The Dynamics of Return On Relationship (ROR)

ROI is understandably a popular (and appealing) term for the entrepreneurs but for startups and SMBs it may not be a pragmatic plan since it requires a sound communal foundation supported by strong and established relationships with the customers. For small businesses to thrive, return on relationship (ROR) is the new policy that can help the entrepreneurs build up their business on their clients’ trust which eventually translates into brand recognition and revenue.

In traditional marketing, huge investments were made in promoting content for electronic and print media however the new trends of ROR involve relationship building through social media channels. The logic behind it is simple. People should be reached where they interact with others the most. The strategy requires user generated content (UGC) which means get people to talk about your product. Once you have achieved this first goal, it would be easier for you to understand what your customers want and what really reverberates with them.

According to Gary Vanerchuk, “We’re living in an era where word-of-mouth is on steroids,” Usually people trust people about brands because they know that they have no stakes involved therefore their opinion is likely to be unbiased. Developing relationships with your initial customers actually creates a viral, global salesforce for your brand. The cost comparison of different promotional mediums suggests the following stats:

The direct mail costs around $15 and gets you 200 customers in return, a billboard costs $7.5 for 300 new customers, on the other hand twitter costs absolutely nothing and you are likely to get approximately 1800 customers without having to spend a single penny. But there is a dire need to understand that social media marketing is not exactly the traditional marketing, telling is not selling and you can’t buy attention anymore. Spending a lot of bucks on social media wouldn’t simply get you the attention of your target customers the old media paradigm “PAY to PLAY” has lost meaning now in this era of social marketing the rule is “PLAY to PLAY”.

The huge marketing budget might have won people the attention of their customers but that is no longer the case since the recent stats tell that only 18% of TV campaigns generate positive results. That is the one medium that costs marketers the most to spread their message. Below is a comparison of the old ROI with the new ROR:

Traditional ROI:

1. High upfront investment
2. High ongoing investment
3. High additional PR costs
4. Not easily measurable
5. No active dialogue
6. Mainly negative feedback
7. High market research costs
8. High product development costs
9. High customer acquisition costs
New (Social media) ROR:

1. Low upfront investment
2. Low ongoing investment
3. Low additional PR costs
4. Totally measurable
5. Active dialogue
6. Mainly positive feedback
7. Low or no market research costs
8. Low product development costs
9. Low customer acquisition costs
The drastic difference between the input and output of both ROI and ROR is enough for the marketers to make the right choice.

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