Relationship Marketing Strategy and implementation

attention then needs to be directed at customer acquisition and cus-
tomer retention strategies.
The traditional focus of marketing has been on winning cus-
tomers, with an emphasis on the value of an individual sale. This
transactional approach has increasingly been replaced by a relation-
ship marketing approach, emphasizing the value of long-term rela-
tionships and repeat purchases. Figure 2.5 describes the shift from
transactional to relationship marketing. In the former, the approach
is impersonal, rule oriented and directed to short-term customer sat-
isfaction, whilst the latter emphasizes long-term relationship build-
ing.
Despite an increasing managerial awareness of the benefits of
relationship marketing and retention, few companies claim to have
achieved the appropriate balance between acquiring and retaining
customers. There is a real danger in placing too much focus on mar-
keting activities directed at new customers. Too much by way of
financial resources may be used in acquisition; whilst these valuable
customers are lost because too little subsequent effort is given to
retaining them. If customer service does not meet customer expec-
tations, it is unlikely that a customer will be retained and the repu-
tation of a company may be damaged by adverse word-of-mouth
publicity.
New and existing customers (including buyers, intermediaries
and consumers) require different strategies and should be allocated
differing portions of the marketing budget. The appropriate alloca-
tion of funds between the two activities will depend on a number of
industry and company specific factors. A company in a start-up sit-
uation, in a growing market or in a fledgling industry will need to
spend considerable resources in developing new customers, whilst

44 Relationship Marketing

Characteristics Transactions focus Relationships focus

Focus

Orientation

Timescale

Customer service

Customer commitment

Customer contact

Quality

Obtaining new customers

Service features

Short

Little emphasis

Limited

Limited

An operations concern

Customer retention

Customer value

Long

High emphasis

High

High

The concern of all

Figure 2.5 Transaction focus and relationship focus.