Transactional Marketing VS Relationship Marketing: Which Sales Method to Choose?

23.03.2023 12:13

Author and content analyst on trade automation

The choice of product promotion strategies - transactional marketing or relationship marketing - depends on the type of business and product you sell, as well as the type of customers you want to attract. Let's look at the main differences and advantages of the two sales methods.

What is transactional marketing?

транзакційний маркетинг як стратегія просування товарів

Transactional marketing (TM) is a marketing strategy that focuses directly on "one-off" sales of goods or services to a customer, i.e. transactions. This method aims to increase sales by focusing on interacting with existing customers.

The main goal of TM is to increase profits by increasing the number of purchases, the average check and attracting customers on a regular basis. This is achieved by providing special offers, discounts and bonuses to customers who have already made purchases in the store or used services.

Transactional marketing tools

Transactional marketing consists of 4P marketing: Product, Price, Place, and Promotion. Its ultimate goal is to offer customers a product at an attractive price. This is achieved through the use of appropriate sales channels for specific customers.

For example, you sell clothes for the whole family and your goal now is to encourage customers to buy new seasonal products or sell off old collections to increase sales and get rid of stock. So, you launch promotions that you post on social media, your website, or in your store windows.

transactional marketing tools

Transactional marketing strategies:

advertising and launching promotions for immediate sales,
discounts such as "buy one, get one free",
personalised offers.

Personalised offers for customers are based on their previous purchases. If properly organised, personalised communications with specific consumers are several times more effective than mass communication with customers. This way, sellers can more accurately plan promotional activities for customers who have already shown interest in their products.

For example, a sporting goods store can create advertising campaigns aimed at selling children's or women's winter clothing or selling goods only for tourism.

The main advantages of transactional marketing are

Increased profits. Companies earn more by using data on customer transactions and products or services that are most likely to be purchased by customers in the future.

For example, if a store sold more Tefal pans than Maestro pans in February, it's likely that the latter is more popular with customers and should be included in the next batch of pans. If you understand which products your customers buy most often, you can develop the best promotions for them and earn more from repeat sales.

Saving time and resources. The method allows stores to focus their efforts on customers who have already shown interest in their products. This saves time and money on market research and attracting new customers. The cost of running targeted advertising campaigns on the Internet is less than running offline advertising.

So, if you want to make money from your existing customers, you should develop campaigns and products that meet their needs. However, if your goal is to increase your customer base, transactional marketing can also be beneficial: based on new sales, you can analyse the market and plan subsequent campaigns to retain these customers. And this is the work of another marketing strategy.

Transactional marketing or relationship marketing?

Although transactional marketing leads to a rapid increase in revenue, transactions are short-term. Instead of gaining long-term customer loyalty and trust in a store, this type of marketing strategy focuses on creating large one-time sales that the customer may not repeat in the future.

For a holistic interaction with all customers, companies should use relationship marketing alongside transactional marketing. This method is focused on building long-term and reliable brand relationships with customers. Its goal is to create a connection that will retain customers and motivate them to make repeat purchases.

For example, a simple registration form on the website or the politeness of a manager calling a customer to warn them that the goods will be delivered late are beacons that show that the company cares about the customer's experience after the purchase.

Customers attracted through transactional marketing can be nurtured further through relationship marketing. This way, the customers you brought in will stay.

Tools and benefits of relationship marketing

This strategy takes more time to grow loyal customers. They come to the store not for bright signs "Everything for 100 UAH!", but for real service and quality goods or services. The main tools of this method:

1. Creating personalised campaigns. Customer loyalty is achieved by building personal relationships with customers. Customers who feel valuable to the company are more likely to come back again and leave positive feedback about it.

Personalised offers are always about an individual approach and care for the customer. They will feel that you are trying to offer them the best service.

2. Implement a loyalty programme. It is one of the key elements of relationship marketing. This is a system of rewards for purchases that includes additional services and benefits for customers who make repeat purchases or regularly use the company's services. To retain customers, they are given the opportunity to earn bonus points that can be exchanged for discounts, gifts or other services in the company.

For example, the FoxFan cashback programme of the Foxtrot hypermarket became almost the only lifeline for the business when the full-scale war started. The company focused its efforts on retaining the existing number of customers and attracting new ones by strengthening personalised communication. The programme is based on the accrual of cashback for every purchase in the store. In addition, other benefits of the programme have been retained: favourable personalised price and product offers and special shopping conditions for Ukrainian defenders and their families.

3. Building a culture of communication with customers.

An important advantage of relationship marketing is the ability to attract new customers through recommendations from existing ones. When customers are satisfied with a product or service, they are more likely to recommend it to their friends. This helps you avoid significant advertising and marketing costs.

Therefore, include reputation management elements in your marketing strategy to help create a positive image of your store in the market and among consumers.

Програма обліку товару для інтернет-магазинів, крамниць, торгових точок, складів та виробництва

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