The Value of Relationship Marketing

by John Jerome

I was reading a blog the other day and came across some very interesting facts about Relationship Marketing.  In case you’ve been living under a rock for the past ten years, relationship marketing employed using a drip marketing format is the most effective tool in a marketer’s quiver.  So, to start, let’s get a clear understanding of what Relationship Marketing actually is. For this I went to Wikipedia:

Relationship Marketing definition: Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales.

We also call it Drip marketing.

Really, when you think about it, everything in our lives that is important to us involves a relationship:  our spouses, our families, our coworkers, our clients, everything! The challenge is how do we stay in touch with them on a regular basis? How many times have you had someone come work on your house and a few years later you want to hire them again, and you can’t think of their name or number?

All relationships take effort to keep them healthy. You have to stay in touch to be in touch.  You don’t want to be that person who you only hear from when they want something.

Part of the reason relationship marketing works is due to the trend that people don’t want to be sold; they want to be part of the advertising message in the same way someone would recommend a restaurant or a car repair shop.

When we execute relationship marketing campaigns, there are some very basic rules we follow:

1. Always provide something of value to the recipient. For instance, an article you think is interesting, highlighting something that is new to you or your family, even a quote you like.
2. Always write it in the first person. It has to sound like you.
3. Keep it short. People don’t read, we try to keep them to no more than 3 sentences.
4. Personalize them. That means use their first name or company name in the writing.  There are a lot of programs that do this for you if you set them up correctly.
5. Do not make it look like it’s a professionally formatted email. That means no logos, no pictures, no borders etc. It should look like an email that a friend would send to you.
6. Be judicious about not over doing it. Don’t you hate emails from places that send two or three every week? Eventually you don’t even open them, you just delete them.  Having someone’s email is a trusted privilege.  We typically do one every six to eight weeks.
7. Do it randomly. Have you ever worked in a company that celebrated everyone’s birthday for that month on the same day?   It doesn’t make you feel special at all. We will occasionally send two out the same week if we have important news to share.

So now let’s look at some of the statistics about Relationship marketing: I found these on the Internet.

1. Open rates for drip campaigns are 80 percent higher than a regular email, and average click-through rates are three times higher.
2. Lead nurturing emails get 4-10 times the response ratecompared to mass email blasts.
3. Relationship marketing generates 50 percent more sales-ready leadsthrough regular communication with customers.
4. We have seen a 20% increase in sales after using drip campaignsto nurture leads.
5. Relevant emailssent through relationship campaigns drive 18 times more revenue than generic emails.
6. There’s less dating around. Loyal customers don’t go shopping around and they’re far less likely to switch. As an added bonus, they’re less price-sensitive because they’re more focused on value than price.
7. Relationship marketing is the foundation of a viral marketing effort.Strong relationships are essential to a successful business and a customer will happily refer your business to a friend.
8. Your regulars are your foundation.Existing customers buy more often and with regular communications. it keeps them engaged and your company top of mind.
9. Relationship marketing helps you reduce the cost of business development.Happy customers refer you to new prospects, reducing the need for paid advertising and costly marketing campaigns.

So here are a few real-life experiences that have happened for our clients due to a relationship marketing campaign.

1. A client was referred by an old friend after he had received a relationship drip email. That referral has become our client’s largest customer and caused our client to double in size in under a year.  Results: Avg. 53% open rate.
2. Another client sent out a drip and it triggered $2M in new contracts. This actually happened twice for two different clients.  Results: Avg. 44% open rate.
3. A client who provides home services would have us send them out when ever business started to slow down. He always got new business from it.  Results: Avg 37% open rate.
4. A telecom company purchased a smaller company in the same business. We let their customers know about it through a drip from the CEO with the intention of initiating new brand loyalty through a human touch. CEO received very positive response.  72% AVG. open rate, 25% click through rate.

When you compare this to direct mail where a ½% is considered a very good response rate and we are typically getting 30% – 70% open rates.

This is usually one of the first things we do for a new client, mainly because it makes us look like marketing geniuses.  The other great thing is that it is very easy to prove ROI.  I honestly can’t understand why any company would choose not to do relationship marketing.