
sell, email recommendation and other channels.

Relationship marketing has also migrated back into direct mail, allowing marketers to take
advantage of the technological capabilities of digital, toner-based printing presses to produce
unique, personalized pieces for each recipient. Marketers can personalize documents by any
information contained in their databases, including name, address, demographics, purchase
history, and dozens (or even hundreds) of other variables. The result is a printed piece that
(ideally) reflects the individual needs and preferences of each recipient, increasing the
relevance of the piece and increasing the response rate.

Scope
Relationship marketing has also been strongly influenced by reengineering. According to
(process) reengineering theory, organizations should be structured according to complete
tasks and processes rather than functions. That is, cross-functional teams should be
responsible for a whole process, from beginning to end, rather than having the work go from
one functional department to another. Traditional marketing is said to use the functional (or
'silo') department approach. The legacy of this can still be seen in the traditional four P's of
the marketing mix. Pricing, product management, promotion, and placement. According to
Gordon (1999), the marketing mix approach is too limited to provide a usable framework for
assessing and developing customer relationships in many industries and should be replaced
by the relationship marketing alternative model where the focus is on customers,
relationships and interaction over time, rather than markets and products.

In contrast, relationship marketing is cross-functional marketing. It is organized around

processes that involve all aspects of the organization. In fact, some commentators prefer to
call relationship marketing "relationship management" in recognition of the fact that it
involves much more than that which is normally included in marketing.
Martin Christopher, Adrian Payne, and David Ballantyne at the Cranfield School of
Management claim that relationship marketing has the potential to forge a new synthesis
between quality management, customer service management, and marketing. They see
marketing and customer service as inseparable.

Relationship marketing involves the application of the marketing philosophy to all parts of
the organization. Every employee is said to be a "part-time marketer". The way Regis
McKenna (1991) puts it:

"Marketing is not a function, it is a way of doing business . . . marketing has to be all

pervasive, part of everyone's job description, from the receptionist to the board of
directors.

Retention

A key principle of relationship marketing is the retention of customers through varying

means and practices to ensure repeated trade from preexisting customers by satisfying
requirements above those of competing companies through a mutually beneficial relationship
This technique is now used as a means of counterbalancing new customers and opportunities
with current and existing customers as a means of maximizing profit and counteracting the
"leaky bucket theory of business" in which new customers gained in older direct marketing
oriented businesses were at the expense of or coincided with the loss of older customers. This
process of "churning" is less economically viable than retaining all or the majority of
customers using both direct and relationship management as lead generation via new
customers requires more investment.

Many companies in competing markets will redirect or allocate large amounts of resources or
attention towards customer retention as in markets with increasing competition it may cost 5
times more to attract new customers than it would to retain current customers, as direct or
"offensive" marketing requires much more extensive resources to cause defection from
competitors. However, it is suggested that because of the extensive classic marketing theories
center on means of attracting customers and creating transactions rather than maintaining
them, the majority usage of direct marketing used in the past is now gradually being used
more alongside relationship marketing as its importance becomes more recognizable.

It is claimed by Reichheld and Sasser that a 5% improvement in customer retention can

cause an increase in profitability of between 25 and 85 percent (in terms of net present value)
depending on the industry. However Carrol, P. and Reichheld, F. dispute these calculations,
claiming they result from faulty cross-sectional analysis.

According to Buchanan and Gilles, the increased profitability associated with customer
retention efforts occurs because of several factors that occur once a relationship has been
established with a customer.

 The cost of acquisition occurs only at the beginning of a relationship, so the longer the
relationship, the lower the amortized cost.
  Account maintenance costs decline as a percentage of total costs (or as a percentage of
revenue).
 Long-term customers tend to be less inclined to switch, and also tend to be less price
sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
 Long-term customers may initiate free word of mouth promotions and referrals.
 Long-term customers are more likely to purchase ancillary products and high margin
supplemental products.
 Customers that stay with you tend to be satisfied with the relationship and are less likely to
switch to competitors, making it difficult for competitors to enter the market or gain market
share.
 Regular customers tend to be less expensive to service because they are familiar with the
process, require less "education", and are consistent in their order placement.
 Increased customer retention and loyalty makes the employees' jobs easier and more
satisfying. In turn, happy employees feed back into better customer satisfaction in a virtuous
circle.

Relationship marketers speak of the "relationship ladder of customer loyalty". It groups types
of customers according to their level of loyalty. The ladder's first rung consists of
"prospects", that is, people that have not purchased yet but are likely to in the future. This is
followed by the successive rungs of "customer", "client", "supporter", "advocate", and
"partner". The relationship marketer's objective is to "help" customers get as high up the
ladder as possible. This usually involves providing more personalized service and providing
service quality that exceeds expectations at each step.

Customer retention efforts involve considerations such as the following:

1. Customer valuation - Gordon (1999) describes how to value customers and categorize them
according to their financial and strategic value so that companies can decide where to invest
for deeper relationships and which relationships need to be served differently or even
terminated.
2. Customer retention measurement - Dawkins and Reichheld (1990) calculated a company's
"customer retention rate". This is simply the percentage of customers at the beginning of
the year that are still customers by the end of the year. In accordance with this statistic, an
increase in retention rate from 80% to 90% is associated with a doubling of the average life
of a customer relationship from 5 to 10 years. This ratio can be used to make comparisons
between products, between market segments, and over time.
3. Determine reasons for defection - Look for the root causes, not mere symptoms. This
involves probing for details when talking to former customers. Other techniques include the
analysis of customers' complaints and competitive benchmarking (see competitor analysis).
4. Develop and implement a corrective plan - This could involve actions to improve employee
practices, using benchmarking to determine best corrective practices, visible endorsement
of top management, adjustments to the company's reward and recognition systems, and the
use of "recovery teams" to eliminate the causes of defections.

A technique to calculate the value to a firm of a sustained customer relationship has been
developed. This calculation is typically called customer lifecycle value.

Retention strategies also build barriers to customer switching. This can be done by product
bundling (combining several products or services into one "package" and offering them at a
single price), cross selling (selling related products to current customers), cross promotions
(giving discounts or other promotional incentives to purchasers of related products), loyalty
programs (giving incentives for frequent purchases), increasing switching costs (adding
termination costs, such as mortgage termination fees), and integrating computer systems of
multiple organizations (primarily in industrial marketing).

Many relationship marketers use a team-based approach. The rationale is that the more points
of contact between the organization and customer, the stronger will be the bond, and the more
secure the relationship.

Relationship Marketing Concept

In our haste to gain media visibility, we sometimes overlook Extension's most important
marketing resource - our relationships with people! This is ironic since the backbone of
Extension's success is based on commitments of volunteers, legislators, lay leaders, and our
staff members.

Educational organizations who wish to survive the competitive "shake-out" period of the
1990s, will need more than media attention. Emerging marketing research indicates that
heightened public awareness of organizations is only a first step in the marketing process.1

Building constructive relationships with selected target audiences is more important to

Extension's long-term marketing success than acquiring widespread public awareness.
Relationship marketing is the process of attracting, maintaining, and enhancing relationships
with key people.2 This marketing process applies to Extension since funding is garnered from
a few sources and continuous educational programs are delivered to specific audiences.

Successful Relationship Marketing Techniques

The greatest challenge confronting Cooperative Extension during the next 20 years will be
persuading county, state, and federal legislators to financially support Extension. Quality
educational programs that meet critical community needs are a prerequisite for funding.

However, quality, need-fulfilling programs aren't enough. Targeted relationship marketing

initiatives that raise Extension's credibility with decision makers are no longer a luxury, but a
necessity for public funding. As Boldt notes, Extension staff must become effective at
relationship marketing to understand emerging governmental priorities and influence future
financial support.3

Typically, decision makers have only a small window of exposure to view Extension
programs. Extension must focus its message on the critical difference it makes on the lives of
voters. Keys to successful communication with decision makers include:

1. Coordinate communications. Communications with elected officials must be

coordinated by one person in each county and state office. This coordination
eliminates duplication of efforts and maximizes the impact of Extension's educational
 message. The elected officials should be contacted by both staff and well-trained
clientele.
2. Know your elected officials. Identify all local, state, and federal elected officials in
your area. Collect basic information on their background and interests. This data
collection can be done by adult or 4-H youth volunteers. Elected officials should be
visited personally by a team of staff and volunteers on a year-round basis. Assign one
volunteer and, if possible, one staff member to visit key elected officials.

Before the visit, review information sheets and, if possible, attend a meeting that the
elected official is participating in. This homework will help identify and target critical
issues that the official is interested in. Target the educational message to meet the
official's interests.4

3. Get organized. Develop a file of success stories on significant Extension programs

and issues that can be shared with elected officials. Tailor the distribution of success
stories to personal/professional interests and needs of targeted legislators.
4. Develop a communication plan. Volunteers and staff should speak one-on-one with
key elected officials. Information sheets can be filled out on the key officials by
volunteers. Personal visits with legislators should be planned and opportunities for
personalized education through other means identified.
5. Conduct effective legislative visits. Face-to-face visits with legislators by clientele
who live in their districts are most effective. When a group is involved, there should
be one spokesperson. Make an appointment for a short, well-planned visit and present
your views rationally. Facts, figures, balance sheets, and other evidence can be
convincing. Develop a one-page information summary to leave with the legislator or
staff member.

Personal visits and written communications must be planned as part of a continuous,

year-long dialogue with legislators. Remember to include the elected official's
secretarial and aide staff. These staff members are literally the eyes and ears of the
elected officials. It's imperative to get to know them personally. Contact staff
members regularly on a year-round basis, don't wait until budget season. Get to know
them, and give them a chance to know you. As you plan your legislative visit,
determine the most important issues to be discussed.

Conclusion

As Extension field staff and administrators develop marketing plans, it will be critical to the
success of these to include relationship marketing strategies. While these relationship
marketing initiatives could target key representatives of the general public, clientele, media,
and decision makers - an audience critical to Extension's future viability is that of elected
officials.

In developing, maintaining, and enhancing relationships with elected governmental officials,

we need to employ "high touch and personalized technology" communication strategies. By
using imagination to portray Extension's commitment and ability to address important
community issues, our professional future will be secure. To paraphrase Ralph Waldo
Emersen, future times can be very good if we know how to make them so through key
relationships!