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Transactional vs. Relational Shoppers

When it comes to shopping, we can generally think of two different types of shoppers: transactional vs. relational.

Ryan Chute
Ryan Chute
July 27, 2022
Transactional vs. Relational Shoppers
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

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

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.

Transactional shoppers:

  • 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.

Relational Buyers

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.

Relational buyers:

  • 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

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

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.

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Ryan Chute
Ryan Chute

"My milkshake brings all the boys to the yard, And they're like, it's better than yours, Damn right it's better than yours, I can teach you, but I have to charge." -Kelis Yeah. This is what I do for Home Service Companies.

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Wizard of Ads® for Contractors work with healthy and growing Residential Home Service Contractors hungry to grow by multiples, like you.

You are ready, willing, and able to grow your business. You are open to change and are seeking a distinctive angle of approach to gain the time and attention of a too-busy public.

You know that lasting relationships take time, patience, and good energy to nurture and cultivate. We carefully enter into every arrangement with the intention of working with you for as long as you own your business. You prefer lasting partnerships.

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Marketing cannot fix a failing business.

We accelerate what’s already happening in a business. If your business is on the rocks, marketing will only speed up the inevitable.  

You’re focused on lasting change that leads to exponential, profitable growth, not just sales at any cost. Intuitively, you know that communication that enhances every element of your customer's experience and your employee's culture is the key to your success.

How does the Wizard of Ads® for Contractors charge?

Traditional marketing agencies are designed to capture the greatest amount of revenue from a client, regardless of results. Every last item is billed and expensed to the client. Typical agency fees can represent a whopping 55% of the entire advertising budget. That means a $5 million dollar advertising budget, you would spend $2.75 million on agency fees.

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Our income is not tied to your advertising budget. Our income is exclusively tied to your growth. Our goal is to maximize your advertising impact with the lowest reasonable spend. This allows you to spend only what is necessary or to put extra horsepower into aggressively growing in your market.

The genius of this model is that it perfectly aligns our motivations as true partners for exponential profitable growth without the pain of being unaffordable. Ultimately, we are confident in taking the risk of being underpaid in the first few years because we know the results always speak for themselves.

Next, we do not accept commissions, referral fees, kickbacks, or other compensation from any service providers we recommend or engage for production work. Most agencies do. This includes the 15% agency commission for media buying. This approach is considerably different from the compensation plan employed by most advertising agencies, as it eliminates any potential conflicts of interest and allows us to focus our entire attention on helping you grow your business profitably as a true partner. For example, a $500,000 annual media buy would involve a $75,000 commission that we would have removed directly from your media providers' invoices.

This is the perfect pricing model for Residential Home Services.

By tying ourselves to gross revenue, we only have one motivation. Your motivation. We have no motivation to convince you to spend more money on marketing than what is necessary, and since we are a variable expense to sales, we NEVER become too expensive to have us on your team.

In almost every case, we end up lowering the amount of money you spend. We will stay within your planned marketing budget, including your media spend, production, and our Annual Fee. Add on the fact that you get any and all commissions back for media buys and various services provided by outside providers, and you will actually save money having us on your team.

Don’t forget, we have the largest buying power in North America for media buying, meaning for every dollar you spend buying media, we only spend 27 cents on average. This stretches your reach, impact, and frequency in a way no other agency (or yourself) can achieve on your own, saving you hundreds of thousands of dollars, eventually millions, every single year.

Clients who heed our advice and embrace our Marketing Strategy quickly add $1 million in incremental revenue to their business, making your investment a smart bet and a bit of a no-brainer.  

There is no longer any guesswork, hope, or fear that our marketing strategies are going to work. If our client’s are able to abandon any limiting beliefs about marketing, deliver operational excellence, and play the long game, our marketing strategy will accelerate their profitable growth.

Wizard of Ads® for Contractors pricing model is based solely on the topline revenue of your company. It consists of an Upfront Fee and an Annual Fee. These fees are inclusive of scheduled travel, services, and all other expenditures as outlined in the Consulting Agreement.

The Upfront Fee covers the intensive Uncovery Process, the first year’s Media Buy, the Creative Process, and the Market Research while the Annual Fee goes toward implementation, ongoing creative and consulting, and next year's media buy. You get a team of 3.5 people, with direct access to a top tier Creative Lead and Media Buyer, and on-demand access to me as your Master Strategist. You will also have a full-time Account Manager keeping everything on track.

While the upfront does have an initial pinch, it is easy to amortize the investment over the many years we will be working together to grow your business. Wizard of Ads® retain clients for 10 years, on average. The sale of the business is the number one reason for termination. We actively terminate the bottom 1% of clients who are unwilling or unable to follow our strategies.

Wizard of Ads® for Contractors believes that all rewards should be directly correlated to the success of our clients. This means that the Wizard of Ads® for Contractors only receives a raise when the company achieves growth. For example, if your gross sales for the year have increased by 25%, the Annual Fee you pay us in the following year will also be increased by 25%. Likewise, if your gross sales decrease, our Annual Fee will decrease by the same percentage during the following year.

This is an exceptionally easy and fair way to track and reward success. This model was developed by Wizard of Ads® over 35 years ago and has served us well because it serves our clients well.

As a rule of thumb, we take the risk of working for considerably less than our actual value in the first few years as we help accelerate growth. This means you need to be willing to pay us exceptionally well when you start doing even better.

When should I engage The Wizard of Ads® for Contractors?

There are four key revenue stages for engagement with the Wizard of Ads® for Contractors.

  1. Under $3.6 million in revenue
  2. Between $3.6 and $10 million in revenue
  3. Between $10 and $20 million in revenue
  4. Over $20 million in revenue

Under $3.6 million in revenue is an investment in your brand. This will serve you well in establishing your brand story early on and help you with your name, logo, and truck wrap design. It's easier to create pictures from a story than it is to make a story based on pre-drawn pictures. You'll be glad you did. Everyone on a fast path to growth is.

Most clients start with Wizard of Ads® for Contractors between $3.6 and $10 million in revenue. They have often seen a natural ceiling with their leads for demand service and are looking for ways to push past the ceiling. This can only be done with a properly executed brand strategy, specifically in mass media with a sticky story.

Between $10 and $20 million in revenue, Wizard of Ads® for Contractors has some natural economies of scale. This is a sweet spot where Wizard of Ads® for Contractors can offer some added value in getting the ball rolling.

Over $20 million in revenue is actually the lowest cost point of entry as a percentage of revenue, but not the cheapest time to start with the Wizard of Ads® for Contractors. Leveraging all economies of scale aside, we have been left out of the upside along the way, so engaging when over $20 million in revenue means we have to mend a lot of fences damaged along the way. This is also where clients see significant savings in their media buys and production costs.

There are also three market sizes to consider.

  • Primary Markets are the top 50 cities in America.
  • Secondary Markets are the smaller cities in America.
  • Tertiary Markets are the more rural trade areas in America.

When considering an engagement with The Wizard of Ads® for Contractors, consider what size market you are in. For example, a $3.6 million company in a Primary Market will struggle to get the necessary reach needed to make a splash. You either have to be more patient than a larger company or spend more money to accelerate your reach.

Alternatively, a $5 million company in a Secondary Market will look like a pretty darn big fish in a medium-sized pond.

A $20 Million company in a Primary Market will feel like a $50 million company using our strategies to potential customers.

The key to remember is that the earlier you start with the Wizard of Ads® for Contractors, the lower the investment to get started. As they say, the best time to plant a tree was 20 years ago. The second best time is today.

Are production costs included in your fees?

The Wizard of Ads® for Contractors Creative Lead will create the ad copy, cast the voice actors, source the production house, direct the performance, pick the music bed, manage all the edits, and provide you with the completed ad for final approval before sending to air on your behalf. This is included in our fees.

You pay for the production house, actors, royalty-free music, and jingles directly to avoid any potential for markups, commissions, or management fees.

We have many friends in the industry that give our clients good deals due to the large volume of work we provide them. We will introduce you to them.

How long before a brand-forward strategy starts working?

In approximately three months of activation, we’ll just be getting live on air. In six months (3 months on air), you’ll be getting anecdotal feedback from people that you are being heard, but there will be no direct line to revenue.

After 6 months on the air, you’ll think you made the biggest mistake of your life signing up for this branding nonsense. After 9 months on the air (12 months in) you’ll see the light at the end of the tunnel.

At 12 full months on the air, you’ll know why you did this branding thing. Two years from now, we'll be clinking champagne flutes as you wonder why you didn’t do this sooner.

How long before we’re live?

The general guideline is 70-120 days, depending on the level of production needed and if there is a name change to your business.

This includes an onsite visit, a deep dive into research, and getting things created, negotiated, approved, produced, and live on the air.

  • Uncovery - 15-30 days based on travel. 1-2 days onsite.
  • Research - 30-60 days based on the scope of work.
  • Creative and Media Buy Process - 45 to 60 days
  • Offline Production - 15 days for radio. 30 - 60 days for television.
  • Online Production (if switching) - 60 days

This means planning for roughly 90 to 120 days in the proper development and production of a completely unique Marketing Strategy before anything hits the airwaves.

Are you exclusive?

Creatively, yes. During the term of this Agreement, all Creative Partners assigned to your Account shall not engage, directly or indirectly, as an employee, officer, manager, partner, manager, consultant, agent, owner, or in any other capacity, in any competition of the client, including any company engaged in marketing consulting.

For clarity, the Creative Partner is defined as the individual Wizard of Ads® Partners who is responsible for creating your creative strategy and ongoing creative copy. Competition is defined as companies that engage in the same industry and business units (e.g., HVAC, Plumbing, etc.) as you. The market area is defined as the area where the marketing message naturally reaches through DMA or 60 miles from the city center of the client's service area(s).

Naturally, we exclude any potential future competition in markets where you are not currently active at the date of signing.

We do not limit Media Buyers in any market. Media Buyers get better deals for larger volumes, making it beneficial for the client to have the Media Buyer available to do as many buys as possible to secure the best deals on the client’s behalf.

Do you do digital marketing?

In rare circumstances, Wizard of Ads® for Contractors will provide specific digital marketing solutions. Wizard of Ads® has very specific Partners that provide digital services that serve Residential Home Services effectively. Under no circumstances will digital marketing services be offered without Wizard of Ads® for Contractors' core solution.

It is most likely that Wizard of Ads® for Contractors will work with your existing digital partners and suppliers. If you do not have a reliable digital provider, we would be happy to introduce you to a number of great providers that play nice with Wizards.

Do you do jingles?

Wizard of Ads® for Contractors can assist you in getting a jingle for your business. Like any other tactical element of a marketing strategy, we do not produce a jingle for the sake of a jingle.

If you do not have a story or a strategic reason to have a jingle...or an ad campaign to tie it to, do not waste your hard-earned money on a jingle. You are wasting your time and money.

When you do build a single unified marketing strategy that incorporates a jingle for a specific (often scientific) reason, we have a Jingle Wizard who has studied the art and science of jingle design.

He will score you an original, royalty-free jingle, including professional singers, musicians, and producers. He will not knock off a generic jingle from a publicly available music bed that sounds like everyone else's jingle.

Your jingle will serve a very specific reason and produce a very specific result. Have you guessed how much we love jingles yet?

Who owns the copyrights?

Wizard of Ads® for Contractors owns your copyright for two very specific reasons. We also provide a fair use clause in all contracts to ensure you are in no way limited to the access of your creative works, whether you are working with us or not.

The first reason we own your copyright is to ensure that we do not have to go up against our own creative works in other markets we serve. This means you are not allowed to lend, give, borrow, tweak, rent, lease, or sell your creative works to any other company at any time.

The second reason we own your copyright is that we can establish a one-time value for your creative works in the event that someone steals the content. Upon selling you the copyrights, you can go after the perpetrator for theft and make a considerable bounty in a slam dunk case.

Here is how Wizard of Ads® word the fair use of your copyright for as long as your business is in operation:

All writing and/or marketing materials we create for you are not works-for-hire. Wizard of Ads® for Contractors hereby irrevocably grants you, and your successors in interest, the non-exclusive, royalty-free, non-transferable, and worldwide right to use the Works in connection with the marketing of your business pursuant to the Marketing Strategy for so long as your business is operational.
How do I measure brand results?

There are a number of interesting ways to measure results. Some people like to get unique identifying telephone numbers, or create branded URLs that redirect to landing pages or the website. However, much of this is a waste of time and energy as it never tells the true story of the brand journey and how it affected the decision-making process.

Other indicators of brand effectiveness include tracking new customers, reactivated customers, or running a brand equity survey to get a sense of your share of mind. Digitally you will see direct search increase, which cannot be affected by anything digital, as well as branded keyword inquiries increase. You’ll, of course, need to get your digital people to add these to your campaigns if you hope to see an increase in conversions.

Wizard of Ads® for Contractors tracks the simplest of indicators. Top line revenue. When your branding takes effect, and the company responds in kind from the phone call or form fill-on, top-line revenue will increase. Efficacy is plotted on a T12, and total lead volume from all sources is tracked.

12 things you should know before signing up.
  1. Quality relationships take time. Branding is a long-term strategy. That’s why most contractors do it wrong, or not at all. There is always a lag between the start of the new campaign and the time it takes your customers to connect the dots. You MUST BE READY, WILLING, AND ABLE to endure this lag period. In our experience, the lag is typically 6 to 9 months, depending on how competitive the marketplace is, your company’s reputation, your budget in relation to reach, and the eight uncontrollable environmental factors. During this time, we will be helping you implement a transition plan to ease the pain. The good news is that this lag only happens once.
  2. Decisions by Committee. We completely reject the notion of decisions by committee. We work with a single, courageous decision-maker. We welcome decision influencers, but we only look to the Owner for the final decision. All decision-makers and influencers must be involved in the Uncovery and Marketing Strategy Presentation if they want to offer input in the future. It is critical that we have a 100% fully approved plan that can be defended and championed by all leaders in the organization.  
  3. Proven Strategy. That means we are not the low-cost provider. With nearly 200 home service clients and a book of strategic devices, tools, and tactics, this isn’t a guessing game for us. We know what to do to make your externally triggered grudge purchase appealing to your potential buyers. If you can deliver the goods, we can continue building relationships. If you are uncomfortable with the idea that you are paying us less now so that you can pay us considerably more once revenues allow, please do not commit. We intend to be your true partners, in sickness and in health...so long as you own your business.
  4. Automatic Payments. Everything is on automatic payments. If you struggle with managing cash flow, figure that out in your business first. We accept all major credit cards and ACH payments.
  5. We Cause Problems. If you don’t have a capacity issue now, I promise you will in about 9 months. Let’s deal with recruitment out of the gate as part of your comprehensive marketing strategy.
  6. We Own the Copyrights. All writing and/or marketing materials we create for you are not works-for-hire. We irrevocably grant you, and your successors in interest, the non-exclusive, royalty-free, non-transferable, and worldwide right to use the Works in connection with the marketing of your business pursuant to the Marketing Strategy for so long as your business is operational.
  7. Brand Building. We will be steering you to limit the use of discounts, rebates, coupons, and sales to attract clients. We know this feels counterintuitive to many, and we will clarify our reasoning. Rest assured, we have considerable experience in creating similar offers that are not damaging to your profitability, your brand’s integrity, and your preferable long-term client relations.
  8. Creative Authority. We must have creative authority over the words. You can accept copy as written or reject it outright, but you cannot modify the words yourself. If you do not like something as written, we are happy to discuss it and make the necessary change to maintain the integrity and intention of the words chosen. Alternatively, we will scrap the concept and create new copy that you are happy to get behind 100%.
  9. Proprietary Algorithm. The media buy must be structured in a very specific way, including running a full 52-week schedule. It is based on brain chemistry, not P&Ls. Once we have committed to the buy, it’s important to avoid adjustments unless they are calculated additions.
  10. Knucklehead Factor. You should expect knuckleheads. For example, when you start running ads that are certain to get attention, you need the courage to continue running those ads, even when you receive complaints. We celebrate complaints. It means we’ve made people feel.
  11. Digital Weasels. In about three months from the time your advertising campaign hits the airways, your digital marketers will show you a marked increase in direct and organic traffic. Some Digital Marketers will mistakenly claim this success as their own. Done properly, you can continue to spend less and less on digital lead generation by increasing your branded keyword online presence.
  12. Annual Marketing Meetings. Travel permitting, we prefer to hold Annual Marketing Meetings (AMMs) outside your city. Years of experience have taught us that we get better results when decision-makers are outside their sphere of influence, away from the day-to-day distractions of the office.

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