Marketing activities generally stress on acquiring customers, generating sales and achieving the highest possible profits. Transactional marketing and relationship marketing are two different marketing strategies as they have different views on the part played by the customer. The transactional strategy considers customers as a means of achieving sales, with the objective being gaining the maximum possible sales. However, relationship marketing focuses on developing a relationship with the customer. Its objective is to develop long-lasting ties with customers so as to ensure sales in the long run.

In this article, we will discuss the two approaches in detail and explain how they are different from one another.

Definitions and explanations

Transactional marketing

This type of marketing has a single focus, i.e. generating a sale by converting a prospective customer into an actual customer. Though this brings about a rapid increase in revenue, the transactions are short-term in nature. Rather than generating loyalty of the customer, this kind of marketing strategy concentrates on generating large one-time sales that the customer may not repeat in the future.

Transactional marketing comprises of the 4Ps of marketing, i.e. the product, placement, price and promotion. It aims to offer a product of exceptional quality at a competitive price to customers. It involves the use of appropriate distributional channels to ensure that the products reach the customers. Finally, it incorporates promotional strategies to make sure that there is suitable visibility of the products so as to bring about sales.

The strategies used in transactional marketing include advertising and promotions that focus on generating immediate sales. Marketers use discounts, buy one get one free offers, buzz words and other incentives to compel the target market to make the sale instantly.

Transactional marketing essentially involves three main elements:

  • Value: To encourage the customers to make the purchase, prospects should be able to view a greater value in a particular brand in comparison to another. For this, discounts may be given, or any other technique may be used to distinguish the product or brand from other competing products or brands in the market.
  • Scarcity: Potential customers should feel that they need to make the purchase immediately so that they acquire the benefits being offered by the product/service.
  • Reputation: Potential customer should be of the view that the product/service will bring about some form of improvement in their lives, which is only possible when brand reputation has been established. This is created by means of advertisements, customer reviews and other sources of information.

In transactional marketing, time is always running short and it is important to sell the highest possible products in a short span of time to anyone who is willing to make a sale. There is no time to develop a relationship with customers.

Relationship marketing

Relationship marketing is different from transactional marketing in that its gives preference to developing a connection with customers instead of generating instant sales. It has wider, more long-term objectives as it seeks to form long-term relationships with customers to ensure that they are able to make repeated sales even in the future.

Relationship marketing is based on the presumption that retaining existing customers is less costly as compared to attracting and acquiring new customers; hence, when effective relationships are developed with the existing customers, there will be an increase in the company’s profitability. Therefore, the focus of relationship marketing is on comprehending the needs and requirements of customers. It is aimed at developing customer loyalty, which is required to achieve profitable sales in the future

The present-day consumer is very demanding, and hence, it is important to have a focused strategy when dealing with them, which is what relationship marketing seeks to provide. It tries to offer a customized service to customers so as to develop customer satisfaction and long-term engagement of the customer.

In this regard, two-way communication between the company and the customer is critical. An important part can be played by the Internet, social media and also word of mouth and reviews from existing customers in developing stronger relationships with customers.

Difference between transactional marketing and relationship marketing

Some key points of difference between transactional marketing and relationship marketing are listed below:

1. Meaning

Transactional marketing is a strategy that focuses on generating maximum possible sales through mass marketing and promotional activities. On the other hand, relationship marketing is the strategy used to develop relationship with customers in the long run by developing customer loyalty and offer good quality goods and services.

2. Objective

The objective of transactional marketing is to bring about a sale, while relationship marketing has the objective of developing strong ties with the customer.

3. Duration

The focus of transactional marketing is on achieving short-term benefits, which is making a sale immediately. However, relationship marketing focuses on developing customer loyalty and long-term relationships with customers. Hence, it tries to achieve benefits in the long-run by ensuring that customers make recurring purchases with the company even in the future.

4. Interaction with customers

There is very little or no interaction or communication with customers in transactional marketing. However, a significant degree of communication and interaction is carried out with customers in relationship marketing.

5. Relationship with customers

In transactional marketing, the relationship with customers is short and discontinuous, while it is long-lasting and powerful in relationship marketing.

6. Aim

The aim of transactional marketing is to get the order or make the sale, while aim of relationship marketing is to become the only or the preferred supplier in the market.

7. Promotional strategies

The promotional strategies employed in transactional marketing are discounts and incentives like buy one get one free offers, sales etc. In contrast, relationship marketing employs loyalty programs, very good customer service and reward system.

Transactional marketing vs relationship marketing – tabular comparison

A comparison of transactional marketing and relationship marketing in tabular form is given below:

Transactional marketing vs Relationship marketing
The marketing strategy used to generate the highest possible sales in the shortest possible time The marketing strategy used to establish long-term relationships with customers
Generate sales Develop a connection with the customer
Short-term Long-term
Interaction with customers
Limited or no interaction with customers High degree of interaction with customers
Relationship with customers
Short and disruptive Long-lasting
Make a sale Become the first choice company in the market
Promotional strategies
Incentives; discounts Exceptional customer service; loyalty programs

Conclusion – transactional marketing vs relationship marketing

Transactional marketing and relationship marketing are both very important approaches to marketing that companies can use to increase the customer base and generate profits. Though both approaches should be used alongside one another, relationship marketing is more capable of obtaining better results because it helps in retaining customers. This is significant because acquiring new customers is much more costly than retaining them. Hence, companies should try to establish long-term relationships and create customer satisfaction and loyalty to achieve long term profitability.