- Transactional Marketing or Relationship Marketing, which is better for your business?
- What is Transactional Marketing?
- What is Relationship Marketing?
- Key Differences between Transactional and Relationship Marketing
- Advantages and Disadvantages of Transactional Marketing
- Advantages of Transactional Marketing
- Disadvantages of Transactional Marketing
- Advantages and Disadvantages of Relationship Marketing
Transactional Marketing or Relationship Marketing, which is better for your business?
We solve it for you here.
What is Transactional Marketing?
The transactional marketing is a strategy focused on making fast and frequent sales, with an emphasis on the quantity over quality of customer interactions. This approach is based on incentivising the consumer through promotions, discounts and other direct sales tactics, seeking to achieve immediate commercial objectives. Unlike relationship marketingWhile transactional marketing focuses on building long-term relationships, transactional marketing prioritises short-term sales volume.
One of the key elements of transactional marketing is its reliance on aggressive advertising campaigns and strong promotions that capture the consumer's attention immediately. According to a report by the Direct Marketing Association (DMA), around 62% of consumers respond positively to discount offers and exclusive promotions sent by email, reinforcing the notion that time-sensitive tactics can be highly effective.
Current trends also indicate an increase in the use of automated tools to execute transactional marketing strategies. These tools enable small and medium-sized businesses to manage promotional campaigns with greater precision and efficiency, optimising resources and maximising the reach of their messages. In fact, a survey by MarketingSherpa reveals that the 53% of SMEs use some form of automation in their transactional email marketing strategies.
In short, transactional marketing focuses on maximising short-term sales through direct and sharp tactics, leveraging offers and discounts that accelerate the customer's buying decision. This approach can be particularly beneficial for SMEs looking for a quick boost to their sales figures, although it is essential to balance these tactics with more sustainable long-term relationship strategies to ensure continued healthy business growth.
Do you have doubts about Transactional Marketing?
What is Relationship Marketing?
The relationship marketing is a strategy focused on building and maintaining long-term relationships with customers. Unlike the transactional marketingWhile relationship marketing, which focuses on making individual sales through one-off campaigns, relationship marketing seeks to develop an ongoing, authentic connection with the consumer. According to Gallup research, companies that emphasise strong customer relationships are 23% more likely to succeed.
Relationship marketing uses tools such as email marketingThe goal of relationship marketing is to build mutually satisfying, long-term relationships with key parties to retain their business," says Philip Kotler, one of the world's foremost relationship marketing experts. According to Philip Kotler, one of the most recognised experts in the field, "The goal of relationship marketing is to build mutually satisfying, long-term relationships with key parties that allow you to retain their business".
For many small entrepreneurs interested in the email marketingThis strategy can be particularly effective. In a context where resources are limited, focusing efforts on maintaining and strengthening relationships with existing customers is not only more cost-effective, but also enhances the loyalty and the customer lifetime value (CLV). Implementing loyalty programmes, satisfaction surveys and exclusive content are common relationship marketing tactics that can be realised through email marketing campaigns.
Any doubts about Relationship Marketing?
Key Differences between Transactional and Relationship Marketing
If you still have any doubts about the difference between one type of marketing and another, read on!
The transactional marketing focuses on achieving immediate sales, i.e. its main objective is to achieve individual transactions. This approach is based on strategies that promote rapid customer acquisition and product sales. According to the American Marketing Association, small business owners can benefit from transactional marketing through promotions, discounts and special offers that encourage quick purchase.
In contrast, the relationship marketing aims to build long-lasting, trusting relationships with customers. According to Philip Kotler, known as the father of modern marketing, "relationship marketing focuses on building long-term relationships, increasing customer loyalty and ultimately increasing customer lifetime value". This is achieved by personalising communications and constantly delivering value to the customer.
Implementation Strategies
The strategies of transactional marketing often include high-impact tactics such as mass advertising campaigns, temporary promotions and flash sales. According to a McKinsey & Company study, transactional marketing can substantially increase sales in the short term, but is less effective at building customer loyalty. These tactics aim to appeal to a broad spectrum of consumers in a short period of time.
In contrast, the relationship marketing uses strategies aimed at creating personal bonds with customers. This involves the use of newsletters, loyalty programmes, and personalised email marketing. According to Gartner, "80% of a company's future revenue will come from 20% of its existing customers, highlighting the importance of investing in relationship marketing." This approach pursues customer satisfaction through consistent positive experiences and ongoing communication.
Measurement and Evaluation
In the transactional marketingThe main metrics are usually sales volume, number of new acquisitions and immediate ROI. These metrics effectively measure the success of specific campaigns and their impact on short-term profits. For example, a Forrester Research report states that 65% of companies using transactional marketing focus their analysis on weekly and monthly sales metrics.
On the other hand, the relationship marketing is evaluated through metrics that reflect long-term customer loyalty and satisfaction. These metrics include Net Promoter Score (NPS), customer retention rate and Customer Lifetime Value (CLV). According to HubSpot, "companies that prioritise relationship marketing make 60% more profit over time through customer loyalty". This approach allows small business owners to gain a holistic view of the sustainability and growth of their customer relationships.
REMEMBER: Measurement is key to any marketing strategy. Measuring results will allow us to adjust our strategy to changes in the market or demand, correct possible deviations and even optimise sales results. Never neglect measurement!
Advantages and Disadvantages of Transactional Marketing
Advantages of Transactional Marketing
The transactional marketing focuses on one-off transactions, allowing small businesses to measure their return on investment (ROI) more immediately and clearly. One of the biggest advantages of transactional marketing is the ability to generate quick sales and increase revenue in the short term. This can be especially beneficial in email marketing campaigns, where special offers and discounts can quickly convert subscribers into customers.
In addition, transactional marketing allows a easy segmentation and customisation of messages. According to a study by the DMA (Data & Marketing Association), 77% of email marketing ROI comes from segmented and personalised campaigns. This means that small businesses can leverage historical data and purchase behaviour to send relevant and engaging offers to their specific audiences, improving conversion rates.
Another advantage of transactional marketing is the ease of measuring and analysing its effectiveness. Using analytics tools, companies can track opens, clicks and conversions in real time, making it easier to continuously optimise their marketing strategies. This is crucial in a competitive environment where the ability to adjust and improve campaigns quickly can be the difference between success and failure.
Disadvantages of Transactional Marketing
Despite its benefits, the transactional marketing also has a number of disadvantages that small businesses need to consider. One of the main disadvantages is the lack of focus on customer loyalty. By focusing primarily on immediate sales, this approach can neglect the creation of long-term customer relationships, which is essential for business sustainability. Studies indicate that acquiring a new customer can be up to five times more expensive than retaining an existing one, underlining the importance of customer loyalty.
Another significant disadvantage is the possibility of saturating consumers with offers consistent. Repeated exposure to promotional emails can lead to customers feeling overwhelmed or even annoyed, resulting in high rates of unsubscribing or marking emails as spam. This phenomenon, known as "customer fatigue", can diminish the effectiveness of future campaigns.
Finally, transactional marketing lacks the long-term vision that other strategies, such as relationship marketing, offer. By focusing on immediate transactions, the opportunity to build a strong and trusted brand can be lost. Marketing experts suggest that small businesses balance transactional strategies with relational approaches to achieve long-term success. According to Philip Kotler, considered the father of modern marketing, "The key to success is to create and maintain lasting relationships with customers".
Advantages and Disadvantages of Relationship Marketing
Advantages of Relationship Marketing
Relationship marketing offers a number of key benefits for small businesses looking to build long-term relationships with their customers. One of the main benefits is the customer loyalty. According to a Bain & Company study, loyal customers are 50% more likely to try new products and spend 33% more than new customers. In addition, relationship marketing enables a effective personalisation of email marketing campaignsresulting in significantly higher open and click-through rates.
Another advantage is the reduced cost of customer acquisition. According to Forrester Research, acquiring a new customer can be up to five times more expensive than retaining an existing one. By focusing on maintaining strong relationships, companies can reduce their marketing expenses. In addition, relationship marketing fosters positive word of mouthThe branding of the brand is a key factor in the success of the campaign, as satisfied customers are more likely to recommend the brand to others, amplifying the reach without additional costs.
Disadvantages of Relationship Marketing
Despite its many advantages, relationship marketing also has challenges that small businesses need to consider. One of the main drawbacks is the time and resources needed to implement effective strategies. Building and maintaining strong customer relationships requires an ongoing investment in time and effort, which can be a challenge for companies with limited resources.
Another negative aspect is the difficulty in measuring ROI (Return on Investment) compared to transactional marketing. In relationship marketing, metrics such as customer satisfaction, loyalty and customer lifetime value are more qualitative and less straightforward. According to Gartner, only 33% of companies can accurately calculate the ROI of their relationship campaigns, which can make it difficult to justify investment in these strategies. In addition, relationship marketing may not be ideal for products or services that do not encourage repeat purchases or long-term relationships.
