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Relationship Vs. Transactional Selling — Which Way To Go

Updated: Sep 15, 2023

What’s the first name that pops into your mind when you’re craving soft drinks?

If it’s Coca-Cola, there’s a reason why.

Coca-Cola has established a strong emotional connection with its customers since its inception, mainly through heart-touching messages about family and friendships. And ever since content marketing started booming, terminologies like “relationship marketing” and “transactional selling” have become key to skyrocketing your business’s scalability.

Budding entrepreneurs and small business owners often get confused on which route to choose. Should one continuously be looking for new customers or build relationships with the existing ones?

Don’t worry, we’ve got you covered.

Here’s a detailed breakdown of how these two methodologies differ from one another and which one will benefit you the most.

What is transactional marketing?

The term itself hints at a one-time sales approach towards doing business. Honestly, that’s all that transactional selling really stands for.

When you’re invested in transactional marketing, the essential business strategy revolves around continuously gathering the attention of new customers.

Here are some key points about transactional selling to keep in mind:

  • Transactional selling aims to make as many one-off sales as possible.

  • The nature of the relationship with customers in transactional marketing is short and intermittent.

  • Transactional selling mostly results in meager customer contact and commitment.

What is relationship marketing?

Relationship marketing is everything that transactional selling isn’t and even more.

The biggest brands leading the global markets have been practicing relationship marketing for multiple decades, long before the term even became relevant in business and marketing studies.

Here’s what relationship marketing is all about:

  • The primary aim of relationship marketing is to retain as many customers as possible by offering them higher value.

  • The objective of a brand using this strategy is to eventually stand either as the only supplier or the most preferred one in the market.

  • It isn’t an overnight get-rich process; it takes years to connect with your customers on a deep, emotional level.

  • Rather than undertaking one-time transactions, it centers on building loyalty and trust.

  • The level of customer contact and commitment in relationship marketing is very frequent and high.

  • Compared to the alternatives, it’s quite a low-cost approach to promote businesses.

The importance of creating long-term relationships in business

Now that we’ve covered the basics of these strategies, let’s dive in to explore the reasons why establishing relationships for the long-term comes with more perks than pitfalls.

1. High returns on investment

As per stats, retaining a minimum of 5% of your entire customer base leads to a whopping 25% jump in profits earned.

Besides, Reichheld & Schefter have stated that relationship marketing helps to retain more and more customers, eventually leading to a 95% growth in profits in the long term.

Why, you may ask? Here’s the secret building relationships with existing customers encourages them to come to you for future transactions.

This way, the company adapts to a more cost-effective method of doing business as it cuts off the expenses of continuously fishing for new customers.

2. Conquering the market, one feedback at a time

Businesses earn more by solving the inefficiencies of their customers.

And how does a brand continue to become the most preferred problem-solver in the market? By actually listening to what customers have to say.

A sense of trust and loyalty is born when you’re listening to the opinions of the people you’re offering services to.

People love it when companies listen. Once you’ve checked it off your corporate to-do list, relax and watch the loyal customers come back for more transactions.

P.S.: Brands like Nike, Starbucks, Netflix, and more have figured out this hack quite early, which explains why they’re our all-time favorites.

3. Gain a competitive advantage

What else does a business need to scale and conquer the market? A huge, fat, whopping competitive advantage.

It always gives you the upper hand, literally everywhere.

Let’s suppose that you’re fishing for recruits to keep your business afloat wouldn’t you want to hire the best in the batch?

But how do you attract the best of the best? When your brand has a huge competitive advantage in the market, the most capable ones come to you automatically.

And how do you gain this advantage? Simple, just focus on building strong relationships.

Summing it up

Transactional selling, if and when done right, rewards you with high-profit margins for the short term.

But there’s no limit to how many benefits you can earn, and for how long, simply by creating long-term relationships.

So, what’s the key takeaway today? Building relationships never goes in vain be it personal or professional.

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