Relationship Marketing Using the Internet


With the advent of the internet and big data analysis, organizations have been able to use relationship marketing and database mining as a powerful marketing tool. This combination of the internet, technology and relationship marketing is referred to as customer relationship management.

Customer relationship marketing uses direct marketing, relationship marketing and database mining to create useful customer relationship marketing strategy. Direct marketing serves to deliver product communication as well as the product themselves to individual consumers. The relationship marketing theory gives the foundation to customer relationship management. The database mining serves as the technology platform to store and use consumer related information.

The biggest advantage of the internet from relationship marketing is the interactivity. Organization through email and online chat can establish customer relationship and data collected from this interaction serves as base for future product offering and other personalized services.

Concept of Relationship Marketing

The development of relationship marketing is closely associated with the way marketing has evolved. Organizations often, to achieve economies of scale restore to standardization and mass customization. The products were sold on the basis of interpersonal relationships. In the last couple of decades, with the increase in competition the focus has moved to differentiation. To achieve this differentiation it is important to understand consumer needs and requirements. Thus marketing moved from mass appeal to customer focused marketing.

The main focus of relationship marketing is to retain customers and make them frequent buyer. The existing customers are the main focus of relationship marketing. The reason for targeting existing customer base is that there is no customer acquisition cost, lesser extent, of discount or vouchers, reduced price sensitivity, increase probability of referral and assured revenue growth.

Now within a defined existing customer base, organizations need to develop strategies to maximize return on relationship investments. The existing customers are divided into three broad categories like most valued customers, most potential customers and no value customers. The most valued customers as the name suggest are frequent buyers and their loyalty is highest towards the company. So companies need to develop strategy to retain them. For the most potential customers' companies need to develop strategies under which they become frequent buyers.

Electronic Customer Relationship Management

The concept of developing strategies through usage of the internet and other digital platform for customer relationship management is called as electronic customer relationship management.

The activities likely to get covered in customer relationship management are:

  • Website as a base for customer development.

  • Customer contact integrity.

  • Applying internet to upsell and cross-sell.

  • Focus marketing.

  • Online customer service.

  • Great customer purchase experience.

The internet is used extensively for relationship marketing by integrating customer database and web site. The key benefits of e-CRM are as follows:

  • Customer marketing becomes more cost effective and return on investment is much better as companies are able to develop more focused strategy.
  • The marketing messages can be made more customized and cost effective with use of emails.
  • Customer can be served in much more in-depth fashion by providing them specific information. This also increases contact frequency between the company and the consumer.
  • Digital technologies like email, online chat, rich web content its help company reduce their overhead cost thus improving their bottom line.

The customer relationship management provides key support to marketing activities through the following:

  • Sales forces receive active support in efforts by providing them real time customer related information.

  • Customer service agents are able to effectively serve consumers as they have a ready database containing customer and their purchase related information.

Customer Lifecycle Management

A customer lifecycle management from an organization perspective contains selection, acquisition, retention, and an extension of the customer.

Selection: at this stage organization defines customers for whom marketing strategies will be developed. This also includes developing marketing strategies for customer acquisition, retention and extension.

Acquisition: at this stage organization attempt to form relationships with new customers at minimal acquisition cost. This includes targeting high potential and value customers.

Retention: at this stage organization develops strategies to retain the existing set of customers. This includes identifying product offering based on customer profile.

Extension: as this stage organization develops strategies to improve buying behavior of existing customers. This includes upsell, cross-sell, re-sell and lead generation.

Implementing electronic customer relationship management

Organizations execute following strategies to implement e-CRM:

Increase Web Traffic: here the aim is to attract more and more visitors to the e-commerce website. But the focus is to attract quality visitors who are likely to make purchases. This increase visibility of the website can be done through online or offline promotion.

Satisfactory Web Experience: the newcomers to website should find the experience of navigating through the website satisfactory. They should be able to get the desired information and browse the website for extended periods for sell activity to happen. There should be enough incentives for consumers to make the first purchase.

Profiling: companies should be able to capture maximum consumer information during the purchase action. The online forms should be easy to operate for its completion.

Communication: companies need to build relationship through communication. This is done by sending periodic email highlighting current happenings of the website. This also includes showcasing specific customer information after logging in, for example, purchase history, related products etc.

Virtual Groups: companies promote the development of virtual groups where products and services are discussed. This group can help in resolving consumer queries and also serve in lead generation.

Privacy: Companies should not get over board with regards to consumer information. They should not share the information without prior consent and knowledge of the consumer.

It is very apparent that to create differentiation and retain a loyal customer, companies need to invest in the relationship market. The internet provides an alternate and effective way through which this can be achieved.

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