Question

Difference between transaction based marketing vs relationship marketing

Answer 1

While all marketing focuses on gaining clients and increasing profits, relationship marketing and transactional marketing take different views of the role of the client. The transactional approach views the client solely as a vehicle for sales, while relationship marketing establishes a relationship with the person behind the sale.

Transactional Marketing
Transactional marketing is focused on a single objective, and that is making the sale. Transactional marketing tactics include advertising and promotions exclusively geared towards immediate sales. “A sale is a one time event. This is transactional marketing,” according to Ginger S. Myers, regional marketing specialist for the Western Maryland Research and Education Center. “The transactional marketing approach seeks to make the largest number of sales possible.” An example of transactional marketing is a sales pitch on QVC. The clock is ticking, and the goal is to sell as many of the featured item as possible. The product manufacturers do not take the time to build relationships. Rather, they use incentives, discounts and buzz words to make as many sales as they can during a short period.

Relationship Marketing
Relationship marketing has broader, longer-term goals than transactional marketing. Relationship marketing focuses on developing long-lasting relationships with clients to secure sales well into the future. “Relationships as a focus of marketing strategy aids in the understanding of consumer needs and wants, which is useful to implement profitable exchanges,” according to Nagasimha Kanagal in her article in the “Journal of Management and Marketing Research Role of Relationship Marketing.” “Knowledge and application of relationship marketing helps in achieving customer satisfaction, customer retention, and customer acquisition.” For relationship marketing to be most effective, it must infiltrate every level of contact with a current or potential customer, from the sales staff to point-of-sale displays to customer service representatives. Some relationship marketing strategies including branding, customer service training, community and media relations, social media, newsletters, blogs, referral programs and frequent buyer incentives. These marketing efforts are investments in the promise of long-term sales.

Internet’s Role
Technology and the Internet clearly have changed the way that companies connect with their customers. Face-to-face interaction is less frequent, and many more services and product transactions are occurring behind a computer screen. With a few clicks on their keyboards, clients can access a world of information that influences their purchase decisions, making the client relationship more important than ever. While the Internet has reduced face time with clients, it has provided more and different avenues to develop relationships with current and prospective clients. Some product companies never had direct relationships with their customers before the proliferation of the Internet and social media. The stores that carried their products exclusively built and maintained the client relationships. Now, manufacturers are reaching their customers more directly, branding and building relationships through interactive and educational features on their websites, blog articles and posts on their Facebook pages.

Retaining Customers
When your business is moving product, it may be tempting to put all resources into marketing tactics that bring immediate results. However, when you consider that acquiring new customers can cost as much as five times more than retaining current customers, according to Emmett C. Murphy and Mark A. Murphy in their book “Leading on the Edge of Chaos,” the financial payoff to investing in long-term client relationships becomes clear.