What is Transactional Marketing and How to Use it to Grow Your Brand


Today, almost every single company, and certainly every single successful company utilizes a variety of marketing techniques and marketing channels to spread brand awareness and entice customers to buy their products. 


Marketing channels can be understood as the different mediums or platforms through which you market your products and your brand to potential or existing customers such as marketing through desktop, mobile, voice search technology, or physical advertisements, on the one hand, and social media marketing, email marketing, inbound marketing, content marketing, etc., on the other hand.   


Marketing techniques, however, can be best understood as the concrete methods of marketing you employ through these channels, such as personalization in your email marketing, for example, or the employment of eCommerce integrations to better segment your audience in your social media marketing. For techniques understood in this way, the examples are endless. 


There is, however, a broader definition of techniques that might be better understood as guiding philosophies in marketing, and this is the plane upon which the debate between transactional marketing versus relationship marketing has taken place for many years. But what is transactional marketing? In this article, we will not attempt to decide the debate between transactional marketing and relationship marketing but will mention relationship marketing only as we define transactional marketing in opposition to it. Then, we will talk about the pros and cons of transactional marketing and elaborate on some ways that you can use transactional marketing to grow your brand.

Transactional Marketing Seller's Choice


What Is Transactional Marketing? 

While all marketing focuses on the acquisition of new clients and increasing profits, transactional marketing and relationship marketing take different views on the role of the businesses’ interactions with a client or potential customer. 


If there was a single motto for transactional marketing, it would be that “a high-quality product will speak for itself.” There is a single objective for transactional marketing, and that is to make a sale. For this type of marketing, it is typical to focus on sales promotion and to endeavor attracting more and more new customers rather than retaining customers or creating repeat customers. Therefore, transactional marketing is characteristically oriented towards the short-term, with the focus of resources generally shifted away from things like customer service and rather placed on things like creating more points of sale. Overall, the customer is not viewed as someone to develop a relationship with, but rather as a means to create the most amount of immediate sales. 


So what are the differences between transactional marketing and what is typically considered transactional marketing’s alternative, relationship marketing?


"There is a clear reason that the product comes first for any business  employing a transactional marketing strategy: the product, not yourbrand or the  user experience, becomes the selling point."  -Click to Tweet-


According to the marketing researcher, Robert Palmatier, “the main goal of a proper relationship marketing strategy is to increase customer’s desire for the unique characteristics found in the relationship-based exchange.” Relationship marketing is all about forming long-term relationships with customers. Rather than trying to encourage a one-time sale, relationship marketing tries to foster customer loyalty by providing exemplary products and services. Relationship marketing generally involves a company refining the way they do business in order to maximize the value of that relationship for the customer. Therefore, much of relationship marketing is focused on the improvement of internal operations so that companies are able to provide things like excellent customer service which keeps a customer wanting to come back for more. 


In today's marketing world, one might wonder why a business would employ transaction marketing over relationship marketing. There are countless statistics showing that customer service and its goals, customer retention and customer loyalty, are essential components of successful businesses, at least in the long term. For example, Estaban Kolsky’s research indicates that it is 6 to 7 times more expensive to gain a new customer than to retain an old customer. Another study by McKinsey and Company indicates that up to 70% of buying experiences are significantly influenced by how the customer feels that they are being treated. Finally, relationship marketing seems to tap into the strength of word of mouth marketing where transactional marketing likely would not, with studies showing that 62% of customers will share their bad experiences with others and 72% of customers will share their good experiences with others. Product Boxes Seller's Choice

Firstly, it should be noted that transaction-oriented marketing does not preclude a business employing relationship marketing strategies at the same time. Of course, many businesses face limited resources and must choose to focus their resources more on one approach rather than another. But there are in fact many reasons why a business may focus its resources on transaction marketing strategies. 


The reasoning behind transaction marketing strategies is the thought that an immediate increase in sales is more valuable than a longer-term strategy that incorporates factors like customer loyalty. This, however, should not be confused with the statement that an immediate increase in sales is more valuable than, for example, customer retention and customer loyalty, for all times, businesses, and situations. Although there are certainly those who believe this, it is also possible to view transactional marketing strategies as short-term measures, where the temporary application of transaction-oriented marketing ignores the customer-relationship building parts of the business for the time being, in order to establish a larger and more profitable customer base. Moreover, it might be thought that an immediate growth in sales results in more revenue to spend and the possibility for expansion or the investment in more far-reaching or diverse marketing methods down the road. The idea is to get people in and get merchandise sold so the business turns a profit and your brand grows first and foremost.


Transactional Marketing Strategies 

Okay, so we have answered the question “what is transactional marketing?” as a marketing philosophy, and now it is time to get more concrete with some real ways that you can employ transactional marketing to grow your brand.


According to the late marketing specialist Jerome McCarthy, there are four essential components that go into the mix of any transactional marketing strategy: 


1) Product

2) Price

3) Promotion 

4) Placement 


It is through this structure of what McCarthy calls “Transactional Marketing’s Marketing Mix” that we will talk about transactional marketing strategies.


1. The Product 

There is a clear reason that the product comes first for any business employing a transactional marketing strategy: the product, not your brand or the user experience, becomes the selling point. Whereas companies that employ relationship marketing strategies may be able to make up for a lack of product quality or an increased amount of product or service problems through stellar customer service and overall great customer experience in every other area, businesses that are taking a more transactional marketing style approach depend almost entirely on an extremely high quality product as their selling point. 


Just think about it: if you do not have great customer service infrastructure, you are not going to want to provide a product that requires customers to frequently seek customer service help. This only risks further frustrating customers. A faulty product can occasionally be forgiven through a great customer service experience. But a faulty product and non-stellar customer service can only create bad word of mouth and give your brand a bad reputation.


Omnichannel Marketing Seller's Choice


2. The Price 

Determining the right price for your products is absolutely essential for any business, but it is particularly important to companies that are primarily employing the transactional marketing approach. Often, this approach depends on making sure that your product's price is better than what the competition is offering. Whereas relationship marketing works on creating repeat customers and developing customer loyalty, transactional marketing is all about finding new customers, and there is nothing more attractive to a new customer without brand loyalties than a great price point. 


For the purpose of pricing your products in the most beneficial way, it can be very useful to make use of pricing strategy software, which is becoming increasingly popular with all businesses.


3. The Promotions 

The promotions for transactional marketing are all about grabbing that customer's attention and drawing them to your product. Transactional marketing focuses on digital-to-in-person conversions through the use of call-to-action methods such as coupons, referral programs, offers and mobile lead generation where action is the key factor. 


In trying to get that new customer, you will want to use all of the data at your disposal to target consumers with personalized ads and promotions with great deals to quickly convert them into customers. 


There are, of course, countless ways that you can employ this strategy over many of the different marketing channels that we discussed at the beginning of the article, but for each channel, the point remains the same: competitive deals and promotions, personalized content, flawless and attention-grabbing product imagery, and often a created sense of urgency will be what is essential to creating as many new customers as possible.


4. The Placement 

One of the greatest priorities for any business employing transactional marketing methods is to make their product as easily reached by the consumer as possible. This often means increasing the points of sale available. The more opportunities there are for the consumer to buy your product, and the easier and more seamless the buying experience is,  the more consumers will be likely to buy your product. Anything that increases the number of ways a consumer can buy your product or reduces the effort required to make that purchase, is a viable transaction-oriented marketing method. 


In order to achieve these goals, many businesses are now switching from multi-channel selling to omnichannel selling in an effort to make the buying experience as seamless as possible. 


Wrapping Up

In this article, we have defined both transactional marketing and relationship marketing and talked about some of the ways you can successfully use transactional marketing as a marketing strategy for your business. However, it is important for any business to consider what their reasons for taking a certain marketing approach are. The transactional marketing approach may not be for everyone, but for those who choose to use it, paying attention to the points made in this article will undoubtedly be beneficial to your marketing success. 

e-commerce tech stack ebook



Gain access to our exclusive list of top rated events for e-commerce sellers


Get E-Commerce News Right To Your FB Inbox!