“It flashed a sparkle of water as if to say goodbye and then the river curled away to go searching for the sea.” – Roy H. Williams
When it comes to shopping, we can generally think of two different types of shoppers: transactional vs. relational. (I know what you are thinking… What the hell does this have to do with the quote? Give me a second.)
Transactional shoppers are focused on the purchase itself. Like the river in Roy H. Williams’ quote, the transactional relationship focuses on the destination, not the journey. (See, I told you it makes sense.)
On the other hand, relational buyers are more interested in the experience of shopping and building a relationship with the brands they buy from. They are interested in the relationship between the sparkle of water that said goodbye and then curled away to meet the ocean.
Relational buyers take the time to dive deep and discover the hidden gems that transactional shoppers might miss. They want to know why the river originally went to the ocean and what kind of journey it took to get there. They are interested in learning about the different things the river has seen and experienced along the way.
The transactional shopper focuses on getting from point A to point B as quickly and efficiently as possible. The relational buyer is more interested in savoring the experience and building a relationship with the brands with which they have a buying relationship.
So, which type of customer are you?
Like most people, you are probably a mix of transactional and relational instead of transactional vs. relational.
2 Modes of Shopping
Each person has a relational and transactional shopping mode. You can only know the right thing to say when determining their shopper type. You and all other shoppers are totally transactional in specific service and product categories and, in others, really relational.
For example, when your HVAC system fails and the temperature in your home rises to an unbearable level, you want the problem fixed as quickly as possible. In this case, you are primarily concerned with results and price. You are not interested in building a relationship with the repairman. Your desire is for him to do his job and leave.
On the other hand, when you are looking for someone to design your home’s landscape, you want to find someone who will help you realize your vision. You want to know that this person understands that vision for your property and will work diligently to get it right the first time. In this case, price is certainly a consideration, but it takes a backseat to finding someone with whom you can establish a good working relationship.
Both modes of shopping are perfectly valid; it just depends on what you are looking for. Regarding transactional vs. relational shoppers, each personality type has a preference.
Transactional shoppers are all about the purchase. They want to get in, get what they need, and get out. They are price-conscious and not looking to establish a long-term relationship with the vendor. They measure your value by how cheap you are.
- Focus on today’s transaction only, giving little to no thought to the possibility of a future purchase.
- Only fear paying too much. Transactional shoppers look for price despite value.
- Rely heavily on the comparing-and-negotiating process, shopping at several sources before deciding to purchase.
- Do their research so they will not rely on an expert’s help.
- Consumer Reports is published primarily for them.
- Do not consider their shopping time as part of the purchase price.
- Transactional shoppers embrace the process.
Transactional marketing programs focus on immediate purchases, coupons, and discounts. Since shoppers in a transactional sales mode will shop all over town negotiating, often merchants wrongfully conclude most shoppers are always transactional. Truthfully, though, customers make more purchases quietly in relational mode.
On the other hand, relational buyers want to build a rapport with the vendor. They are looking for someone with whom they can establish a long-term relationship. They are often willing to pay a little more for the convenience and peace of mind of knowing their vendors well.
- Consider today’s transaction as one of many future buys. They look less for the product and more for the store to purchase it.
- They most fear making the wrong choice. Relational buyers purchase as soon as they have confidence in your empathy and competence. Your team must give them the confidence they seek.
- Do not enjoy nickel and diming. They understand the service you get at a discount is not the same service they get at full price.
- Look externally for an expert they can trust.
- Consider their time and energy as part of the purchase price.
- Very often become repeat customers once they are confident they found the right place to purchase from.
Relationship psychology says people are likelier to do business with those they know, like, and trust. Therefore, relationship marketing programs should focus on cultivating long-term customer relationships rather than simply encouraging one-time transactions. Building these lasting relationships means businesses must provide more than just good products and services. They need to create an emotional connection with their customers.
Some examples of relationship marketing include:
– Offering loyalty programs or rewards for repeat business.
– Hosting customer appreciation events.
– Sending personalized communications (e.g., birthday cards, holiday greetings).
– Asking for customer feedback and acting on it.
– Providing superior customer service.
Regardless of whether or not your customers are [transactional vs. relational](https://wizardofads.com.au/transactional-vs-relational-shoppers#:~:text=Consequently%2C Transactional shoppers represent lower,sales%2C and higher profit margins.), you want to book a call with Wizard of Ads™. We will help you understand your customers’ needs and develop a marketing strategy that will help you grow your business.
Transactional vs. Relational Case Study
Here is an easy peasy Transactional vs. Relational Case Study to analyze:
There are 10 shoppers in total: five transactional and five relational. All shoppers have the $100 recommended retail price, and they all want to purchase the same product.
Let’s start with the five transactional shoppers:
T1: Visits 3 stores. Spends $70.
T2: Visits 2 stores. Spends $80.
T3: Visits 5 stores. Spends $60.
T4: Visits 3 stores. Spends $70.
T5: Visits 5 stores. Spends $60.
Total: 18 store visits. Spends $340.
Transactional shoppers look around all over town at multiple stores before deciding to slurge. Each asks several questions at each of these stores and then leaves. Each transactional shopper returns to only one store to buy an item, leaving a score of salespeople frustrated without a sale.
Here are the five relational buyers:
R1: Visits one store. Spends $100.
R2: Visits one store. Spends $100.
R3: Visits one store. Spends $100.
R4: Visits one store. Spends $90.
R5: Visits one store. Spends $90.
Total: 5 store visits. Spends $500.
Meanwhile, the five relational buyers visit their favorite stores, buy things, and go home. They account for five store visits and purchases and zero upset salespeople.
Did you know that most companies spend retail ad dollars targeting the transactional mindset? Did you know half your prospects are relational buyers? So, why did your salesperson make it about price?
Transactional shoppers share a more significant percentage of all appointments than gross profits or actual sales. These shoppers care about the lowest price and will traverse many businesses to find it.
Business owners, keep this in mind: Transactional shoppers illustrate lower average sales and closing ratios, and smaller profit margins. Relational buyers depict a smaller share of selling time. Regardless, they have a larger share of sales and higher average sales, closing ratios, and profit margins.
Why do you spend 80% of your time for 20% of your lowest margin sales? Wouldn’t you rather spend 20% of your time generating 80% of your revenue? Think how much more time you’d have to close more relational buyers! Now that is exponential, profitable growth.
Indeed, relational buyers seem a more viable option to businesses in the transactional vs. relational debate.
Bottom Line– There is No “Perfect Ad”
The bottom line is that not everyone is going to like you, and that’s okay.
There will always be transactional vs. relational mindsets who engage your company. If you want more of the relational buyers, you need to speak the relational buyer’s language.
Is Your Company Transactional or Relational?
“Changing your ads so that they speak to a different shopper is easy. But changing the essence of your customer’s experience (selection, prices, sales staff) is not.”
– Roy H. Williams
Transactional vs. relational: Which is your residential home services company?
If you are not sure, here are some key questions to ask yourself:
- Do you see customers as one-time transactional shoppers or long-term relational buyers?
- What is your company culture like? Is it built on a foundation of trust and transparency, or is it more transactional?
- Do you focus more on the sale than on the customer experience?
- How do you measure success– by the number of sales or customer satisfaction levels?
- Are your advertising messages focused on selling a product or service, or are they designed to bond with potential customers?
- Do your team members view customer interactions as opportunities to build rapport and relationships? Or are they focused primarily on completing the transaction?
If you answered transactional to most of these questions, then your company is likely transactional. That means you see customers as one-time shoppers only interested in the product or services sold. Your focus is on making the sale rather than building long-term relationships with customers. (I am sorry to say, but your strategy kind of sucks.)
On the other hand, if you answered relational to most of these questions, then your company is likely relational. That means you see customers as people with whom you can build long-term relationships. Your focus is on creating rapport and developing relationships rather than making the sale. (I have to say, that is a much better strategy.)
Why is that the case?
Transactional companies tend to have high customer turnover rates. They are always looking for new customers because their old customers keep leaving. On the other hand, relational companies have much lower customer turnover rates. Their customers are loyal because they feel valued and appreciated. They know that the company cares about them as people, not just potential sales.
Build a successful business by focusing on developing relationships with your customers. It is the key to long-term success. The psychology of relationships is complex, but you can follow these basic principles to get started.
If you belong to the residential home services industry, transactional vs. relational, your customers will stay content with Wizard of Ads® aid. We build our business on relationships. Book a call with Ryan Chute today.