Evolution of Relationship Marketing in the Digital World

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Abstract: The digital world has immense potential that has yet to be tapped into; with each new phase, an opportunity to alter many marketing theory and practice arises. This review will look into the aspect of relationship marketing and the influence of social networks sites, particularly social media to consumers’ behaviourism and expectations; and how organisations need to identify the increasing challenges in managing customer relationship. 1. Introduction

As aptly described by Castells (2000), the network society that has evolved over the last decade, has made a spectacular makeover in relationship marketing; a paradigm shift from being monopolised by large organisations to having a consumer stronghold. Relationship marketing has been impacted with the emergence of the digital world and consumers’ dependency and behaviour towards social network sites and will be reviewed here to identify how organisations have evolved to adapt to the changes in the game and re-define their business goals – “engage consumers into a platform; to sell products, to generate contributions, to get people to join conversations” (Scott, 2012, p.33). 2. Relationship marketing redefined

2.1 Definition
“Relationship marketing is defined as is a process of maintaining and enhancing relationships with customers and stakeholders for mutual benefit” (Berry, 1983; Gronroos, 1994; Morgan & Hunt 1994). Berry (1995, p237) rightly pointed out that being “on marketing’s backburner for so many years, relationship marketing now sits on the front burner”. In a recent white paper by IBM, it explains that “relationship marketing is architected to manage relationships as a means for extracting the greatest value from customers over the lifetime of the relationship. These strategies typically concentrate on the operational responses required to manage the customer.

2.2 The digital world
With social network sites, though, customers (and their highly influential virtual networks) are now driving the conversation, which can trump a company’s marketing, sales and service efforts with unprecedented immediacy and reach.” Social media guru David Meerman Scott suggests that “the old, one-way mode of communication are ineffective. Today’s consumers are looking for just the right product or service to satisfy their unique desires at the precise moment they are online” (2012, p.18). 3. Evolution in marketing strategies

3.1 Traditional marketing
Traditional marketing days have clearly evolved from running advertisements, commercials and other forms of one-way promotions and the digital rise of relationship marketing has taken a front seat today. Gone are the days when large organisations were holding the monopoly of advertising and marketing, resulting in a dominated, one way communication. The power has shifted from organisations to customers, and the traditional ways marketers controlled the landscape is gone or what is termed the “traditional richness-reach trade-off. Richness means “the quality of information, and reach means “the number of people who participate in the sharing of the information” (P.Evans and T.S. Wurster, 2000). Traditionally, quality of information decreases with the number of people who share such information. 3.2 New direction in relationship

A radical change that demands a new direction in customer communication is in place, and in this context, digitally managing relationships with consumers. The digital space, especially social network sites has changed the way consumers interact with organisations. What makes organisations with outstanding social network sites presence is the continual interact online, as well as the way they respond and address customer complaints. Marketers have come to realise that they can no longer control the relationship with consumers, nor the communication flow that has been established online; the emphasis on marketers to facilitate collaborative experiences and dialogues that customers hold value....
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