Relationship marketing aims to attract and retain customers through loyalty programs. It is less expensive for companies to gain repeat business from existing customers rather than acquiring new ones. Loyalty programs are common in industries like hospitality and tourism where they provide rewards and incentives for frequent patrons. The benefits of relationship marketing include higher profits, reduced acquisition costs, and increased customer referrals. Companies must study which customers are most loyal and profitable to focus retention strategies on maintaining relationships with those valued customers.

1. Tasmon Islam

2. o Relationship Marketing
o Retention Strategies
o Loyalty programs
o Benefits of Relationship Marketing
o Targeting profitable customers

3. A form of marketing that attracts customers,
retains them, and enhances their satisfaction.
o Less expensive to attract repeat customers
o Dramatic increases in profits
• Repeat customers generate twice as much gross
income as new customers
o Enhancing customer satisfaction includes:
• Nurturing individual relationships
• Making customers feel unique
• Making customers feel singled out for attention
• Loyalty programs

6. o Extremely common in hospitality and tourism
o Customized reward programs are growing
o Coalition model is also more common
o Airlines
o Frequent flyer rewards
o Highest fare holders
o Elite status customers
o Hotels
o Complimentary meals, internet access
o Included in franchise fees
o Joint programs for smaller brands, boutique hotels
o Restaurants
• Rewards Cards
• Non-financial incentives e.g. ‘Jump the Line’ perk

7. Loyalty
 high repeat patronage
 less motivated for
alternatives
 more resistant to other
brands
 more likely to pass on
positive word-of-mouth
Latent Loyalty
 strong preferencefor/
attitude towards a
brand
 do not purchase
repeatedly
 due to situational or
environmental
constraints
Spurious Loyalty
 frequently purchases a
brand
 sees no differentiation
between brands
 Repeat purchase as a
habit
No Loyalty
 see few differences
between brands
 low repeat purchase

8. o Customers loyalty incentives:
• High perceived value
• ‘Get’ should exceed ‘Give’
• Rewards for loyalty
o Company benefits:
• Higher profits through retaining customers
⁻ More purchases overall
⁻ More frequent purchases
• Lowers operating costs
⁻ No acquisition costs
• Increases company referrals

9. o Building and improving upon traditional segmentation
o Studying loyalty- versus defection-prone customers
• Identify profitability bands
• Identify customers most likely to remain loyal
• Develop overall strategy around these customers
⁻ Target with retention strategies
• Other customers too costly to retain
⁻ Little potential to become profitable

10. Figure 7.4 (Source: Adapted from Zeithhaml and Bitnen, 2000)
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12. Future Relationship ValueCustomerProfitability
High LowHigh
Prime Customers Mobile Customers
Low
Valued Customers
of Tomorrow
Incidental Customers