A successful transaction between a buyer and a seller is not the end — it’s a means to an end.
Let me explain. Whenever a business attempts to pitch a product or service to a customer, they also sell a potential relationship. For all industries, especially residential home services, that relationship is priceless. You want to transform one-time buyers into loyal customers.
Enter: Relationship marketing!
Relationship marketing is a marketing strategy focusing on building long-term relationships with customers. Focusing on long-term customer loyalty is integral to the success of any business, but especially so among home services.
You need a steady stream of repeat customers to survive in such a highly competitive and saturated industry. Otherwise, keeping your business operational and your bottom line in good health is impossible.
The solution to overcome this challenge is to maintain a loyal audience that chooses you amidst the Sea of Sameness. Firms that adopt relationship marketing attempt to capture and keep their existing customers hooked for the long haul.
Here we’ll dig deeper into answering the question, “what is relationship marketing?” And we’ll cover how it works in the residential home services industry. Continue reading.
Understanding Relationship Marketing
As we said, relationship marketing is an essential strategy for companies in the residential home services industry. This approach focuses on building long-term customer relationships to help companies maximize profits and ensure customer loyalty.
You must recognize the benefits of maintaining repeat customers versus acquiring new buyers every single time. According to Finances Online, the cost of acquiring new customers is five times the cost of retaining existing ones. They also added that increasing customer retention by five percent doubles the revenue of a business.
To many companies, doubling their revenue and significantly trimming their acquisition cost is enough to keep their business thriving. That said, the importance of relationship marketing for companies is unquestionable.
In order to understand relationship marketing further, it’s important to first know what transactions transpire among businesses. Generally, two types of transactions occur in the residential home service industry: relational exchange and discrete transactions.
Discrete transactions are the simplest form of transactions. Three things characterize discrete transactions:
- A distinct beginning — You have full awareness when the point of contact began.
- Short duration — They normally begin with the initial contact and end once the sale is complete.
- Sharp ending — There is no longer any form of contact after the sale.
As you imagine, discrete transactions are counterintuitive to relationship marketing. Relationship marketing is all about nurturing and taking care of successful transactions. Your goal is to repeat doing business with people you successfully served in the past. This is where the second form of transaction comes in.
Relational exchange is the opposite of discrete transactions. Like the former, you can define a relational exchange based on three characteristics:
- Consists of past engagements — Customers have a vast experience of engagements with your business through your various touchpoints.
- Longer duration — All forms of transactions end eventually, but relational exchanges last indefinitely compared to discrete transactions.
- Ongoing process — No sharp ending completely halts the business and the customers.
Several key elements of relationship marketing are particularly important to ensure relational exchange transactions. These include things like:
- Focusing on customer needs and preferences
- Providing high-quality products and services
- Consistently delivering excellent customer service
- Communicating effectively with customers
- Maintaining open and transparent lines of communication
In the case of home services like HVAC, the transaction doesn’t end with installing a new heating unit for customers. You want to be their go-to for maintenance, repairs, and upgrades.
More importantly, you also want a customer’s business once they decide to install an air-conditioning unit during summer. Offering the above things enables you to permanently fill the role of the customer’s go-to HVAC service provider.
Adopting a relationship marketing model allows companies to foster stronger customer trust and satisfaction, leading to loyalty.
If you’re looking for an expert business strategist to help you adopt a relational marketing strategy, look no further. Wizard of Sales® can help you craft the perfect strategy that reels long-term business for your company. Book a call.
When is Relationship Marketing Important?
A relationship marketing strategy is undoubtedly always important. Any business will benefit from building long-term relationships with its customers regardless of industry. However, there are specific instances when having a relationship marketing model is especially impactful.
Here are some examples.
When you are a service provider
Services, in a way, are more crucial than products. Rendering services involve doing something for customers. Whereas other businesses simply hand out products to customers. That’s why customers can be especially picky about which service provider to trust.
Relationships put customers at ease. When you have relationship marketing principles, customers feel better about hiring you. After all, people work with people that they trust. That said, using relationship marketing in your residential home service business is a must.
In supplier-to-seller relationships
Many residential home services rely heavily on suppliers. For instance, an HVAC contractor may get their units from a particular brand. Roofers may choose a specific brand for their shingles. Plumbers that install water fixtures buy those porcelain sinks from another company.
Relationship marketing not only applies to customers but also to stakeholders that support your business operations. This includes suppliers, logistics, investors and other organizations that help you run your business.
When dealing with individuals, not firms
That’s what sets residential home services from commercial services. In commercial services, you go through various people before completing any projects. All of these decision-makers have a say that may affect your relationship with the entire business or corporation. Relationship marketing in these transactions can be tricky and difficult to establish.
In residential home services, on the other hand, there are usually only two decision-makers in the household. That means you’re dealing with a limited number of individuals rather than a comittee, making relationships much easier to establish.
Different Types of Relational Exchanges in Marketing
Relational exchanges during a relationship marketing strategy do not only occur between stores and customers. There’s an entire big network of exchanges where relationship marketing transpires.
In general, there are four distinct types of relationship marketing partnerships in business. We’ll explore each of them below:
One key component of relationship marketing in residential home services is establishing and maintaining strong supplier partnerships. These relationships ensure that your business can access the best products, equipment and materials at competitive prices.
Building strong relationships with your suppliers requires a lot of time and effort. You need to actively communicate concerning new developments in your industry, including changes in their supplied products or services.
Investing in these relationships ensures you get the high-quality products and materials needed to provide service to your customers.
Lateral partnerships refer to relationships with entities not directly involved in your business operations. This includes your competitors, relevant non-profit organizations and governmental bodies.
These partnerships are important in the residential home services industry because they help you stay abreast of new developments. More importantly, they are useful in providing you with opportunities for collaboration and information sharing.
For example, partnering with local competitors grants you insights to better serve your customers and improve overall service quality.
Meanwhile, working with relevant non-profit organizations helps you engage in community outreach efforts that build trust among potential customers.
Finally, building connections with governmental bodies ensures compliance with regulatory requirements. Plus, it keeps you updated on any changes to industry standards that may impact your business operations.
The only way relationship marketing between your business and customers works is if you nurture internal relationships, too. Internal partnerships are another important component of relationship marketing in the residential home services industry. Working closely with your team ensures that your organization moves in a single accord, preventing blindspots and bottlenecks.
Every employee must experience and understand how you value your relationship with them. Only then can they extend that same relational nature back to your customers.
Buyer partnerships are the most important aspect of relationship marketing in the residential home services industry. These partnerships involve working closely with your customers to build long-term relationships that benefit both parties. This can help drive innovation and growth within your organization, as well as enhance customer satisfaction and loyalty.
There are several different strategies that you can use to build strong buyer partnerships in your business. Some key techniques include:
- Communicating effectively with customers
- Listening carefully to their feedback and concerns
- Providing high-quality products or services
- Offering incentives or rewards for positive customer interactions
Cultivating these buyer relationships helps you create value for your organization and your customers. More importantly, building relationship marketing with customers grants you access to benefits that wouldn’t normally be available. Read below to learn about those.
Importance of Relationship Marketing to the Services Industries
Relationship marketing has a lot of benefits for businesses. However, there are three primary advantages.
1. Customer Loyalty.
Doing a good job on a service is not enough to encourage loyalty among customers. You only create customer loyalty when you render excellent service and give them a positive customer experience. You significantly improve the buying journey by infusing relationship marketing into your business touchpoints.
2. Positive Word of Mouth.
Merely satisfied customers don’t share the good news about your business. It takes customer loyalty to produce brand ambassadors. Relationships help forge loyalty among customers through positive experiences.
3. Improves Performance.
Finally, one often-overlooked benefit of relationship marketing is improving your company’s performance. Keeping in touch with your customers allows you to better understand their pain and pleasure points. More importantly, you become more aware of their underlying felt needs or their need for time, energy and money. This information enables you to tailor your solutions and approach to every customer better.
Relationship marketing is one of the most important strategies in the residential home service industry. This is especially true for businesses that heavily rely on club memberships. Relationships are the foundations for upselling your services, but more benefits await you.