Man drinking lemonade from boy’s lemonade stand
Imagine this scenario:
In your business or organization, you are the person responsible for sales and marketing activities. It’s the time of year to formulate next year’s plan and determine how much executing it will cost. Will investing in transactional marketing strategies or building relationships with customers yield the best results?
On the one hand, transactional marketing – which focuses on single point-of-purchase sales transactions – can be maximized for transaction efficiency. This means less overhead costs associated with each sale and therefore a higher potential net profit. Transactional sales are appealing to buyers in today’s busy world because they take less time and can happen 24/7.
In contrast, relationship marketing focuses on generating sales by first developing a relationship with the buyer. This means the business must gather and analyze information about each buyer’s needs and wants in order to offer products and services that are useful and relevant. Such an approach takes business resources (time and money), which compromises efficiency. The tradeoff is that a relationship with the buyer can lead to customer loyalty and long term purchasing habits.