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Michaela Roytman
Growth Marketing Copywriter @ Yotpo
June 8th, 2022

The Difference Between Transactional and Relational Marketing

Increasing sales of products and services is the goal of all marketing strategies. However, each method differs in its approach.

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Every eCommerce business’ definition of success is the same — the more you sell, the more successful you are. Most marketing strategies take the same factors into account: who is your target audience, and how much time and money are you willing to invest. But marketing strategies are not a one-size-fits-all matter. Different brands have different values and goals.

In this article, we’ll be discussing two very popular but seemingly opposed marketing strategies — transactional vs relational marketing. 

What is transactional marketing?

Transactional marketing is all about selling as many products as possible to as many people as possible. The goal of transactional marketing is to maximize sales by continuously appealing to new customers, rather than encouraging repeat purchases from the same customer as in relationship marketing.

What is relational marketing? 

Relational marketing is a marketing strategy that puts an emphasis on building long-term relationships with customers and repeat purchases. As the name suggests, relational marketing revolves around building meaningful relationships and investing in recurring revenue instead of one-off sales.

The benefits of transactional marketing 

In transactional marketing, the focus is not on building strong relationships with customers, but rather on making the next sale.

Transactional marketing has three distinct advantages: 

  1. Revenue boost. Transactional marketing is all about making that sale, so the most important benefit is revenue from new shoppers.
  2. Inventory turnover. Managing inventory can be pricey and hard work. Transactional marketing aims to get as many products flying off the shelves as quickly as possible.
  3. Lower costs. Since the main goal is sales, transactional marketing campaigns are less expensive. They can run for shorter periods of time and the targeting is meant to attract as many customers as possible.

The benefits of relational marketing 

Since relational marketing revolves around building strong relationships with customers, it  has a lot of unique benefits, both in terms of revenue and customer satisfaction.

Key advantages of relational marketing: 

  1. High ROI. Acquisition costs are always on the rise, and it’s cheaper to retain your current customers than it is to attract new ones all the time. The more you invest in your current customers the more likely they are to come back again to purchase more and more products from you. In fact, brands have up to a 70% chance of converting existing customers.
  2. Increase in brand awareness. Investing in your customers makes them even more likely to spread the good word for you. They’re likely to talk about your brand on their socials and to their friends and family. With the right campaign, you can even get customers to leave feedback and reviews on your own socials.   
  3. Higher customer satisfaction. Relating to the last point, when customers leave feedback you can learn from it. Loyal customers are more likely to leave you feedback, which can teach you so much about your customer base, their likes and dislikes, and what they’re expecting from you. It’s easier to satisfy your customers when you know what they want, and it’s easier to know what they want when they communicate with you.
  4. Brand loyalty and repeat purchases. If customers like your products and enjoy the interaction you have with them, they are far more likely to stay loyal to your brand and come back to shop time and time again.

Transactional vs relational marketing

So when it comes down to it, which marketing strategy is better? How do we compare them? As it turns out, the answer is not that simple. 

We understand that no business can exist without a transactional marketing strategy. The ultimate goal is always to sell more, and while it’s true that customer acquisition costs (CAC) are on the rise, you can never plan a successful marketing strategy without it. However, relational marketing is a goldmine of LTV and ROI that can not be overlooked.

Building a solid relationship with your customers is a surefire way to get them to repurchase your products, engage with your campaigns, and even become brand advocates. In fact, nearly 60% of loyal customers would wait until their products are back in stock in their favorite brands over shopping somewhere else. 

There are several ways brands can build those influential relationships with customers. The first and most obvious one: loyalty programs. An incredible 83% of global consumers say that belonging to a loyalty program influences their decision to buy again from a brand. And over half of them are willing to wait for their favorite products to be back in stock before buying them from a different brand.  

For example, after Revolution Beauty launched a loyalty program called RevRewards, they saw a +378% increase in lifetime revenue per member and +44% in average order value. These incredible numbers are only possible when a brand truly invests in their relationship with customers. 

Another way brands can build long-lasting relationships are through product subscriptions. The eCommerce landscape is changing and subscriptions are becoming more and more popular. In fact, according to Shopify, by 2025, 75% of all D2C brands will offer subscriptions. Customers nowadays are looking for the ultimate convenience, and subscriptions allow them that. By making a single purchase that keeps reappearing at their doorstep at a time chosen by them, shoppers get to forget about stocking up and have the bonus of being excited to see the new package. 

But subscriptions are not only convenient for the customer — they’re also convenient for the brand. Having a subscription offering allows brands to not only keep in touch with customers at regular intervals, but it’s also a steady stream of recurring revenue. For example, after implementing subscriptions, Till You Collapse saw a 3x subscriber growth in 3 days.

What strategy should your brand choose? 

There is no absolute winner here. And transactional marketing should always be a part of your overall marketing strategy. 

However, more and more customers are looking to connect with brands, and they’re looking to buy from a brand they like and believe in. This is why relational marketing and customer retention are taking center stage. It’s time to think about giving your customers what they want so you can benefit from that extra mile they’re willing to go for their favorite brands. 

 

If you’re interested in subscriptions click here to download for free, or click here to schedule a demo for loyalty. 

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