So, what is the difference between relationship-based marketing (RBM) and transaction-based marketing (TBM)? Simply put, RBM emphasizes high commitment to customer satisfaction and contemplates a long-term relationship with a client that fosters their loyalty. By contrast, TBM has a narrower focus on completing sales with a broad audience, with less thought put into customer retention.
Relationship-based marketing: In RBM, marketing is part of an effort to foster a partnership with clients. This approach relies on high quality products, committed customer service and high loyalty from the brand to the customer. These factors can combine to create an overall high-quality customer experience and long-term relationship.
Transaction-based marketing: In contrast, TBM is more myopically focused on driving transactions. It can reduce the customer experience to being primarily concerned with price. TBM often does not involve much strategy to retain clients or increase the value of the interaction beyond a competitive price. Additionally, TBM operates on a much shorter time scale than the long-term relationships contemplated with RBM. The aim of TBM is simply to make a sale.
As you can see, RBM is an extensive, long-term strategy with the focus on building close relationships with your customers. The rationale is that the longer you have a customer, the more profitable they tend to become. For companies and professionals who are looking for repeat transactions or depend heavily on referrals, RBM is a worthy approach. It can also be an effective use of marketing dollars compared to TBM, since it is less expensive to obtain repeat sales rather than sales from new customers. It’s a critical strategy for businesses large and small, like ours.
What type of approach makes sense for your business? How have you thought about implementing relationship-based marketing in your business?