- Transactional marketing focuses on customer acquisition.
- Relationship marketing focuses on customer retention.
- Relationship marketing is the future of marketing strategy in a world where consumers are constantly trying to fight for self identity and belonging.
In a world where people are craving for self identity and belonging, it is proving extremely crucial for businesses to begin making deliberate steps towards establishing personal relationships with their clientele. This trend has necessitated the reinvention of the marketing strategies for businesses, to accommodate more personalized marketing techniques, to create unique customer experiences, increasing the probability of acquiring and keeping customers. This is what is called in marketing circles relationship marketing.
Before relationship marketing became an industry standard, we first had transactional marketing which is a type of marketing that prioritizes single, “point of sale” transactions. Instead of focusing on forging a relationship with the customer, transactional marketing places emphasis on optimizing individual sales optimized for efficiency and volume. The overwhelming and ongoing need to switch from transactional marketing to relationship marketing is therefore explored in this insight, along with a clear explanation of how the two differ.
Differences between transactional marketing and relationship marketing
As we get started, it’s critical to note that although transactional marketing and relationship marketing share the goal of making a sale, they approach this goal in various ways. One of the key differences between transactional marketing and relationship marketing is that transactional marketing is a marketing strategy that aims to maximize the number of successful sales by constantly attracting new customers, with little to no emphasis on encouraging repeat customers or customer retention. On the other hand, relationship marketing is all about encouraging repeat customers, that is, to retain them. The primary goal of transactional marketing is customer acquisition, while the primary goal of relationship marketing is customer retention.
Secondly, while transactional marketing only emphasizes short-term communications, relationship marketing stresses long-term communication with the goal of encouraging brand loyalty.
The third difference is in terms of their techniques. Transactional marketing capitalizes on one-time sales by using promotional techniques like (Buy One, Get One) BOGO deals or discounts, whereas relationship marketing uses loyalty programs and incentive systems to encourage clients to make recurrent purchases.
Transactional marketing and relationship marketing by Meltwater.
Why relationship marketing is the future of marketing strategy
As the millennial generation begins to constitute more of the market and customer share than past generations, it is becoming increasingly important to make marketing personalized. Researchers have established that for millennials, personalized marketing can help drive loyalty and purchasing decisions. Millennials make up 23% of the global population and have a total population of 1.8 billion, making them the largest adult cohort in history, and are a significant group of customers that define marketing strategies and trends for up to entire industries.
Contrary to transactional marketing, relationship marketing is focused on the relationship with the customer. The goal is to create a relationship that encourages repeat business and customer loyalty. Compared to transactional marketing, this type of marketing takes longer to develop and more work to maintain. Among other things, loyalty programs, social media groups, and improved customer service training are relationship marketing strategies. Marketing teams should consider the following when putting this strategy into practice: What is the customer trying to achieve? Would they consider this useful? Wanting to see this advertisement?
In any case, it is generally more expensive to acquire a new customer than to maintain a customer. Continued relationships mean increased revenues and more profits for the company.
How have you previously understood marketing, and do you think you have been doing something right or wrong?