Advantages & Disadvantages of Customer Relationship Marketing
It's an exhilarating time to be a small-business owner. You stand on the threshold of the Fourth Industrial Revolution and its accompanying technologies that have altered the way people work and live. Technological advancements are triggering changes that may not yet have manifested themselves at your business, such as artificial intelligence, quantum computing and the Internet of Things.
Since your customers probably lie at the center of everything you do, one development – and an infinitely more human one – can no longer be ignored: a strategy known as customer relationship marketing. Embrace it or eschew it, but at least assess the advantages and disadvantages of relationship marketing before rendering your final opinion on this facet of the revolution.
Many eagled-eyed proponents of inbound marketing saw the change coming. The days of meeting a customer, impressing a customer, thanking the customer and hoping the customer comes back are probably gone forever – at least among business owners who survive the competition for customers in a digital age.
Inbound marketing, which goes to the heart of anticipating and addressing customers' wants and needs, has converged with and validated customer relationship marketing in an almost seamless way.
The strategy was introduced by Dr. Leonard L. Berry in a paper called “Relationship Marketing” before the American Marketing Association in a year in which even flip phones were not yet commonplace: 1983.
While Berry knew that many people tend to do business with people they know, like and trust, he encouraged business owners to take the long view and “attract, maintain and enhance customer relationships.”
This language is echoed almost word for word in the fundamentals of inbound marketing, a fairly new strategy that is credited with revolutionizing marketing, especially among small-business owners.
Customer relationship marketing may have debuted before its time, but it more than made up for lost time by upending the traditional sales paradigm. It did so in a simple but powerful way:
- The sale no longer represents the endpoint. It represents the starting point of a long-term or even lifelong buyer-seller relationship that is cemented by loyalty on both sides.
In this way, customer relationship marketing dispenses with sales as a mere transaction. It presents an opportunity to attract and retain customers who are demanding more from businesses with each passing year.
At the same time, customer relationship marketing acknowledges the influence of one of the most significant forces of the Fourth Industrial Revolution – social media – which many consumers rely on to learn about businesses. The best relationship marketing examples show how to convert customers into ambassadors that are happy and eager to spread their positive experiences with a company to others.
If your business follows an inbound marketing strategy, you're well aware of some of the tactics you can use to cultivate customer relationships. You're probably equally aware that it is a fluid process that requires constant monitoring and adaptation. Revolution or no, customers are and always have been fickle – capable of changing their minds and behaviors without warning.
Businesses must pivot right along with them.
Against this reality, customer relationship marketing tactics are as diverse as customers themselves. If you subscribe to the inbound marketing mantra of “attracting, engaging and delighting,” you may:
- Place communication at the forefront of everything you do. Insist that everything, including website landing pages and everyone from sales reps to upper management, demonstrate that you prize your customer relationships.
- Communicate with customers regularly through blog posts, email messages, social media updates and surveys that help you track what they're thinking and what they're up to.
- Stop in your tracks to immediately respond to their requests for answers or information, even if a request strays from the confines of your business relationship.
- Give them plenty of free but valuable information. Naturally, since you know your customers so well, you know exactly what this content is.
- Never let a birthday or major holiday pass without a greeting and maybe a gift.
- Offer a loyalty program that rewards frequent shoppers.
If you've embraced or are inclined to embrace the importance of relationship marketing, expect to reap some of its advantages, which include:
- Honest and valuable insights from people who are truly vested in your business.
- Honing these insights to create highly specialized marketing campaigns that should hit their targets with greater precision.
- The ability to tweak these campaigns on a moment's notice to heighten their success. A call to action in an email or on a blog post that is misconstrued or misses the mark can be finessed as soon as you're alerted to its presence.
- The opportunity to learn of and respond to complaints and problems in due haste so you can contain the damage with little public notice.
- A considerable distinction from your competitors, who may lack the time, interest or resources to invest in customer relationship marketing.
- An exponential return on your investment via a positive customer experience, assuming that the customers share it with their circles of influence. Despite some of the awe-inspiring changes spawned by multiple industrial revolutions, word-of-mouth – people spreading information to others – remains the most pervasive form of marketing. Only the channels they use have changed.
- Sales that require a lower investment because returning customers tend to purchase more, and more often, than new customers.
The up-close-and-personal nature of customer relationship marketing isn't suited to every small business, but it wouldn't be fair to call these businesses hold-outs because they probably know the benefits of “treating the customer like a king.”
They have their reasons to observe the strategy from the sidelines, perhaps knowing that customer relationship marketing can:
- Necessitate a fundamental cultural shift at a business, especially those that have been passed down from a previous generation and are philosophically opposed to the strategy. These business owners know that to provide a seamless customer experience, they first must change the culture from within to support it.
- Call for an enormous investment of time, even though a bevy of CRM software programs have been developed to help manage it.
- Require an infusion of money, mostly in the form of employee training.
- Take time to see results and – because people are at the center of it all – also be unpredictable.
- Blur the traditional line between business relationships and personal relationships. Many small-business owners have worked hard to create professional yet somewhat formal relationships with their customers – and they prefer it this way.
- Breed a sense of entitlement in customers, who may assume that a closer relationship with a business justifies discounts, freebies or protocols tailored to suit them and them alone.
- Unintentionally undermine the importance of attaining new customers. Even Berry put two-thirds of the focus on existing customers by underscoring the benefit of maintaining and enhancing customer relationships.
If you're not sure whether to cross the threshold and embrace customer relationship marketing, you may prefer to take an easy-does-it approach and test the waters at your small business first.
After all, this approach appealed to many small-business owners who couldn't shake their skepticism about another invention that altered the way people live, work and relate to one another: the World Wide Web.