Transactional vs Relational Customers

One is more profitable. One is more needy. Both are important to the overall success of a business.  Understanding how to identify each type and how to turn transactional customers, when possible, into relational can be a huge boost to your business.

Every business has basically two types of customer profiles: 

1.) Transactional Customers
       – Only care about price
       – Have no brand or business loyalty
       – Demand more, but pay less
       – Consider themselves buying experts
       – Often return merchandise or complain about service when they discover the “cheapest” solution was not the best solution.

Warning:
Don’t confuse “traffic” with sales.  Because transactional customers contact you so often per purchase, their “traffic” can cause you to think the majority of your customers care only about price. Seldom is this the case. 

 2.) Relational Customers
       – Want a salesperson or expert they can trust
       – Need help and advice
       – Are more loyal to brands and businesses
       – Are less demanding and more profitable
       – Become repeat customers

Relational customers make fewer visits per purchase than transactional customers but generally account for a minimum of 50% of sales and more than 70% of profits.

The Bottom Line

We attract the kind of customers, relational or transactional, by design. If you would like to design a more profitable business and attract more relational customers, click here to see our Profitable Customer Marketing Checklist.

What I just shared with you arrived in a few hundred peoples email this morning. It’s this weeks edition of my Sound ADvice newsletter and you can have it delivered to your inbox too by filling out the info in the Sound ADvice newsletter box below.

Let me take a moment add a few more insights.  

All of us have a little bit of transactional and relational buying habits in us as consumers.  All depends on the item or service we are considering spending money on as to what our priorities are.  The problem I see that too many businesses don’t understand is that they think price is a higher priority than trust when we are spending money.

Several years ago, I was doing a Customer Needs Analysis with a HVAC dealer and he was talking about their quality and experience and all these great things that were relational.  But his marketing was focused on offering discounts and I asked him if he liked giving away money.  He was a little insulted until I challenged him to market his company the way he talked to me.  He was afraid to because his competition advertised price discounts and he was playing follow the leader.

I talked to another HVAC dealer and got them to minimize the discounts in their marketing and focus on trust and expertise. They took my advice and saw their sales double over time.

Want help figuring out how to market your business and you are in northeast Indiana?  Contact me.  I’ve been doing this successfully for years and am currently the General Sales Manager of WOWO radio.  My team and I will be glad to help.  Scott@WOWO.com is my email.