How to Build Strategic Customer Relationships in 7 Steps

Customer relationships are the foundation of any successful business. They help you attract, retain, and grow your customer base, as well as increase your revenue and profitability. But how do you create and maintain strategic customer relationships that go beyond transactions and loyalty programs? Here are seven steps to help you achieve this goal.

KEY TAKEAWAYS

Strategic customer relationships are long-term and mutually beneficial relationships between a business and a customer that go beyond transactions and loyalty programs.

Strategic customer relationships help businesses attract, retain, and grow their customer base, as well as increase their revenue and profitability.

Businesses can build strategic customer relationships by following seven steps: understand, segment, define, deliver, engage, build, and reward.

Strategic customer relationships bring many benefits, such as higher satisfaction, loyalty, lifetime value, referrals, feedback, etc., but also pose some challenges, such as managing expectations, perceptions, goals, strategies, experiences, trust, credibility, rewards, etc.

1. Understand your customers’ needs and expectations.

The first step to building strategic customer relationships is to know who your customers are, what they want, and how they perceive your value proposition. You can use various methods to gather customer insights, such as surveys, interviews, feedback forms, social media, analytics, and customer journey mapping. By understanding your customers’ needs and expectations, you can tailor your products, services, and communication to meet them.

2. Segment your customers and prioritize them.

Not all customers are equal. Some are more valuable, profitable, or loyal than others. Some have more potential for growth, referrals, or advocacy. Some have more specific or complex needs that require more attention or customization. To build strategic customer relationships, you need to segment your customers based on criteria such as demographics, behavior, preferences, needs, goals, challenges, satisfaction, loyalty, profitability, lifetime value, etc. Then, you need to prioritize your segments and allocate your resources accordingly.

3. Define your relationship goals and strategies.

Once you have segmented and prioritized your customers, you need to define your relationship goals and strategies for each segment. What do you want to achieve with each customer segment? How do you want them to feel about your brand? How do you want to communicate with them? How do you want to deliver value to them? How do you want to measure and improve your relationship performance? By defining your relationship goals and strategies, you can align your actions and decisions with your desired outcomes.

4. Deliver consistent and personalized experiences.

One of the key factors that influence customer relationships is the quality of the customer experience. Customers expect consistent and personalized experiences across all touchpoints and channels. They want to feel valued, understood, and appreciated by your brand. They want to receive relevant and timely information, offers, and solutions that match their needs and preferences. They want to have easy and convenient interactions with your brand. To deliver consistent and personalized experiences, you need to use data, technology, and creativity to customize your products, services, and communication for each customer segment.

5. Engage with your customers regularly and proactively.

Another key factor that influences customer relationships is the frequency and quality of the customer engagement. Customers want to have meaningful and engaging conversations with your brand. They want to hear from you regularly and proactively, not just when you want to sell something or when there is a problem. They want to receive valuable content, tips, advice, insights, stories, etc., that educate, entertain, or inspire them. They want to have opportunities to provide feedback, share opinions, ask questions, etc., that make them feel heard and respected. To engage with your customers regularly and proactively, you need to use various channels and formats to communicate with them in a two-way manner.

6. Build trust and credibility with your customers.

Trust and credibility are essential for building long-term and strategic customer relationships. Customers want to trust that you will deliver on your promises, that you will protect their data and privacy, that you will act ethically and responsibly, that you will be transparent and honest with them, etc. Customers also want to see that you have the expertise, authority, reputation, and social proof that make you a credible partner in their eyes. To build trust and credibility with your customers, you need to demonstrate your values, showcase your credentials, share testimonials, reviews, case studies, etc., admit your mistakes, and resolve issues quickly and effectively.

7. Reward your customers for their loyalty and advocacy.

The final step to building strategic customer relationships is to reward your customers for their loyalty and advocacy. Loyalty means that customers repeat purchases, increase spending, or renew contracts with your brand. Advocacy means that customers recommend, refer, or promote your brand to others. Both loyalty and advocacy are indicators of strong and positive customer relationships. To reward your customers for their loyalty and advocacy, you need to offer them incentives, such as discounts, freebies, upgrades, access, recognition, etc., that motivate them to continue or increase their behaviors.

TIP

To build strategic customer relationships, you need to focus on creating value for your customers, not just selling products or services.

Strategic Customer Relationship: A Global Perspective

Strategic customer relationship (SCR) is a process of implementing customer centricity in the market and building shareholder value. SCR is based on established marketing principles that recognize the need to balance organizational and customer interests carefully. SCR is not a result primarily of technological solutions but is rather supported by them.

Global Demand for SCR

The global demand for SCR is increasing as customers have higher expectations for service and experience. According to a report by Zendesk, consumers have higher customer service expectations now than they did a year ago. Customers are also more likely to spend more with businesses that offer streamlined conversational experiences and to forgive a company for its mistake after receiving excellent service. These factors create opportunities for businesses to differentiate themselves from competitors and to increase customer loyalty and retention.

Benefits of SCR

SCR can provide various benefits for businesses, such as:

Improved customer satisfaction and loyalty
Increased customer lifetime value and profitability
Enhanced brand reputation and credibility
Reduced customer churn and acquisition costs
Greater cross-selling and up-selling potential
Better customer insights and feedback
Higher employee engagement and productivity

To achieve these benefits, businesses need to adopt a strategic approach to CRM that aligns with their corporate objectives and customer needs. They also need to use appropriate tools and techniques to manage customer relationships effectively, such as:

Customer segmentation and targeting
Customer value proposition and positioning
Customer journey mapping and touchpoint analysis
Customer communication and engagement
Customer service and support
Customer feedback and satisfaction measurement
Customer data analysis and action

SCR is one of the most undervalued aspects of potential business growth. A study by Watermark Consulting found that the companies that led in customer experience outperformed their competitors by a 3-to-1 margin over 11 years. Such a margin represents millions of dollars and a solid, undeniable market advantage.

SCR is a relationship management concept that can help businesses succeed in today’s customer-centric market. By implementing SCR, businesses can build strong customer relationships that deliver value for both parties and create a competitive edge in the global market.

FREQUENTLY QUESTIONS

Q: What is a strategic customer relationship?
A: A strategic customer relationship is a long-term and mutually beneficial relationship between a business and a customer that goes beyond transactions and loyalty programs.

Q: Why are strategic customer relationships important?
A: Strategic customer relationships are important because they help businesses attract, retain, and grow their customer base, as well as increase their revenue and profitability.

Q: How can businesses build strategic customer relationships?
A: Businesses can build strategic customer relationships by following seven steps:

Understand your customers’ needs and expectations.
Segment your customers and prioritize them.
Define your relationship goals and strategies.
Deliver consistent and personalized experiences.
Engage with your customers regularly and proactively.
Build trust and credibility with your customers.
Reward your customers for their loyalty and advocacy.

Q: What are the benefits of strategic customer relationships?
A: The benefits of strategic customer relationships include:

Higher customer satisfaction and loyalty.
Lower customer churn and acquisition costs.
Higher customer lifetime value and profitability.
More customer referrals and word-of-mouth.
More customer feedback and innovation.

Q: What are the challenges of strategic customer relationships?
A: The challenges of strategic customer relationships include:

Managing customer expectations and perceptions.
Segmenting and prioritizing customers effectively.
Aligning relationship goals and strategies with business objectives.
Delivering consistent and personalized experiences across all touchpoints and channels.
Engaging with customers in a meaningful and relevant way.
Building trust and credibility in a competitive and dynamic market.
Rewarding customers in a fair and attractive way.

References:

http://www.hcltech.com/sites/default/files/CRM_Trends_Insurance.pdf

https://eprints.soas.ac.uk/21171/1/Chapter%209%20-%2010%20Dec%202014%20-%20ANA-ACT%5B1%5D.pdf

http://www.bain.com/publications/articles/management-tools-customer-relationship-management.aspx

How to Build Strategic Customer Relationships in 7 Steps
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Customer Engagement: What It Is & Why It Matters
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Customer Loyalty: The Ultimate Guide