Article 1 of 3 Part of: Value of relationship marketing for improved customer experience Some companies thrive on building strong relationships with customers, while others want to make a sale without long-term commitment. Either way, the business needs a strategy.How a business markets its goods and services depends on whether it wants to make a quick sale or if it wants to take time to build a strong customer base for future sales. If a company's goal is to have products flying off the shelves with no further customer interaction, transactional marketing is the way to go. However, if the business wants to be customer-oriented and build a long-term plan for making sales, relationship marketing may be more beneficial. Here are the differences between transactional and relationship marketing and what each strategy entails. What is transactional marketing?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 marketingAlthough transactional marketing doesn't focus on building a relationship with customers, companies that use this method benefit in a couple ways.
Example of transactional marketingExamples of transactional marketing include:
What is relationship marketing?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:
Benefits of relationship marketingRelationship marketing focuses on building strong relationships with customers, which leads to several benefits. Here are a few examples:
Examples of relationship marketingRelationship marketing takes it a few steps further than transactional marketing. A company that uses relationship marketing may:
Transactional vs. relationship marketingWhile transactional and relationship marketing are similar in that both strategies aim to make a sale, they go about it in different ways. Here are the main differences between transactional and relationship marketing:
Next StepsWhat is the difference between marketing and advertising? How to market a loyalty program effectively 4 types of loyalty programs and their benefits Dig Deeper on CRM tools and strategy
Part of: Value of relationship marketing for improved customer experience Article 1 of 3 |