14 Pros and Cons of Relationship Marketing

“Relationships are the keys that unlock the potential of your brand and business.”

You’ve likely seen a phrase like this, or fairly similar anyway, in articles and posts about how to be successful with a business. It’s a common truth: people are more likely to by something from a business when they feel like they have a personal relationship with that brand.

In order to reach this point, it becomes necessary to emphasize consumer recognition, retention, and satisfaction when implementing a marketing plan. This is what relationship marketing happens to do.

The primary advantage of relationship marketing is that it forces a brand and business to focus on long-term goals instead of short-term success. You are doing more than just getting someone to buy something. You’re looking at ways to have that customer continue buying things because they see value in the brand.

The primary disadvantage of relationship marketing involves cost. Providing value to an existing consumer base does not guarantee an increase in repetitive sales. This is especially true for a brand and business that provides products or services that offer a long-term user experience.

Here are some additional pros and cons of relationship marketing that are worth considering before including its principles into a future campaign.

What Are the Pros of Relationship Marketing?

1. Returning customers often purchase more than first-time customers.
Because you are able to retain customers, you’re able to create an atmosphere where a greater per-purchase average can occur. This will help a brand and business create more revenues out of their current customer base.

According to reporting by CMS Wire of data collected by SumAll, 25-40% of the total revenues of stable businesses comes from returning customers. Businesses at the 40% revenue level in returning customers were able to generate 47% more in revenues than businesses that only have 1 in 10 repetitive customers purchasing products or services.

2. Sales are able to multiply with a minimal investment.

Many customers who have a relationship with a brand will purchase upcoming products because of the past values experienced in previous purchases. This means the only marketing effort required is to make the current customer base become aware of a new product or service that is being offered.

3. Positive experiences help to create viral positive one-on-one marketing.

People leave reviews for brands and businesses when an experience goes beyond their expectations. This is why there are so many negative reviews: a customer expects to receive a positive experience.

When your marketing is focused on the value propositions you can provide, then it becomes possible to exceed expectations in a positive way to generate a positive review, word-of-mouth marketing, and social network sharing.

4. It creates personal connections.

Although the marketing efforts may connect a customer with a brand, the end result is that customers make personal connections with employees as well. For local brick and mortar businesses, the managers or owners become a representation of that brand in the community as well. If a customer interacts with that person, they are also interacting with that brand, which increases the chances of a future purchase.

5. Brands and businesses receive honest insights from invested people.

It’s often a series of small concerns which ends up taking down a brand and business instead of one large issue. The proverbial “straw that broke the camel’s back” can be found and removed thanks to relationship marketing. This is because customers become personally invested with the business. They want to see it succeed because that becomes a personal success for them.

6. It creates opportunities to solve problems immediately.

There isn’t a brand and business on our planet that is 100% perfect. Products sometimes fail. Services don’t always get provided as intended. When relationship marketing efforts are in place, it gives an organization an out to be able to keep that customer. This is because customer contacts are at the forefront of this marketing effort.

From customer service lines to Twitter accounts to in-person visits, the ability to effectively handle a problem and then resolve it in a positive way contributes to the marketing efforts.

7. There are multiple avenues of relationship building available today.

Brands and businesses today have advantages that have never before been seen in our world. With social media, a brand can make an immediate 1-on-1 impact on customers. They can use their social media accounts and pages to keep reinforcing the value propositions that are offered. Even a brief email, which takes seconds to write, can have a long-lasting influence on a customer.

This is combined with the in-person contacts, direct mail contacts, and other forms of communication that are offered to everyone today. There are even under-utilized communication methods that can be used to advance a marketing campaign like this. Skype, FaceTime, and SnapChat are just three examples where a business can reach out with a representative to reinforce the value of their brand.

What Are the Cons of Relationship Marketing?

1. New customers are treated as a secondary commodity.

You want to retain your best customers, but you also sometimes need new customers to meet your budget goals. With relationship marketing, the focus of a brand and business is placed first on retaining and supporting the current customer base. This causes new customers to be overlooked and possibly ignored.

2. Negative information can ruin a relationship marketing campaign.

Because of the amount of sharing that happens today, all it takes is one negative experience that gets shared with others to cause this type of marketing to fail. Many consumers are focused on immediate, short-term values.

If you fail to provide them, then those customers aren’t going to look at long-term benefits. They’ll look to see who can provide them with immediate gratification from your competitors.

3. It takes time for relationship marketing to be effective.

Many customers feel like a brand and business which wants a relationship with them should be able to make time for them. This means there will be customers that want to receive direct answers from employees or representatives instead of finding the information on their own. Not only does it take time to develop the relationship, but many workers will also be asked to increase their 1-on-1 time commitments to continue the process.

4. Relationships can become to close sometimes.

Having a strong relationship with a customer is a good thing. Having a relationship that becomes close to intimate, however, can be a bad thing. When managers are paying too much attention to the needs of their customers, then they are not paying enough attention to their direct reports or tasks that need to be completed.

This can cause the brand and business to lose on the back end of a successful relationship marketing campaign.

5. Value propositions change over time, so the marketing efforts need to change too.

Some products always have a certain amount of perceived value. Take coffee, for instance. Millions enjoy a cup or two of coffee in the morning as part of their routine. It always has a basic value. What if one brand comes up with a type of vanilla flavored coffee that costs $2 less than the regular coffee of another brand that has been successful?
Now the value ratios have changed. Not only can a consumer get flavored coffee, but it costs them less to do so. Without a change in the marketing approach, the brand selling regular coffee will find themselves lacking customers over time.

6. It can require a culture change.

A brand or business cannot implement a relationship marketing strategy without having the culture of the organization supporting it. If a customer comes to the brand, expecting a supportive experience, but receives something else, then the likely outcome is a shift in business to the competition.

The worst negative reviews come when customers vote with their money and your brand and business isn’t on the ballot.

7. Some returning customers may expect a discount.

There will always be some customers who expect to be treated better by a brand and business because they are returning for another purchase. They want discounts that go beyond the normal sales and offers that might be part of a marketing effort. Without that “extra” benefit, they may say they’ll go to the competition – sometimes even under the threat of leaving a negative review.

These are not the customers a relationship marketing effort should target. Brands must recognize the lack of value in such an offer. If an “extra” discount is given, that customer will want even more benefits on their next follow-up visit.

The pros and cons of relationship marketing show that the efforts of a brand and business to connect with existing customers can increase revenues. It may also improve a brand’s reputation. A campaign such as this is not without risk, however, so there must also be flexibility built into each marketing effort so that a brand and business can adapt to the changing needs of their core demographics.

Have you had the privilege of implementing a relationship marketing campaign? What is the most important lesson you learned from your experiences that you could share with those who may be starting their first campaign right now?