How you choose to market your business or product can make a big difference in the success of your marketing campaigns. Whether you choose a transactional or relational marketing campaign depends on the type of business and products that you are selling and what type of customer you intend to attract. A one-time sale needs different marketing techniques than attracting customers who will return for many purchases and remain loyal to your business. In most cases, a blend of both transactional and relational marketing is used.
Transactional marketing campaigns focus on the actual sales process for an item. The emphasis is put on making the sale and may include aggressive sales techniques that eventually alienate the customer. A applicable example of a transactional marketing campaign is a sales presentation for a time-share vacation home. The salesperson concentrates only on closing the sale.
Transactional marketing is a strategy that aims to increase efficiency and volume of point-of-sale transactions. This approach focuses on making the sale, rather than forming a relationship with the customer. Once the business completes a transaction, there is no further interaction with the customer, other than potential customer service assistance.
Transactional marketing follows the four traditional elements of marketing: product, pricing, placement and promotion often known as the four P’s. This means businesses focus on providing customers with high-quality products at profitable, yet attractive, prices.
Companies also establish efficient distribution chains and promote the products in ways that appeal to the customer. For example, a business may promote a product by using discounts and coupons; buy one, get one (BOGO) promotions; cash-back offers; mail-in rebates; and in-store or online sales.
Benefits of transactional marketing
Although transactional marketing doesn’t focus on building a relationship with customers, companies that use this method benefit in a couple ways.
- Low cost. Because this method focuses on quick sales, transactional marketing campaigns are typically inexpensive. Most transactional marketing campaigns include sending out fliers and promotional emails, enabling marketers to spend less of their budget in this area.
- High inventory turnover. It can be expensive for businesses to manage large inventories for long periods of time, and quick sales can reduce the amount of time that businesses hold items in their inventory. If a business clears its shelves quickly, it can replenish them with in-demand items and to generate more revenue.
Relational marketing attempts to create a relationship between the customer and the salesperson or business. Because of the relationship, customers will feel a loyalty to the business and return for future purchases. Relational marketing is important for large purchases like purchasing a car or home, but pure relational marketing runs the risk of building a relationship without closing the sale.
Relationship marketing aims to build strong, long-term relationships between brands and customers that lead to repeat sales and increased customer loyalty. Relationship marketing focuses on enabling communication between customers and the business, tracking their activities using a CRM system and tailoring messages and advertisements to customers based on their customer profiles.
Businesses that use relationship marketing emphasize customer service to improve retention and satisfaction. Often, if customers aren’t satisfied with a company’s customer service, they will stop buying products from that company and seek another with better customer service.
A benefit of relationship marketing is that strong customer connections can result in trust, and customers may help promote the brand by free word-of-mouth promotion or buzz marketing and potentially generate leads and sales. Customer acquisition can be expensive, so relationship marketing can often help cut costs on marketing and advertising, as it is the customers who find and draw new people to a business.
A business can use relationship marketing in the following ways:
- Provide noteworthy customer service;
- Increase customer engagement by interacting with customers through social media and regularly responding to posts;
- Conduct customer feedback surveys, polls and phone calls to show customers the business values their opinions;
- Launch customer loyalty programs; and
- Offer discounts or bonuses to repeat customers.
Benefits of relationship marketing
Relationship marketing focuses on building strong relationships with customers, which leads to several benefits. Here are a few examples:
- High ROI. It is more expensive to acquire new customers than it is to retain current ones. Customers who have strong relationships with a brand are likely to purchase more of a business’s products and services and support the company when they introduce new products. Relationship marketing also increases the likelihood that a customer will return to the store more than once.
- Increased customer feedback. Relationship marketing creates loyal customers who are more likely to promote a company and its products on social media and leave comments or ratings on the company website. Businesses that listen and act on customer feedback over social media, or through surveys, can improve the products and show that they care about what the customer wants from a product.
- Long-term sales. If a customer trusts a business and enjoys its products or services, he or she is likely to continue purchasing from the company, even if they raise their prices. Businesses that have loyal customers who trust the company increase the chances of long-term sales.
Transactional marketing is most appropriately applied to one-time purchases where a hard sell is necessary to close the sale. For a one-time sale, there is no expectation that the customer would return for repeat business, so closing the sale with a hard sell is possibly the best choice. However, a hard sale tactic would annoy customers at the supermarket and discourage repeat business. Repeat business situations call for relational marketing and gentle point-of-sale techniques.
Finding Middle Ground
Most businesses use a mixture of relational and transactional marketing. The salesperson attempts to build a relationship with each customer while still attempting to close the sale. It is important to know your customer and communicate with them effectively. Customers may have differing expectations from relationships. Many customers would be delighted to be addressed by name and treated like family every time they enter a restaurant, others might wish to remain anonymous and be left alone. The most effective position is to read the customer well and follow his lead.
Differences Between Transactional Relationship and Relational Selling
Transactional marketing focuses more on short-term benefits through price and profit maximization. On the other hand, relational selling is all about developing strong and long-lasting relations with customers, partners, and businesses that influence your organization directly or indirectly.
Transactional relationship relies on a single sale formula of increasing sales through mass marketing and product promotion. Relational selling is more inclined towards customer loyalty by providing ideal products and services. The strategy aims at improving the way you perform your business periodically to improve the value of your customer relationship.
There’s minimal customer interaction in a transactional relationship, whereas relational selling maintains frequent interactions.
Transactional marketing emphasizes the point-of-sale transactions, whereas relational selling is all about providing helpful information to customers in order to develop strong ties.
While transactional relationship focuses on increasing efficiency and overall quantity of individual sales, relational selling aims at building long-term relationships with customers.
There’s low customer commitment in transactional marketing, whereas relational selling is characterized by high customer commitment.
While transactional marketing focuses on getting the order, relational selling aims at becoming the sole supplier or preferred marketer in the industry.
Transactional marketing results in a short-term relationship between the buyer and the seller. On the other hand, relational selling creates a long-lasting and robust relationship between the seller and the clients.
In the end, a transactional relationship evaluates results, while relational selling evaluates how the customers feel about the results.