Relationships matter. There are a million ways to say this simple fact, and a million ways to prove it too. Good relationships lead to customer retention, partnerships, referrals, and – ultimately – a big payday. That’s why well-run companies put so much emphasis on relationship marketing.

Deep down, successful small business owners want to make the world a better place. The best way to do this is by forming a meaningful relationship with one person at a time. In my opinion, small businesses are much better suited to do this than large ones. In fact, relationship marketing may very well be the secret sauce to small business success. (Along with product-market fit, of course!)

Relationship marketing: the art of building meaningful relationships with your customers

We’ve used the term relationship marketing a few times already, so let’s go ahead and define it. The definition used by SuperOffice is a good one: “a long-term strategy with the focus on building close relationships with your customers.”

We can talk about metrics, advertising, and even product development all day long, and those concepts are all very important. Yet it’s important to remember that people don’t make decisions using pure reason. Rather, people are emotional and make decisions based on those emotions. So, if you want to sell products or services, it helps to make a real emotional connection.

Turns out, making an emotional connection doesn’t require slick advertising campaigns or manipulation. All you have to do is be nice and proactively address your customers’ needs.

Relationship marketing isn’t just nice, it will grow your business

This all may sound a bit soft so far, and I don’t blame you if you think that. After all, a properly run business relies on data and rational decision-making. Basing your marketing strategy something as nebulous as “making an emotional connection” might seem disingenuous or woo-woo.

But the data doesn’t lie. Taking the time to build a good relationship pays. Here are some specific reasons why.

Customer retention is cheaper than customer acquisition

It’s harder to find a new customer than it is to keep an existing one. Not only is this intuitively true, but it has been proven by no less prestigious a company than Bain: “increasing customer retention rates by 5% increases profits by 25% to 95%.”

That’s a massive spike in profits for a relatively minor change. It makes sense, though: finding new customers is expensive and time-consuming!

Good relationships retain customers

I’ll talk about relationship marketing strategies later in this post, but suffice it to say, most of them overlap with customer retention. Good relationship marketing tactics improve customer service, increase the effectiveness of communication, and generally encourage customer loyalty. All of these sub-goals are conducive to customer retention.

Good relationships lead to referrals

Referrals are practically gold in the marketing world. Leads generated through referrals convert 30% better than average, and they tend to spend more too. That’s because practically nobody will refer a company to their friends if they have a bad experience with them. You have to establish a good relationship with your customer to earn those referrals.

Good relationships make your business more meaningful, which gives it greater resilience in times of change

This last one is harder to measure, but no less important. Loyal customers are likelier to stick with you no matter what. When difficult times come – and they will – good relationships make your company much safer than it otherwise would be. It’s much easier to bounce back if your customers or clients love you and desperately want you to stay in business.

How to engage in relationship marketing

We’ve made the case for why relationship marketing is worth your time. Now let’s talk about how your business can engage in it.

The are a lot of different marketing tactics that fall under the purview of relationship marketing. Here are several that you can use.

Offer discounts to regular customers

As many as 93% of customers use coupons and 70% have used an email discount in the last week to make a purchase. Sometimes, a modest discount is all a customer needs to remember your company’s existence, feel like you’re looking out for them, and make a purchase.

Create loyalty programs to encourage and reward repeat purchases

I don’t know about you, but I’ve racked up enough SkyMiles to use Delta for the rest of my natural life. Companies big and small use loyalty programs as a way of rewarding customers for their repeated purchases and even small businesses can use them. (Just think of the punch card for your local sandwich shop that will give you a free sub if you buy just three more sandwiches.)

Personalize customer service

This is easier than you think. American Express recommends using your customers’ names when speaking with them, smiling, and maintain eye contact. They also recommend offering multiple ways to contact customer service and making relevant recommendations. In short, be a nice person and put your customers’ needs above your own!

Upsell and cross-sell relevant products and services

This might seem like a strange recommendation, but it can be done properly to great effect. For example, if you sell T-shirts based on popular brands, when someone buys one T-shirt, you can recommend one for a similar band. The odds are pretty good that your customer will like that product too and be glad that you recommended it!

Send timely and relevant emails

Email marketing is still, to the surprise of many, one of the most effective ways to market. If you provide interesting and actionable information, be it educational content or time-sensitive discounts, your customers are likelier to remember your company’s name and buy again.

Improve customer service

We’ve talked about this before, and concluded that following these five principles can dramatically improve your customer service, and therefore, relationships:

  1. Be friendly.
  2. Respond as quickly as you can.
  3. Resolve the problem in the most straightforward way possible.
  4. Build positive relationships.
  5. Collect feedback.
Learn and implement the principles of good customer experience

Customer experience is a complex field worth studying in its own right, which we’ve also written about. The seven principles of good customer experience are also relevant to building good customer relationships.

  1. Be responsive. (Noticing a theme?)
  2. Understand what your customers need.
  3. Work until you answer your customers’ questions and resolve their issues.
  4. Know when the human touch is necessary.
  5. Personalize your service as much as possible.
  6. Watch how your employees treat people.
  7. Learn the principles of UX design.
Behind the scenes: get organized and use technology to your advantage

Everything we’ve talked about so far in this article is reasonably straightforward. Be nice, use people’s names, understand what they need, and so on. The basic tenets of this article are no different than Dale Carnegie’s famous book How to Win Friends and Influence People.

Yet remembering this much information in a growing business is borderline impossible if you’re not systematic about it. That’s why a lot of people turn to customer relationship management (CRM) software, such as Salesforce.

The basic idea behind CRM platforms is that you can streamline the storage of a lot of information, which will make it far easier for you to take care of your customers needs. For example, a CRM platform can:

  • Help you store information such as contact information
  • Remind you when to follow up with people
  • Store notes on their interests, likes, and dislikes
  • Provide quality reporting and dashboards with customer data
  • Make it easier for your team to communicate with one another

In short, a well-managed CRM platform can make it much easier to proactively take care of your customers. The software need not be complex or expensive either. At Pangea, we use Trello as our CRM, and we used the free version for a long time before upgrading.

Create a genuine emotional connection

Everything we’ve talked above hinges on one essential point: building a genuine and positive emotional connection. The marketing tactics needed to do that may change over time, and the software you use to manage relationships might change too. But the core principle of creating a genuine positive emotional connection will remain.

The first key to a positive relationship is trust. You can build this by sharing reviews openly, being transparent about your pricing, and providing responsive customer service. Make sure you have consistent branding too because consistency breeds trust.

The second key is maintaining trust. Do what you say you will, and provide a great customer experience no matter what. Pay attention to what your customers or clients want. Anticipate their needs and proactively work to solve them before they can even put into words what they’re seeking.

Establish a meaning in your work

Nothing can be quite as attractive or powerful as a good reason to be in business! If you can establish a meaningful reason for being in business, people will feel like their purchases from you fit into a larger narrative. Put another way, they feel like their spending dollars matter.

So what exactly do people find meaningful? According to SuperOffice, the top five attributes people find most important are:

  • Environmentally-friendly business practices: 71%
  • Giving back to the local community: 68%
  • Social responsibility: 68%
  • Support of social movements: 50%
  • Price/value: 44%

There are a lot of problems to fix in this world, and you need only find one good one to start solving.

Final Thoughts

Business pitches are a dime a dozen. Meaningful relationships, though, are rarer and much more important. People want to be treated as ends and not means.

I hope that by sharing some of this information with you that you can build better relationships with your customers. Along the way, you’ll make their lives genuinely better and you’ll reap the financial rewards too.