Relationship Marketing - Positioning for Profits in the Future

"My understanding of contemporary advertising theory leads me to believe that advertising's primary role is to reinforce the loyalty of existing customers. Advertising is a largely defensive marketing factor. At least 90% of our advertising budget, even in the case of the launch of a new product, we should see as being devoted to nurturing the emerging loyalties in the consumers who we've won through other influences in the market place."
Hugh Mackay, Director of Mackay Research Pty Limited.
Consultant to Mojo and The Clemenger Network.

Michael Porter, Professor of Marketing, Harvard University

"…..companies that anticipate the power of information technology will be in control of events - companies that do not respond will be forced to accept changes that others initiate and will find themselves at a competitive disadvantage".

Technology is transforming choice, and choice is transforming the marketplace. As a result, we are witnessing the emergence of a new approach to the marketing discipline and practice - not a "do more" marketing that simply turns up the volume on the sales spiels of the past but a knowledge and experience-based marketing.
Thoughtful, creative "one-on-one" communication is infinitely more effective in both the short and long run, than the comparatively impersonal mass media advertising or "blanket-cover" direct mail. Relationship Marketing simply takes this "one-on-one" way you relate face-to-face to your customers, back into the beginning of the communication process that is designed to bring them to you in the first place.

It is technology and the development of databases that is making it possible. The 1990s will belong to the customer. And that is great news for the marketer.

Harvard Business Review Extracts:
In the next ten years large companies might find it easier to increase profits through marketing efficiency, says Rowland Moriarty, Associate Professor of Business Administration, Harvard University. "Automation has already cut labour as a fraction of manufacturing costs down to an average of 8% to 12% nationally". By contrast, marketing and sales costs, which often average 15% to 35% of total corporate costs, deserve more attention. To Moriarty, the marketing area offers greater potential than manufacturing for cutting costs and boosting productivity.

"Early adopters of Marketing and Sales Productivity Systems have gained superior competitive advantage. Compared with their "manual" competitors, they perform selling tasks with greater economy and impact. They know their customers better, and can tailor their sales communications to supply just the right amount of sales stimulus at just the right time. Overall they craft and control their marketing programs more intelligently………

"In cases we have reviewed, sales increases arising form advanced marketing and sales information technology have ranged from 10% to more than 30%, and the investment returns have often exceeded 100% within 6 months."

Technology has moved into products, the workplace, and the marketplace with astonishing speed and thoroughness. Twenty years ago, there were fewer than 50,000 computers in use, today more than 50,000 computers are purchased globally every day.

The defining characteristics of this new technological push is "programmability". The technological promise of programmability has exploded into the reality of almost unlimited choice.

The attached diagram gives some insight to the nature and power of this approach.

We at Enright Hendy & Partners have identified three areas where relationship-building/direct marketing/sales productivity systems can help small and large businesses adapt and look forward to the future with confidence.

Firstly, for retailers and service providers, we have sourced the interactive P.O.S. audio-visual hardware and software that are essential to cost-effectively meet customers' information and service needs. This area is currently being recognised as being a prime opportunity for attaining Sustainable Competitive Advantage.

Secondly, we also specialise in developing and implementing relationship marketing and sales productivity strategies. This option is now available at considerably lesser cost than was the case previously - bringing it within the financial reach of all businesses. Highly sophisticated, user-friendly, PC-based database and communications software packages are now comparable in cost with Microsoft Word - in fact, Microsoft is one of their many large users and advocates.

Finally, Enright Hendy & Partners can provide a staff management program that can considerably enhance selection and on-going management of personnel. It is particularly invaluable in attaining substantial improvements in manager, sales and telemarketer performance, and is used by organisations such as American Express, Dept. of Education, ICI Australia, Microsoft and Regent Hotels.

A front-page story in The New York Times dramatically confirmed some of the pains of this substantial transition.

"After five years of stagnation, the American advertising industry is facing a dim and uncertain future…Advertising agencies are adapting only fitfully to a profound change: the splintering of the mass market into hundreds of smaller markets, and the development of new ways of communicating with them…The growth of mass advertising has come to a virtual halt, agency profit margins have been cut in half, and advertising agencies are going through a painful consolidation that is reaching into the deepest corners of the industry.
"There'll be continual introductions of new media forms, which will continue to diminish the power and reach of mass media, network television, mass circulation magazines. Another thing that's going to happen is new research technologies are going to enable advertisers and their agencies to pinpoint much more exactly who their target market is, or markets are."

The director of advertising for mighty General Motors added the voice of a mammoth advertiser when he redefined the company's desired relationship with consumers: "GM wants to deal with you as a buyer rather than as a collection of buyers…to learn how to communicate with you on a one-to-one bases."

Does this Relationship Marketing demand higher budgets and greater resources?

No! And you can measure the results.