Relationship marketing is still a confusing concept for a lot of businesses. While they easily understand sales and the need for a set process to convert leads into dollars, the idea of building lasting relationships does not so easily translate into traditional business models.
Time is money, after all. Why would you want to spend more time building relationships when you could be spending time finding new leads?
What is the value in building lasting relationships with your customers?
The Sales Funnel Is Broken
Your organization might have a sales process in place already. This is a method by which you’re moving your leads to prospects, and your prospects to paying customers. In a transactional business model, you grab on to leads, drop them through your sales funnel, and when they come out the other end as customers, you part ways with them in search of more leads.
In this model, your business is dependent on a continuous flow of leads coming in to the top of that funnel. Marketing generates leads and hands them off to sales. Sales converts them to customers, and if the need arises, hands them off to support.
The sales team is relying on math to meet its sales goals. In order to achieve X sales goal, they must generate Y number of leads. In each stage of the process, they account for Z amount of drop off.
Even if this sales process works flawlessly, you run the risk of losing your customers in the cracks between the different departments. The customer experience suffers because they don’t have a strong relationship with your business throughout the process.
When customer experience suffers, your bottom line suffers.
Relationships Are The Glue
There are also more choices available. With mega corporations like Wal-Mart and Amazon continually undercutting prices, there’s no room to compete on price alone. Features and benefits are mostly similar between competing products. As a result, it’s becoming more about the emotional investment your buyers have with your business.
Your company must consider the customer experience in order to compete. From lead to customer and beyond, it’s up to you to understand their buying journey and support their decision-making process in every way you can.
Your relationship with the buyer is the glue that keeps them close to you throughout the sales process.
Relationships vs. Leads
New business is always important. In order to grow, you must be attracting new customers to your product or service. And you can find more leads easily, if you want.
Gathering a list of names to call is simple. You either buy it, or you research public records. Names and contact information are easy to come by. The problem is, it’s a high effort activity, and your rate of return is pretty low. You might expect between a 4% to 8% conversion rate when cold calling.
On the flip side, you can dedicate time and energy to promoting referrals and cross-selling opportunities to your existing clients. They already have a relationship with you. They already trust you. If you continue to offer them valuable products and services, they’ll be more likely to buy again.
Attracting a new customer costs 5 times as much as keeping an existing one. Source: Lee Resource Inc.
Focus On The Customer, Not Your Quota
Your customers have more information at their fingertips than ever before. They know about you, your product, and your competition already. They might purchase based on price, but more often they are making purchase decisions based on whether they like and trust you.
The relationship they have with you makes all the difference.
Here is what a successful relationship building strategy might look like:
- Research and understand your buyer’s needs.
- Spend the time to build more meaningful relationships with your prospects from the beginning.
- Continue to provide them with exceptional value throughout their buying journey.
- Educate, inform, and continue the relationship well beyond the sale.
This is a drastic shift in thinking for many businesses that are operating under antiquated sales models. And surprisingly, many businesses won’t ever change their approach.
They will continue to measure success by activity, rather than results. They will continue to ignore the customer after the purchase. They’ll focus more effort on new business instead of cross selling and referral opportunities.
And they’ll continue to play a losing game while smarter businesses are winning their customers’ hearts and minds.