Google “transactional marketing” or “relationship marketing” and you’ll get thousands of hits with titles like “relationship marketing vs transaction marketing”. Basically, transactional marketing is thought of as a thing of the past, while relationship marketing is the bright future that businesses should be striving towards.
Transactional Relationship Marketing: The Cost Effective and Environmentally Friendly Strategy
“Transactional marketing is an approach that focuses upon one-off exchanges with consumers.”
“Transactional marketing: Orientation towards single purchase. Limited direct customer / supplier contact. Focus on product benefits. Emphasis on near-term performance. Limited level of customer service. Goal of customer satisfaction. Quality a manufacturing responsibility.”[ii]
“Relationship marketing is a business philosophy which aims to develop strong relationships with a range of stakeholders, such as suppliers, media, intermediaries and public organisations, as well as with customers.”
“Relationship marketing is a form of marketing that emerged in the 1980s, in which emphasis is placed on building longer term relationships with customers rather than on individual transactions. It involves understanding the customers’ needs as they go through their life cycles. It emphasizes providing a range of products or services to existing customers as they need them.”
The new kid on the block is a strategy called Transactional Relationship Marketing, or TRM. This is a process trademarked by direct mail company, Hermes Precisa (HPA).
Transactional Relationship Marketing
“TRM uses ‘essential’ communication, such as electricity or phone bills, to give marketers the ability to reach potential users. By tapping into customer profiles and buying patterns through payment transactions, TRM delivers relevant promotions to customers based on their buying trends and without the need for a separate customer relationship management system.”[v]
By combining essential mail (that is: invoices, bills, etc) with specially and personally targeted offers, HPA have created “Transactional Relationship Marketing”.
HPA say that by analysing people’s spending habits and sending them personally targeted promotions, they are getting double-digit response rates, where the industry average is single digits.[vi]
How does Transactional Relationship Marketing work?
HPA gives an example of how large telecommunications companies might use TRM.
“… a hypothetical example of a telecommunications company, which holds the profiles of two million people who call the United kingdom each month and an airline that annually flies thousands of people to London. The airline can target its offer by piggybacking on the telco’s essential communication to its customers.”[vii]
But how would it work for a small business?
Let’s say, for instance, that you run a pharmacy. You have a certain percentage of your clients on 30 day accounts.
When the clients are being billed, you notice that Mr X. has been buying large quantities of mouthwash and floss. So, when Mr X.’s bill goes out to him, it does so with an offer from a local dentist.
The offer may be for a free consultation, x-rays, cosmetic assessment or teeth cleaning with new equipment. In fact, it may be an offer that incorporates all of these elements, allowing Mr X. to self-select and choose what he feels will suit him best.
The offers should be more enticing than merely a coupon. A professional copywriter can help you (or the dentist) put together a long sales letter.
It’s important when using sales letters to test a number of variations. You’ll need multiple headlines, body copy and calls to action. How many multiples? This 3 x 3 Marketing Momentum Matrix™, created by Dr Marc Dussault, Managing Director of Exponential Programs, works well for a medium sized mailout.
Body Copy 1
Body Copy 2
Body Copy 3
Call to Action 1
Call to Action 2
Call to Action 3
Of course, the permutations of this are more than just three letters – for instance you could test headline 2 with body copy 1 and call to action 3.
This level of email sophistication is taught in The Platinum Program to ensure that you get the most from your marketing spend so that you can replicate what works and stop doing what doesn’t. Often, once combination will out-perform the other by orders of magnitude! But that is a discussion for another day – let’s get back to THIS campaign and how it relates to Transactional Relationship Marketing.
The dentist may include, with the offers, educational material such as a survey on dental hygiene, an FAQ on dental cosmetic procedures or a “Top 5 Dental Cosmetic Dangers to Avoid” brochure. This will help to cement him as the pre-eminent source of dental education in Mr X.’s mind.
TRM is a strategy in which everyone wins.
Mr X wins because he gets something he needs being offered directly to him. He receives educational material that is of direct benefit to his situation. Perhaps most importantly, he doesn’t need to feel embarrassed about asking for this information – because it has confidentially and sensitively come to him.
The dentist wins because he has a qualified lead with whom he has now built rapport and to who he is now a pre-eminent source of dental education. Using this strategy alone, a dentist could easily fill his practice without doing any other kind of advertising – saving him, potentially, thousands of dollars each year.
You win because you have offered your client something that is very valuable to him – with no motive other than to help him out. This also builds your pre-eminence with Mr X. – after all, who is he more likely to go to for his pharmaceutical needs? The mega-hyper-super-store that just opened down the road and who may be a few dollars cheaper? Or the pharmacy that has sent him educational material and promotional offers that increase the quality of his life?
The environment wins because you are reducing waste – not only are you sending several promotions in one envelope, the promotions are also targeted, going to people who will actually value them and who are unlikely to just throw them away.
Of course, you could accept payment from the dentist for the advertising. Better yet – you could form a host-beneficiary partnership with the dentist. In return for the TRM promotion, the dentist could send a letter to all of his patients, recommending and endorsing your pharmacy. You might even work out a trailing commission arrangement, so that you each get a certain percentage of sales for the lifetime of the client.
[ii] Dr Chaston, I., “New Marketing Strategies: Evolving Flexible process to Fit Market Circumstance”, Sage Publications, 1999, page 8, table 1.1
[iii] Beech, J. and Chadwick, S “The Business of Tourism Management: Glossary”, Pearson Education, November 2005,
[iv] Wikipedia entry, “Relationship Marketing”, en.wikipedia.org/wiki/Relationship_marketing
[v] Blackie, T., “Lifecycle Potential: Bill sweetener”, BRW, June 28-August 1 2007, page 106
[vi] Blackie, T., “Lifecycle Potential: Bill sweetener”, BRW, June 28-August 1 2007, page 106
[vii] Blackie, T., “Lifecycle Potential: Bill sweetener”, BRW, June 28-August 1 2007, page 106