Relationships or Transactions: What’s Your Business?

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

Picture yourself:

  • Plopping down at a chain restaurant for a quick, quiet meal. Immediately, your server bombards you with her introduction, questions, specials, and how their operations work. All you wanted was some decent food and some peace and quiet, but they insist on becoming lifelong friends!
  • Dropping your clothes off at your regular dry cleaners. Do they still ask your name, starch preference, and when will you pick up? Why can’t they remember this and maybe even ask what else your clothes need to look presentable?

And it is no different when your business sells to or buys from other businesses.
  • To "provide better service" when checking on a delivery you are required to enter the shipment number, zip code or account number, only to have to repeat this information when Customer Service finally picks up. Why do they pretend their systems work when they know otherwise?
  • Your landscaper agrees to design your new building’s grounds, promising you excellent service for his premium price. You OK the deal only to watch him fail to deliver. You end up firing him not only from the new project but also from his long-term service contract.

What is wrong? In each pair of scenes, the former is a transation business attempting a relationship and the latter is a relationship business hell-bent on making every transaction stick.

Whether your business sells B to B or B to C, ask yourself if yours is a relationship or a transaction business? Each demands different approaches to sales, marketing, manufacturing, service, and billing. How many of the following steps is your business taking?

You Know You Run a Relationship Business When Your Average Customers’ Sales Grow Over Time. If your ongoing dialog results in you and your clients learning, trusting, doing more business together, then take the following steps:

Your:
  • Sales efforts and reps need to continually ask more questions, learn more about your client’s problems, and create new, custom solutions to your customers’ pain and opportunities.
  • Marketing efforts should provide expertise, exchange information of value, and offer low-risk opportunities for prospects to take a chance and make a trial purchase.
  • Manufacturing and service operations must learn how to meet your customer’s perception of total customization at the undifferentiated cost your CFO demands.
  • Customer Service efforts must focus on ensuring your product or service really meets the real and perceived needs of the customer instead of how you think it performs.
  • Bills should state and charge for the outcome of the service or output of the product you provide rather than the hours you spent, activities you performed, or units you produced.

You Know You Run a Transaction Business When Every Customer Sale is the First and Last You Will Likely Make. When you have to resell your customers each time you do business together, then take the following steps.

Your:
  • Sales people need to focus on meeting customers’ acute needs, closing them fast whenever the time is right.
  • Marketing efforts must be event-driven. Generate hot customer leads by making your offers simple, complete, and irrefutable.
  • Manufacturing efforts and processes need to be efficient, continuous operations creating as much value in delivery as in the product or service itself.
  • Service departments must solve customer problems simply and now. Transactional buyers want to get what they need quickly and easily. If they do, they will unconsciously reorder.
  • Billing must be itemized and show detail as to actually how much was bought, when and for what price. Accuracy counts more than anything.

How do you tell a good transactional or relationship business when you see one? I submit my candidates and invite your nominations for the:

Relationship and Transaction Hall of Fame and Hall of Shame

Best Relationship Business: AAA Motorists Association. With their newsletters, discounts, travel agency, TripTiks®, and retail stores, who minds paying $100 a year for overlapping coverage most of us never need or use!

Worst Relationship Business: Cleveland’s own COSE (Council of Small Enterprises). A health insurance company masquerading as an association, it is the most one-sided organization at taking its members’ time, money and content for free. When you quit, you get a goodbye letter informing you that should you rejoin, you must pay a penalty greater than if you had never joined in the first place!

Best Transaction Business: Dunkin Donuts. No matter where you are or what time it is, they have a great cup of coffee and a delicious fat pill, but once they sell you, you both move on!

Worst Transaction Business: Red Lobster Restaurants. I can stomach the mediocre food, but not the wait staff’s suffocating full court press. Just leave me be, I get my loving at home!

Conclusion:

There is not a black and white line between relationship and transaction businesses. We know that transactions don’t occur without a trusting relationship, and relationships don’t grow without a series of interactions or transactions. Still, your business must start out on a firm foundation. Either it is more relational or more transactional. So, first decide for yourself what kind of a business you are running. Too many businesses confuse themselves into blowing relationships, transactions, and ultimately profits.


Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080 , by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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