Relationship Marketing vs Transactions Marketing

Relationship marketing is company focusing on existing customer base and building long lasting relationships with them and merely trying to attract new customers to organization. Assumption here is that customer retaining expenses are lower than expenses on attracting new customers. So that building effective relationships with existing customer base increases the profitability of the organization.

Relationship marketing is one aspect of modern marketing where the traditional aspect of relationship marketing was known as transaction marketing. Transaction marketing where markets build relationships with customers with the focus of performing single sale where the relationship with customers is terminated soon after the sale is made and then focus on attracting more new customers.

The difference between relationship marketing and transactional marketing can be explained as follows:

• Transactions marketing focuses on single transaction/sale where the relationship marketing aims to make more than one sale to the customer through customer retention and building customer loyalty.
• Transactions marketing focuses on short term time scale where they aims to make a little profit on the spot and move on to other customers whereas relationship marketing focuses on longterm time scale with making high profits in long run even though short run cost is high and profits are low.
• Standardized products are sold in transactions marketing as they do not wish to serve the customer in long term basis and retain the customer through customer satisfaction. Relationship marketing offers customized products to retain customers through providing high quality customer service which will eventually build a loyal customer base.
• Transactions marketers do no commit themselves to customer service nor the customer do commit themselves to the firm to purchase goods in the future and they will always shift between competing firms. But relationship markets always commit themselves to serve the customer to retain them in long run and customers also will commit themselves to firm and will not be shifting to competitors.
• Transactional marketing do not encourage high customer contacts where as relationship marketing rely on high customer contacts to identify, anticipate and satisfy customer need and retain them in the long run.
• In transactions marketing quality is seen as a concern/responsibility of the production department which only affects the single sale performed. But in relationships marketing quality is viewed as concern/responsibility of each and everyone in the organization where they commit themselves to avoid mistakes and preserve customer satisfaction in order to build customer loyalty.

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