Any type of marketing has the goal of increasing a prospect base with the hopes of improving profits. Two common approaches to this goal are relationship marketing and transactional marketing. Each takes a different view of the prospect, client, or customer.
What Is Relationship Marketing?
In relationship marketing, the goal is to create a long-term relationship with each prospect, client, or customer. This allows for ongoing revenues to be developed because of a loyalty to the brand. Instead of creating one sale and then moving on, relationship marketing seeks to create multiple sales over multiple future opportunities.
For relationship marketing to be effective, it must be able to have multiple contact points with every past and present prospect, client, or customer. Each contact point must have a positive influence on the relationship for success to be maximized. Every brand interaction with the individual will create a “transaction” which affects how that individual makes a purchasing decisions.
It is a series of deposits and withdrawals. When an individual experiences a positive interaction with a brand, whether it is a shelf display or a post on a Facebook page, then this acts as a deposit. The individual will be more likely to make a purchase now and in the future.
If a negative interaction occurs, then a withdrawal occurs. This makes the individual less likely to make a purchase now or in the future.
Strategies to help build a brand relationship with a customer include blogging, referral rewards, buyer incentives, social media relationships, training opportunities, and branding extension.
What Is Transactional Marketing?
In transactional marketing, the goal is to create one specific transaction, turning a prospect into a client or customer. This allows for revenues to grow rapidly, but in short-term transactions. Instead of creating a loyalty to a specific brand, this form of marketing encourages larger one-time sales that a customer may forget about in a short period of time.
For transactional marketing to be effective, it must speak of three value points.
- Value. Prospects must be able to see a higher level of value in one brand over another to encourage a sales transaction. This can be accomplished by highlighting what a product or service can provide, through the creation of discounted pricing, or some other method that separates the item from competitive items.
- Scarcity. Prospects must feel like they need to act immediately to gain the benefits that a product or service can provide. Unless there is a call to action which brings the prospect to what is being offered, a sale is unlikely to occur.
- Reputation. Prospects must feel that the product or service will improve their life in some way. This value can only be established through the establishment of a brand reputation. Advertising messages, promotions, customer reviews, and similar information sources are often used to create this value point.
Unlike the series of deposits and withdrawals which occur in relationship marketing, in transactional marketing, the clock is always ticking. The goal is to sell as many products or services in the shortest amount of time to whomever is willing to make a sale. There is no time to build a relationship.
Strategies to help increase the chances of a transaction occurring involve discounts, incentives, and buzzwords to attract prospects. Then, by using the three value points, a brand does its best to close a sale. Then the process repeats.
Both Marketing Opportunities Can Help a Business Retain Customers
Relationship marketing is often promoted as a better solution for brands and businesses because of its long-term potential. A customer purchasing 3 items annually over the course of 10 years is better than a customer purchasing 5 items today and then never purchasing something again. Acquiring a new customer is also more expensive than retaining an existing customer, so relationship marketing can help the bottom line of an organization.
Yet transactional marketing as an essential place in every organization’s outreach opportunities. Customers can be attracted to annual sales opportunities that a brand and business uses, such as an inventory liquidation sale. Customers can be encouraged to return to a business to purchase more items because of discount opportunities which are offered.
It is even possible to move a customer from a transactional relationship to a long-term relationship using strategic sales opportunities.
In the relationship marketing vs transactional marketing debate, there are positive aspects to consider in each opportunity. There are dividends to be earned when a relationship can be established, but there is an immediate payoff when transactions can be successfully performed.
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