Relationship-Based Sales vs. Transaction-Based Sales

Relationship vs Transactional Selling

The Difference between Relationship-Based Sales and the Traditional Transaction-Based Sales

Transaction-based sales as a rule, always focuses on maximizing individual sales and profits and not forming a relationship with the consumer or customer. Relationship-based selling on the other hand, seeks to form an interactive and retaining bond between the customer and the company in the long run. Both these sales models differ in several notable ways such as in the core elements that form the basis of the marketing strategy and the consequent impact on return on investment (ROI).

The transaction-based sales model does not take customer retention into precedence and draws its focus on sales with the belief that the product or service will sell by itself. A salesperson that employs this tactic often focuses on the transaction itself, and is eager to close a deal as soon as possible. In the relationship-based model, forming strong ties that is interactive and beneficial towards the customer is the top priority of the company. A salesperson that uses relationship marketing will usually try to get to know their client better before closing a deal. Due to this, studies have shown that ROI rates for companies that use relationship-based selling tend to increase as compared to the ROI rates of transactional sales.

However, building a strong relationship is relatively more costly compared to the transaction-based sales model since a lot of expenses are forked out over dispensing customer subscription services and leaflets. More time must also be invested in the former as compared to transactional selling. Due to this, highly successful companies such as Microsoft and Starbucks have employed a common theme revolving around their customers: to figure out what they want, get them addicted to the products and keep them coming back for more.

Although relationship building has become the epitome of a steady revenue stream, some companies still adopt the transactional-based sales model as a marketing tactic to cut back on additional costs and time. Communicating brand awareness is more direct this way, and human resources can be minimized if less contact is kept with the customer. If strong ties with the customer must be maintained, other human or technological resources will be needed to operate the social media networking hub, which could be slightly costly and not to mention time-consuming.

But if a comparison of the advantages and disadvantages were to be drawn between a transaction-based sales model and a customer relationship model, there are several points of interest to take note of such as:

Relationship Sales Model

Advantage: A strong bond is created between the salesperson and customer, which gives off the feeling of ‘like and trust’ to enable a deal to push through.

Disadvantage: The business might remain stagnant and not move forward, which makes a salesperson an ‘unpaid consultant’ in certain circumstances.

Transactional Sales Model

Advantage: Business deals are smoother and more efficient. This significantly cuts back the amount of time and resources expended whilst making a sale.

Disadvantage: Customers may view this as a tad too pushy or aggressive. Additional information pertaining to the sale might also be missed since the sale occurs too quickly.

Thus, the relationship sales model is more profitable in the long run but is also equally costly and requires technological expertise and additional human resources. The transactional sales model is less profitable with lesser ROI rates in the long run, but is virtually less expensive and does not require more human, financial and information resources.