When To Use Relational Vs. Transactional Selling
Should a salesperson be transactional or relational with their customers?
With all the emphasis on relationship-building and long-term relationships, it seems obvious what the answer should be. But the truth is, transactional selling still gets results, and not all customers even want a relationship-building sales interaction in the first place.
A new study by Professor Autry and colleagues details when you should invest your resources into relational selling and when it might be wiser to sell transactionally.
Why relational selling isn’t always effective
Relational selling is defined as activities that initiate and nurture long-term buyer–seller relationships through a development of mutual trust and value. This long-term relationship is built through frequent contact, information gathering, and collaborative communication.
Transactional selling is defined as activities that emphasize getting the order as the near-term outcome through persuasion strategies like generating buyer interest, overcoming objections, and closing the sale. Transactional salespeople are more focused on generating new business versus maintaining relationships.
Compared to transactional selling, relational selling is riskier because it tends to require more resources, which results in higher costs. Customers might not want a relational sales interaction because the costs on their time may exceed the perceived benefits.
Why customers invest in their relationships with salespeople – and why they don’t
Professor Autry and colleagues found both transactional and relational selling were positively correlated with sales performance.
The researchers studied two factors that influenced whether the customer preferred a relational vs. a transactional selling exchange:
- The product/service’s supply market risk. The harder it is to procure a comparable product/service from its competitors, the more motivated the customer is to invest their resources into developing a cooperative relationship.
- The product/service’s impact on profitability. The more potential profit the product/service will make for the customer, the more motivated the customer is to invest their resources into developing a more cooperative relationship.
When customers prefer relational vs. transactional selling
When the risks of procuring a competing vendor for your product/service are high (e.g., lack of availability), using a relational selling approach is more successful than a transactional one.
Likewise, when the potential profit your product/service can make for the customer is high, customers prefers relational selling over transactional selling.
Should you sell transactionally or relationally? It depends on your customer’s needs and motivations. In general, the more valuable your product/service is to the customer, the more likely they’ll want to pursue a long-term relationship.
Even with today’s emphasis on long-term relationship-building, transactional selling can still be successful. Much like a salesperson has to predict whether the benefits outweigh the costs of investing their resources into developing a long-term relationship with a prospect, a customer has to make a cost-benefit analysis on how much time they should invest in their suppliers.
In today’s complex sales environment, using the right data to adapt your sales approach to give your customers what they really want – and not what you think they want – is the key to success.
Agree? Disagree? Share your thoughts in the comments or tweet @ideal.
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