Relationship Marketing

Relationship marketing is defined as “an organization’s effort to develop a longterm, cost-effective link with individual customers for mutual benefit.” Rather than focusing on a short-term sale, the sales rep tries to establish a long-term bond. And rather than just selling, the sales department works with marketing to use techniques like database marketing, message differentiation to different target markets, and tracking of promotional effects to improve the relationship. For example, customer relationship management (CRM) tools have been used by a number of companies. These companies, including Sears, Wells Fargo, Sony, and GM, among others, make extensive uses of their databases on purchase behavior and frequency and duration of customer interactions to estimate profitability at the individual account level. A number of companies now offer software to assist in implementing CRM programs, including Seibel Systems, SAP, and PeopleSoft (Exhibit 18-1). AT&T builds databases of customers with similar profiles, flagging those with the most potential for up-selling. As noted by Copulsky and Wolf, such marketing uses a more personalized form of communication that crosses the previous boundaries between personal selling and the other promotional tools. Relationship building also requires trust, as noted by Pepper and Rodgers; if the customer does not trust the salesperson, there is no relationship and the sale will focus only on price. In a long-term relationship, the buyer and seller collaborate within the context of previous and future transactions.

Adoption of a CRM approach will require sales managers to develop nontraditional sales strategies, according to some observers. Ingram and colleagues note that companies will need to move to a more strategic, less tactical approach, using emerging technologies to support this effort. Bob Donath agrees, noting that traditional communications performance standards—the number of qualified and converted leads generated from a medium—will be less important. Donath notes that a company’s reliance on websites and banner ads, as well as ads in print publications, will need to be more strategic, direct marketing will assume a greater role, and the use of more sophisticated CRM programs will be required to be successful.

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