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Key differences between transactional and relationship marketing

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 wants to market its goods and services depends on whether it wants to make a sale fast 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.

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.

Transactional vs. relationship marketing comparison chart

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.

While transactional marketing is focused on short-term communications, relationship marketing focuses on the long-term benefits of building relationships and brand loyalty.

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:

  • provide noteworthy customer service;
  • increase customer engagement by interacting with customers through social media and regularly responding to posts;
  • conduct customer feedback surveys, polls and phone calls to show customers the business values their opinions;
  • launch customer loyalty programs; and
  • offer discounts or bonuses to repeat customers.

Transactional vs. relationship marketing

While 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:

  1. Transactional marketing uses mass marketing and promotion to make sales, while relationship marketing uses personalized marketing and builds customer relationships to make sales.
  2. While transactional marketing is focused on short-term communications, relationship marketing focuses on the long-term benefits of building relationships and brand loyalty.
  3. Customer interaction is minimal in transactional marketing and does not occur beyond the sale. Relationship marketing, on the other hand, pushes for communication with customers via surveys, polls, phone calls, text messaging and social media interactions.
  4. While transactional marketing uses promotional strategies such as BOGO offers or discounts to make one-time sales, relationship marketing uses loyalty programs and reward systems to encourage customers to return.

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