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Relationship marketing using digital platforms

Introduction

Building long-term relationships with customers is essential for any sustainable business, and this applies equally to online elements of a business. Failure to build relationships to gain repeat visitors and sales largely caused the failure of many dot-coms following huge expenditure on customer acquisition. Research summarized by Reich held and Schefter (2000) showed that acquiring online customers is so expensive (he suggested 20–30 per cent higher than for traditional businesses) that startup companies may remain unprofitable for at least two to three years.

From e-CRM to social CRM

The interactive nature of the web combined with email and mobile communications provides an ideal environment in which to develop customer relationships, and databases provide a foundation for storing information about the relationship and providing information to strengthen it by improved, personalized services. This online approach to CRM is often known as electronic customer relationship management (e-CRM).

The challenge of customer engagement

Forrester (2007) heralded customer engagement as ‘marketing’s new key metric’, given the rapidly increasing online media fragmentation and the challenges of keeping customers engaged with brands given the proliferation of choice. Customer engagement is sometimes used to refer to engaging customers on a single touchpoint, such as whether someone dwells on the site for a significant time or whether they convert to sale or other outcome.

CRM technologies and data

Database technology is at the heart of delivering these CRM applications. Often the database is accessible through an intranet website by employees or an extranet by customers or partners providing an interface onto the entire customer relationship management system. Email is used to manage many of the inbound, outbound and internal communications managed by the CRM system. A workflow system is often used for automating CRM processes.

Conclusion

You can see that this framework distinguishes between customer retention and customer extension. Retention involves keeping the most valuable customers by selecting relevant customers for retention, understanding their loyalty factors that keep them buying and then developing strategies that encourage loyalty and cement the relationship.

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