"If you want to catch a trout, don't fish in a herring barrel."
-- Ann Landers

The Transactional vs Relational Customer.

Business owners in the USA want to catch that wonderful but elusive, relational customer; the one that comes in and buys what they want quietly, with no fuss, and are happy doing business with you. They often come back again and again. But it seems like the business’s advertising lures in way too many people that are “just looking” and are shopping for the lowest price.

The Relational Customer and the Transactional (taken from the Meyers-Briggs personality profile test) was explained so very well at my seminar in Austin last week: Marketing on a Shoestring Budget. Roy Williams came in to welcome the class and introduce the speakers (myself and my good friend and Wizard Partner Mike Dandridge). Roy gave a PowerPoint presentation we have called: The Transactional vs Relational Customer.

He basically said the same thing Ann Landers said in the quote above. The business owners want to catch that Relational Customer but that darned, cantankerous, ole price shopping Transactional customer keeps coming in because 90% of retail ad dollars spent in America are used in a way to lure in that person looking for the lowest price. See below Roy’s Monday Morning Memo from February 10th 2003. Every person has a transactional mode and a relational mode of shopping. And "the right thing to say" can be determined only when you know which mode the shopper is in:

1. Transactional shoppers are focused only on today's transaction and give little thought to the possibility of future purchases.
2. Their only fear is of paying more than they had to pay. Transactional shoppers are looking for price and value.
3. They enjoy the process of comparing and negotiating and will likely shop at several stores before making their decision to purchase.
4. Transactional shoppers do their own research so they won't need the help of an expert. Consumer Reports are published primarily for the transactional shopper.
5. Because they enjoy the process, transactional shoppers don't consider their time spent shopping to be part of the purchase price.
6. Anxious to share the "good deal" they've found, transactional shoppers are excellent sources of word-of-mouth advertising.

1. Relational shoppers consider today's transaction to be one in a long series of many future purchases. They are looking less for a product than for a store in which to buy it.
2. Their only fear is of making a poor choice. Relational shoppers will purchase as soon as they have confidence. Will your store and your staff give them this confidence they seek?
3. They don't enjoy the process of shopping and negotiating.
4. Relational shoppers are looking principally for an expert they can trust.
5. They consider their time to be part of the purchase price.
6. Confident that they have found "the right place to buy," relational shoppers are very likely to become repeat customers.

As was stated earlier, every person has a transactional mode and a relational mode of shopping, so don't be surprised when you see yourself in both descriptions. You, like all other shoppers, are extremely transactional in certain product and service categories and wholly relational in others. At any given time and in any given category, about one half of all shoppers will be in transactional mode and the other half will be in relational mode. I can't fully prove this assertion, but I'm sure that someday it will be.

Due to the fact that shoppers in transactional mode will shop all over town and love to negotiate, merchants often wrongfully conclude that most shoppers stay in transactional mode. But in truth, more purchases are quietly made by customers in relational mode.

Here's a simple illustration: Two transactional shoppers go to 5 stores each before making their decisions to purchase. At each of these 5 stores they ask a lot of questions, then leave. But each transactional shopper will return to only one store to make a purchase. This means that a total of 12 store visits will be made by the transactional duo, and 8 different salespeople will be frustrated by them. Meanwhile, 3 relational customers visit their favorite stores, make their purchases and return home, accounting for a total of 3 store visits, 3 purchases, and zero frustrated salespeople. The 2 transactional shoppers account for 80% of all store visits, but only 40% of sales. Conversely, the 3 relational shoppers account for just 20% of total store traffic, but contribute a whopping 60% of the sales volume.

Bottom line: There is no "perfect ad." The right thing to say to a relational shopper is the wrong thing to say to a transactional one. The secret to attracting and keeping happy customers is to communicate the truth about who and what you really are. Remember, you're not a 100 dollar bill. Not everyone is going to like you.

Is your company transactional or relational? Changing your ads so that they speak to a different shopper is easy. But changing the essence of your customer's experience (selection, prices, sales staff) is not.

Roy H. Williams

Would you like to have a Wizard of Ads Partner come to your town and give the 30 minute presentation: The Relational Customer and the Transactional customer?
Just contact me and I will arrange that for you.

Perhaps now would be a good time to have a complimentary meeting with a Wizard of Ads Partner. Links to their websites and blogs are listed down the right side of The Wizard Times. Hundreds of their articles with free insightful advice can been seen at www.americansmallbusiness.com 2010 would be a great year to attend a class at the Wizard Academy 21st Century Business School in Austin Texas. What is the Wizard Academy?

See you next week.

Clay Campbell
Wizard of Ads

PS. Need help to attract more customers and grow your business?