Marketing activities generally stress on acquiring customers, generating sales and achieving the highest possible profits. Transactional marketing and relationship marketing are two popular but different marketing strategies in the contemporary business world, as they have different views on the part played by the customer.
The key difference between transactional marketing and relationship marketing is that while transactional strategy considers customers as a means of achieving sales, with the objective being gaining the maximum possible sales, relationship marketing focuses on developing a relationship with the customer. Its objective is to develop long-lasting ties with customers so as to ensure sales in the long run.
What is Transactional Marketing?
Transactional marketing refers to a business strategy that focuses on the point of sale (POS) transactions. Since this strategy targets quick sales, its main purpose is to maximise sales efficiency by increasing the volume of individual sales. However, this business strategy does not have an interest in developing an ongoing relationship with the buyer.
It is important to note that Transactional marketing is based on four traditional elements of marketing known as 4Ps.
What are the 4Ps of Marketing?
The first P is Product, which involves creating a product to satisfy customer needs and expectations. For instance, selling a washing powder which is more effective than the existing washing powders in the marketing.
Price is all about assigning an attractive and reasonable price to lure customer. For example, reasonable prices than other competitive products in the market or giving an incentive for the product to boost sales.
This is all about placing the product where buyers can find the product easily, not letting customers search for the product. For instance, selling washing powder in supermarkets and even neighbourhood shops and stores.
Promotion mainly includes urging customers to buy the product immediately. For example, store promotions such as brand activations, road shows and market storms to attract buyers to purchase the product as quickly as possible.
What is Relationship Marketing?
Relationship marketing is an aspect of customer relationship management which focuses on customer loyalty and long-term customer engagement. The prime objective of relationship marketing is to create a strong connection between the customer and brand, product or service, which may lead to the success of the ongoing business. Most importantly, relationship marketing does not have an interest in short term sales boost. Relationship marketing understands that the process is neither a sprint or dash but a marathon.
At present, businesses have realized that acquiring new customers is always costly and challenging. Therefore, relationship marketing helps to retain customers over the long term. As a result, customers build trust and loyalty with the brand. Moreover, relationship marketing uses strategies to foster better customer loyalty. Two-way communication between the buyer and the business is very important to create a good relationship. Internet, social media, as well as word of mouth and testimonies from existing customers, can help to promote the business and build strong relationships.
Similarities between Transactional Marketing and Relationship Marketing?
• Transactional and relationship marketing are just two ways of marketing.
• Although strategies aligned for both terminologies are different, their ultimate objective is to enhance business performance.
Differences between Transactional marketing and Relationship marketing?
The key difference between transactional marketing and relationship marketing is that transactional marketing focuses on the effectiveness and capacity of sales, whereas relationship marketing focuses on keeping long term relationship with customers. While transactional marketing is a short-term strategy, relationship marketing is a long-term aspect.
Strategies like advertising and promotions are used in traditional marketing, while relationship marketing is focused on enhancing and creating a permanent connection with its customers. According to marketing consultants, relationship marketing can easily capture a competitive advantage than transactional marketing. Another difference between transactional marketing and relationship marketing is that transactional marketing does not focus on customer loyalty and repetitive purchase of the same customer while relationship marketing does. In addition, relationship marketing strictly believes that loyal customers are extremely valuable to a business than attracting new customers, whereas transactional marketing only focuses on sales uplift.
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Transactional and relationship marketing are just two ways of marketing. The key difference between transactional marketing and relationship marketing is that transactional marketing focuses on short term sales boost, whereas relationship marketing focuses on long term customer connection with the business. Every business must clearly identify which approach and strategy to use in its operations.