Why Relationship Marketing Matters: Creating Brand Loyalty and Advocacy

In today’s consumer-centric ecosystem, businesses that consistently chase net-new acquisitions as their primary sales objective will inevitably fall short at some point.

With instant gratification the new normal, it’s easy to lose sight of what customers really value: genuine and hyper-personalized interactions with your brand. They want to be more than a number in your database, and data suggests that the more companies invest in this ethos, the more likely buyers are to do business. In fact, customers that are fully engaged generate 51% higher revenue and sales than their counterparts.

So what’s the differentiator? Relationship marketing: building customer connections based on trust, keen consideration, behavioral insights and mutual understanding. Executed well, it can drive customer retention, increase lifetime value and propel businesses toward their revenue goals.

In this article, we’ll explore the value of relationship marketing and cultivating customer bonds that inspire greater brand loyalty and advocacy.

Relationship marketing is a long-term effort; it doesn’t produce quick results overnight. Businesses should not expect to build close relationships and increase repeat business in a day. It requires significant nurturing, honesty and personalization to create a substantial connection between brand and buyer.

While it may seem cumbersome, there are more immediate benefits to relationship marketing beyond long-term financial gains:

Customers equate brands with experiences. “From customer service to the digital journey to retail ambience, our association with a brand is based on how it makes us feel,” argues Daniel Newman, Contributor at Forbes.

When brands are proactive in delivering exceptional experiences, they channelize their resources to engage consumers throughout the lifecycle – and that benefits the customer as much as it does the business.

So, what’s really in it for the customer?

Despite the known benefits of building strong customer bonds and loyalty, research suggests that only a small proportion of businesses actively engage in relationship marketing. According to a 2023 study, only 19% of businesses intend use relationship marketing as part of their marketing strategy.

So, why aren’t companies investing in relationship marketing when its benefits are so apparent? The answer is usually mentality. Many businesses are still rigid in their understanding of customers – focusing on single transactions rather than the entire customer lifecycle. 

Similarly, relationship marketing requires its own set of tactics and tools for effective rollout. This does not come without additional budgeting, resources, headcount and leadership, much of which is deemed “better placed” on chasing net-new targets.

For those looking to turn the tides, here are four essential steps to building a relationship marketing strategy that genuinely drives business outcomes.

Data collection and retention go hand in hand with successful relationship marketing. By implementing rigorous, high-quality customer data into your strategy, marketing execution can be hyper-targeted to their needs, based on behaviors, preferences and known intent – not just simple demographic data. CRM data hygiene is foundational. To effectively target and segment customers, businesses need to validate and deduplicate their databases, creating a clean, reliable bedrock for customer targeting and personalization.

More advanced marketing teams can look to implement artificial intelligence (AI) and machine learning (ML) to sharpen customer analytics. Many businesses have introduced sentiment analysis by parsing through customer interactions and generating insights on potential upsell opportunities and attrition signals. AI can also be used to predict new behaviors and preferences based on customer intent and consumption patterns, enabling businesses to deliver more proactive content and messaging on a 1:1 or 1:few basis.

Customers navigate unique journeys and relationships with your company. They aren’t mutually exclusive – but one size certainly doesn’t fit all. By categorizing leads based on their behavior, interests and position in the lifecycle, you can deliver offers that align with the unique needs and acknowledged interests of each customer in your database – making it easier to build authentic relationships and scale one-to-one communications. 

Successful segmentation has to be dynamic to drive results. With the wealth of options a customer can have (both internally and externally) – and the constant expansion of channels – preferences can change overnight. Consumers may migrate throughout a period, and if your segmentation is static, this will undoubtedly influence relationships and business opportunities. Dynamic segmentation adapts in real time to the consumer, enabling messages to be customized with exactness and confidence for each and every buyer.

As the name implies, relationship marketing relies on the experience, reputation and connection that customers associate with your brand. That means robust support and CX operations are essential. A personal approach to customer service goes a long way toward the type of relationship buyers are willing to have with your business. In fact, 96% say great service is crucial to their loyalty with a brand, and almost half of Americans cite poor service as their main reason for switching companies. 

Integrating relationship marketing with customer care can be labor intensive, but cutting corners is likely to cause painful results – or at least underwhelming marketing returns. Many businesses have found success by introducing predictive AI and automation into their CX and marketing functions, configured to make real-time decisions based on a customer’s current emotional state and session information. For example, AI can let customers know that it’s time to renew their subscription, or that they’ve left something in their shopping cart. It can even be agent-facing, prompting team members with the next best actions to take with customers once an engagement has ended for the purpose of relationship building. Using generative AI, conversations can also be proactively summarized and flagged as an identified knowledge gap, providing CX and marketing teams with real-time customer insights that indicate new pains and potential content shortcomings, helping businesses to standardize messaging across their operations.

Reward programs can and do build customer loyalty – and most businesses now appreciate how valuable that loyalty can be. It’s no secret that a company’s most loyal customers are also its most profitable. In fact, customers who are members of loyalty programs generate between 12-18% more revenue than non-members. Equally, customers who endure longer relationships are less costly to serve, and even become business endorsers – paying premium prices and referring new customers to your business.

A reward program can accelerate customer loyalty, encouraging new customers to behave like a company’s most profitable patrons. In order to maximize loyalty and profitability, a company must find ways to share value with its customers in proportion to the value the customer’s loyalty creates for the company. This is usually built on a points, spend, referral or value-based model – incentivizing purchasing or advocacy behaviors from consumers. Such promotions are rife in product marketing, meaning customers are so accustomed to perks-based programs that they either ignore the value or become experts at getting “freebies.” Loyalty programs today must be built on three key tenets:

In a world where customers crave unique, one-to-one interactions and associate brands with experiences, relationship marketing emerges as not just a strategy but a commitment to building lasting connections. In this era of heightened customer expectations, businesses that embrace relationship marketing stand poised to not only meet but exceed those expectations, securing a competitive edge in a crowded marketplace.

In essence, relationship marketing is not just a strategy; it’s a philosophy that recognizes the profound impact of meaningful connections on both the customer and the business. As we navigate the evolving landscape of consumer expectations, businesses that prioritize these connections will find themselves not only meeting the demands of today but also building a foundation for sustained success in the future.

Looking to get started? Harte Hanks is a specialist in relationship marketing strategy, helping businesses nurture, convert and retain customers across the globe. We help stimulate stronger relationships between world-leading brands and their buyers through data activation and campaign acceleration, orchestrating B2B and B2C programs that drive customer engagement and lifetime value.