INVESTING IN THE RIGHT CUSTOMER RELATIONSHIPS

Building relationships with customers is a worthwhile investment for companies.

Companies should look to create one-to-one relationships with regular customers by offering value to the right customer, specifically, customers whom the company can serve profitably, customers who are loyal or at least potentially loyal. Still, not all relationships are worthwhile or have the potential to be profitable.

Customer acquisition and retention are two strategies that can work jointly in achieving profitability. However, maintaining existing customers represents the first line of security for any company, as customer acquisition is more difficult than retention. Customer retention strategies are more important in relationship building for the reason that current customers are less expensive to maintain than to recruit. In fact, retention marketing is encouraged first, and acquisition marketing second.

Not all customers contribute equally to the firm’s profit; that is why it is essential to implement unique strategies for each customer (potential, loyal, ex-customer). These strategies should have individually targeted messages and value choices or rewards for each customer group.

For the most part, losing a profitable customer may be incredibly impactful to a company more so than a non-profitable customer. Hence, companies should focus on the most beneficial customer group since profitability is the fundamental force behind every business strategy improvement.

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N.B: This article is the fourth of a six-part series; the reference list below represents the total of all six articles.

Reference List:

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• Ndubisi, N.O., 2007. Relationship marketing and customer loyalty. Marketing intelligence & planning

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