Ending Soon! Save 33% on All Access

5 Relationship-Marketing Strategies for Small Businesses to Use to Increase ROI Most Gen Zers have never known life without the internet; they can smell inauthenticity a mile away. So polish up your customer relationships.

By Greg Brooks

Opinions expressed by Entrepreneur contributors are their own.

vgajic | Getty Images

Relationship marketing marks the re-emergence of human friendliness in our sometimes-cold, digital world. As it turns out, robots are not the ones buying products and services from us … it's still people!

Related: Connecting With Your Customer Is What Drives Relationship Marketing

So, while technology in the digital marketing space allows for scaling (maybe to unprecedented heights), it also makes us prone to forget that we're dealing with people instead of just numbers on a screen.

What's meant by "relationship marketing"? It's the relatively recent focus on those granular customer interactions which foster long-term engagement, to generate long-term revenue. The digital wild west's early days, when almost any banner ad resulted in sky-high conversions, were surpassed long ago. Next came the middle days of the digital wild west, when the success of each step in the sales funnel was measured solely by the cost incuurred to move a customer a step down.

That "middle days" phase died too -- this time, a deserved death.

What has emerged from the ashes was, and is, relationship marketing, which entails using customer service to express a genuine concern for the customer. The direct effect of this heightened care has been deeper, long-lasting relationships that deliver better ROI.

So, what are some specific marketing straegies to use in relationship marketing? Here are five.

1. Embrace the haters.

If relationship marketing exists for the purpose of deepening loyalty and interaction, then there needs to be a certain level of authenticity in the campaigns that you launch. While being authentic certainly means being truthful and transparent, authenticity also comes from a place of emotional resonance:

  • Does your campaign make a reader or viewer feel a certain way?
  • Does it strike a deep, deep, chord?
  • Does it make your target audience stand up and say "Yes! This resonates with me!"

If it does these things, which it should, people outside of your target audience may feel alienated or even disagree with your values. A willingness to polarize, such as the Nike campaign with Colin Kaepernick, allows you to gain the benefits that come from standing out from the crowd.

Yes, you will potentially turn away customers who would have bought had you not revealed your values. But, the data shows that polarizing behavior can produce good financial results: Customers surveyed who had an emotional relationship with a brand had a 306 percent higher lifetime value, and recommended the company 71 percent of the time, compared to the 45 percent average, according to Motista research.

Even more amazingly, again according to Motista, customers who say they feel emotionally connected spend an average $699 with a company versus merely satisfied customers, who spend an average $275 a year. So the logical conclusion is that iIf you focus on building emotional connections with your most important target audiences, everything else will fall into place.

2. Allocate marketing dollars according to the "6:3:1 Formula."

So, you've decided that you're actually going to put effort into relationship marketing, to try to make an emotional impact with your core audience. Great! But, how should you split up your budget? Digital Marketer has been preaching what it calls the 6:3:1 Formula for years, and for good reason.

The 6:3:1 Formula recommends spending 60 percent of your budget on cold traffic (people who are not familiar with your brand). According to the formula, you don't attempt to convert these people into leads or customers -- you simply provide value.

Another 30 percent of your budget is then spent on turning those now familiar with you -- warm traffic -- into leads or customers. The final 10 percent of your budget is spent attempting to convert buyers into repeat purchasers.

To be clear: The major proportion of your budget should not be spent directly offering your products or services.

Although this ratio might feel counterintuitive, the reality is that the 6:3:1 Formula exists to maximize the amount of money that your brand makes from a given customer. Trying to sell any faster, without building some semblance of a relationship first, risks your forcing potential customers toward competitors who are focused on building those relationships.

3. Offer an incredibly long-term and valuable guarantee.

At the point of sale, the customer frequently second guesses himself or herself. Traditionally, simple "low-risk" offers, such as a 30-day money-back guarantee, have been used by companies to provide a greater sense of protection to the customer.

These guarantees are offered with the expectation that increases in your conversion rate will outpace any losses stemming from additional product returns. Relationship marketing goes a step further than this, showcasing the fact that you genuinely want a long-term relationship with your customer.

Related: Why Building Relationships Is the Marketing Secret No One's Talking About

For example, offering an extended period of time during which your company promises to take care of anything related to your product signals your customer that this purchase is the beginning of a relationship. The actual risk of such an offer is typically much lower than you may perceive it to be; it's also easy to test.

What if an ecommerce store wanted to offer something like a lifetime warranty, under the hypothesis it would deepen trust and lead to better LTV? Let's assume the original return rate was 5 percent, and the current guarantee is for 30 days. What would happen if that guarantee shifted to five years?

Let's assume returns would then double, creating an additional revenue loss of 5 percent. If the conversion rate increased by just 5 percent, the store would break even. If this five-year guarantee was publicized on the product description page and the checkout page, and through email, it wouldn't be a stretch to predict an increase in conversion of 10 percent, or even 20 percent.

If you're worried about really putting your brand on the line by offering customers the ability to return products that aren't serving your customers, then perhaps the "relationship-building" elements of your products themselves need to be examined.

4. Unabashedly collect feedback.

Despite those shiny-looking ideas on this list, the idea of collecting feedback will always carry the largest ROI. Ask customers, even leads, what they think of the interactions they've had from your brand. For service businesses, sending out a brief survey request three to four months into your engagement will not only provide free insights into how you can make your clients happier but will also immediately increase happiness!

Asking how you could explicitly serve customers better demonstrates, through your actions, that you care. For more product-based businesses, a net promoter score serves as a wonderful data collection tool as well.

5. Actively shift budget away from lead generation and toward customer nurturing.

Lots of marketing departments go through a hopeless exercise of assuming, "Great, let's do that."

Idea: Post to the blog more? Response: "Great, let's do that."

Idea: Spend more time learning the latest and greatest digital marketing trends? Response: "Great, let's do that."

But, think about it: What if you could deepen the relationship with your existing customers by 5 percent while increasing profits by 25 percent to as much as 95 percent? The best response here would definitely be: "Great, let's do that."

In the world of marketing, budget reigns supreme. Therefore, the most effective way to take an idea and implement it is to shift budget there, highlighting its importance as well as creating internal alignment. In fact, on average, 90 percent of customers are likely to purchase more than once, according to HubSpot research). According to Invespcro, the success rate of selling to an existing customer averages 60 percent to70 percent, compared to the 5 percent to 20 percent success rate realized from selling to a new customer.

Smarter companies more in tune with these facts are already building out customer retention teams. These personnel are dedicated to making sure their companies -- perhaps your competitors -- keep their customers happy through healthy relationship-building. Isn't it time for you to shift some budget and resources there, too?

The underlying principle of relationship marketing

As these five strategies imply, a direct relationship exists between treating the customer better and increasing revenue. This is a strategy that is good for everyone, but works only if you are genuine in your actions. Consumers, after all, are more sophisticated than ever.

Also consider that 50 percent to 70 percent percent of Gen Z have never known life without the internet. This means they can smell inauthenticity a mile away. How much longer do you think your marketing ploys will work? Instead of putting effort toward outsmarting a customer, why not focus on the opposite?

Related: 4 Tactics To Create Brand Loyalty Through Relationship Marketing

Build something valuable, actually contribute, earn the privilege of your customers' money, then thank them with a long-lasting, positive relationship. It's what you want. I's what they want. So, implement relationship marketing across your organization and reap the benefits today.

Greg Brooks

Director, Marketing, SearchTides

Greg Brooks is the director of marketing at the NYC-based SEO agency SearchTides. He is the author of Facebook Marketing: A Step by Step Guide to Guaranteed Results (Facebook, Facebook Advertising, Facebook Ads). 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

TikTok Reportedly Laid Off a 'Large Percentage' of Employees as the App's Fate in the U.S. Remains Unclear

Laid-off TikTok employees were notified Wednesday night through Thursday morning.

Business News

More People Are Exploring Entrepreneurship Because of This Unexpected Reason

More new business applications were filed in 2023 than in any other year so far.


8 Subtle Hints that People Don't Respect You — and How to Fix Them

While you have to earn respect, you don't have to deal with disrespect in the meantime.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Four Seasons Orlando Responds to Viral TikTok: 'There's Something Here For All Ages'

The video has amassed over 45.4 million views on TikTok.