Transactional and Relational Redux

The recent MMMemo, 2003: Year of the Internet's Bar Mitzvah, merged with last week's memo about Boomers and Xers, can be combined with the following Transactional/Relational shopping-style analysis to give you a revealing glimpse into the future of marketing in North America.

Every person has a transactional mode and a relational mode of shopping. And “the right thing to say” can be determined only when you know which mode the shopper is in:

  1. Transactional shoppers are focused only on today's transaction and give little thought to the possibility of future purchases.

  2. Their only fear is of paying more than they had to pay. Transactional shoppers are looking for price and value.

  3. They enjoy the process of comparing and negotiating and will likely shop at several stores before making their decision to purchase.

  4. Transactional shoppers do their own research so they won't need the help of an expert. Consumer Reports are published primarily for the transactional shopper.

  5. Because they enjoy the process, transactional shoppers don't consider their time spent shopping to be part of the purchase price.

  6. Anxious to share the “good deal” they've found, transactional shoppers are excellent sources of word-of-mouth advertising.

     

  1. Relational shoppers consider today's transaction to be one in a long series of many future purchases. They are looking less for a product than for a store in which to buy it.

  2. Their only fear is of making a poor choice. Relational shoppers will purchase as soon as they have confidence. Will your store and your staff give them this confidence they seek?

  3. They don't enjoy the process of shopping and negotiating.

  4. Relational shoppers are looking principally for an expert they can trust.

  5. They consider their time to be part of the purchase price.

  6. Confident that they have found “the right place to buy,” relational shoppers are very likely to become repeat customers.

As was stated earlier, every person has a transactional mode and a relational mode of shopping, so don't be surprised when you see yourself in both descriptions. You, like all other shoppers, are extremely transactional in certain product and service categories and wholly relational in others. At any given time and in any given category, about one half of all shoppers will be in transactional mode and the other half wil be in relational mode. I can't fully prove this assertion, but I'm sure that someday it will be.

Due to the fact that shoppers in transactional mode will shop all over town and love to negotiate, merchants often wrongfully conclude that most shoppers stay in transactional mode. But in truth, more purchases are quietly made by customers in relational mode.

Here's a simple illustration: Two transactional shoppers go to 5 stores each before making their decisions to purchase. At each of these 5 stores they ask a lot of questions, then leave. But each transactional shopper will return to only one store to make a purchase. This means that a total of 12 store visits will be made by the transactional duo, and 8 different salespeople will be frustrated by them. Meanwhile, 3 relational customers visit their favorite stores, make their purchases and return home, accounting for a total of 3 store visits, 3 purchases, and zero frustrated salespeople. The 2 transactional shoppers account for 80% of all store visits, but only 40% of sales. Conversely, the 3 relational shoppers account for just 20% of total store traffic, but contribute a whopping 60% of the sales volume.

Bottom line: There is no “perfect ad.” The right thing to say to a relational shopper is the wrong thing to say to a transactional one. The secret to attracting and keeping happy customers is to communicate the truth about who and what you really are. Remember, you're not a 100 dollar bill. Not everyone is going to like you.

Is your company transactional or relational? Changing your ads so that they speak to a different shopper is easy. But changing the essence of your customer's experience (selection, prices, sales staff) is not.

Roy H. Williams

PS  BOOK ALERT: Today is the release date for Bringing Out the Best in Others, the new book from Dr. Thomas Connellan in which he shares the 3 Keys that all great leaders have in common. If you want to stimulate those around you to peak performance, day after day, this is the book you'll definitely want to read.  Roy H. Williams