Why Relationship Marketing is important for Retailers

  • April 29, 2020

What is Relationship Marketing

The standard definition of relationship marketing is that it is a strategy to foster customer loyalty, interaction, and long-term engagement. It is designed to develop strong connections with customers by providing them with information directly suited to their needs and interests and by promoting open communication.

And we have a problem with that. We believe that all definitions of relationship marketing omit a crucial word. The word we want to be included is ‘emotion.’

Relationship marketing is all about the big picture. It is not a short-term technique that you can use to deal with a temporary slump in your business or single sales or customer acquisition. It is a long-term process of building a loyal relationship with your customers to retain them. And for that to happen, you need to create an emotional connection with your customers. Your brand’s name should evoke a positive feeling in your customers.

Why Relationship Marketing is essential to Retail Industry

And no industry in the current scenario needs relationship marketing as desperately as the retail industry. Think about it. The status quo of the retail sector as the reigning champion of fulfilling consumer needs has irreversibly changed with the rise of e-commerce. As a result, most retailers have moved from exclusive retail to opting for an omnichannel retail approach, thus bringing e-commerce into the traditional fold of brick and mortar retail shopping. E-Commerce is inevitable.

So, where does that leave the traditional brick and mortar retailers? How are they to survive and thrive in this industry anymore?

This is where relationship marketing, with the help of retail analytics, comes in.

As mentioned earlier, relationship marketing is about creating an emotional connection with your customers, and traditional brick and mortar is an intimate way of interacting with your customers. The unique and time-tested ‘touch-and-feel’ experience offered by brick and mortar retail shopping can never be replicated by clicking your mouse button.

Retention vs Acquistion

Relationship marketing differs from your short-term goals, such as single sales or customer-acquisition costs.

Of course, individual sales and customer acquisition are both vital to growing and sustaining your business. But you need to focus on customer retention with just as much energy and drive.

For retail companies, customer retention was identified as the highest driving factor for revenue according to a KPMG survey.

Customer acquisition was a close second. And there is a massive difference between these two driving revenue factors, the primary difference being the cost. That’s right. It’s easier to sell to your existing customers who are already walking through your doors and visiting your website than someone who might not know what you do. It’s also much less expensive to sell to your current customer base.

Let’s look at the difference between retention cost and acquisition costs.

Your existing customers are already comfortable with your company and your products or services. Sure, you need to spend the money initially to acquire them – but then it’s inexpensive to keep these customers coming back for more. So the critical question is, how do you keep them?

Relationship marketing. Ultimately, relationship marketing can help lower your customer acquisition cost. If your existing customers love you, they will promote your business through word of mouth. It turns into free advertising for you. All of this insight stems back to relationship marketing. I’ll show you how to use relationship marketing to connect with your current customers effectively.

Retail Analytics is the key

Traditionally, retailers have used loyalty programs to retain customers and drive repeat business, and in the past, they were useful. However, recent data shows that this is not the case anymore. According to a Nielsen study, although 89% of UK customers own a loyalty card, only 51% would choose to shop with the retailer. Why is that?

Because these loyalty programs are simply not tailored to fit customer needs and preferences, they are generic.

But thanks to technology, retailers now have access to a wide range of data about customers – from their purchase history to the buyer journey to social media engagement. And the number of available data sources is only growing with every passing day.

By applying the right customer loyalty analytics, brands can better understand customer behavior, improve customer satisfaction, and drive more profits. In a nutshell, you can use retail data analytics to improve your relationship marketing strategy.

Find out what customers truly want

Instead, analyze customer buying patterns, preferences, needs, and opinions – whether it is using in-store data, social conversations, or online purchase history. This will tell you what kind of rewards will surprise and delight your customers. Based on which, with the assistance of sonic sensors and Bluetooth beacons, you can send personalized messages using outbound solutions.

Look into your sales data to find out the most popular product categories and brands in your catalog. It will also help you discover seasonal sales trends – which products sell more during school holidays, which ones peak during the festive season.

Monitor keywords in social conversations and other text-based data sources such as emails, in-store reviews, and surveys to find out what customers are saying about your brand and products as well as what they are thinking.

Are they facing any issues? Fix them before it becomes a big problem. Which areas do they love? Expand them with more offers and promotions.

Use these insights to build a reward catalog that compels customers to earn more points.

Sometimes, it may not be about what you give but how you present it. For example, you may also find that customers are happy with your rewards and offers, but they’d like to see a personal touch, something that shows that your brand understands who they are and what’s important to them. In such cases, conduct user surveys (via email, on-site, or at the POS) to find out if your customers are happy with the loyalty rewards and how you can improve them.

More information = More power

To compete with online stores, retailers need as much information about their customers as they can get. We’re not just talking about likes and dislikes. They want details on what displays are working, what products are flying off the shelves, and what could be causing store losses. And they want to understand and undercut the phenomenon of showrooming — when someone comes into the store to see something they want to purchase elsewhere, usually online.

This is where in-store retail analytics comes into play. It can help retailers see things from the perspective of their customers.

Shopper vs. Consumer

In a store setting, people are either consumers or shoppers. Who went without purchasing anything, and why? What did they do in the store, from the entrance to exit? The old techniques of door counting and sale conversion can’t answer these questions, much less give insight into buyer motivation.

In-store analytics can show retailers how customers behave, leading to an improved shopping experience and an optimized store layout. This can nudge people from being shoppers to consumers, and may even encourage them to spend more.

The Shopping Cart problem

Retailers know what customers purchase from their store. But they also need to understand what customers didn’t buy and why. This technology can give detailed insights into the effectiveness of store displays, employee actions, and other factors that can be used to sway purchasing decisions.


When you think about it, giving relationship marketing a personal touch is not new. Long have the marketers and advertisers the world over, have insisted on the word ‘emotion.’ For just as in any relationship in life, touching on human emotions, preferably the positive emotions, is the key to any happy, healthy, and long-term relationship, so why should it be any different from a person buying a t-shirt from you?