Relational versus Transactional Consumers

The Academy of Marketing teaches media sellers how advertising really works so they can have deeper, more meaningful conversations with prospects and customers.  But, deeper and more meaningful conversations about what?

About what is likely to happen when the prospect buys the advertising that the media seller is offering.  

Unlike traditional process sales trainers, The Academy of Marketing doesn't teach tips, tricks and techniques for qualifying prospects or cold calling or getting appointments.  We teach consumer behavior and demonstrate to media sellers how their advertising customers can use predictable patterns to get results.  Rather than trying to change human behavior, we encourage business decision makers to create advertising plans and messages that take advantage of it.

The Academy of Marketing posits that advertising sales professionals should be experts at advertising and not just sales because it is advertising they are selling and it is advertising they must explain to their prospects and customers.  How do consumers interact with advertising and how do they use it?  What is going to happen when a prospect buys advertising from you?  Let's figure this out.

The Target Market consists of all the potential customers for a product or service.  This isn't the entire population - it's a specific demographic plus qualitative criteria.  For example, A30-70 who are homeowners in the northern geography of the metro, might be the Target Market for a roofing company.  What percentage of this Target Market would the roofing company be interested in reaching?  Of course, it's 100% because everyone in the Target Market has the potential need for their products.

But, everyone in the Target Market is not "in the market" to buy right now nor at any specific time in the future (unless there is a macro event like a hurricane).  Both right now, and at any given time, some people are ready to buy and most people are not.  We classify these two groups of consumers as Transactional and Relational.

Everybody in the Target Market is in Relational phase until they've had a Situation that causes them to move into Transactional phase.  This is a critical concept.  Situations move Target consumers from Relational phase to Transactional phase - not a good deal or special sale being offered by the advertiser. 


Most advertisers focus their message on those consumers in Transactional Phase.  They speak of price, selection, warranty, financing, store locations, store hours, etc.  This seems sensible because these are the people who are trying to decide from whom to buy right now.  They must have this information and any smart advertiser wants to reach these people.

But, let's go back to last week's post and recall our HVAC example.  At the time of need, the person whose air conditioner has broken does not go to TV or Radio or Billboards to find an HVAC company.  So, an HVAC company or a roofer or a plumber or an auto dealer who is on TV or Radio talking about price and selection and financing are not speaking to people with an immediate need.  They are not speaking to those in Transactional phase because those in Transactional phase have taken other actions (gone to the internet or the yellow pages or asked friends or visited stores).  That means, that those advertisers on TV and Radio are speaking to consumers in Relational phase - people who are not in the market to buy and who don't need the detailed information being provided.

Here's why that's a problem:  Since consumers in Relational phase do not need this information they will not remember it and they are very likely not to remember who was providing it to them.  They see the ad but they just don't pay attention.  Let's review:  the people seeing these ads on TV or hearing them on Radio are most likely not in the market to buy (95% of the Target) and they are ignoring the detailed, transactional information being provided.  The people who are in Transactional phase  (5% of the Target) are likely to pay more attention to the commercial but they don't really need the transactional details because they are getting that information from other sources.

That's a big problem and it explains why TV and Radio experience 30-40% attrition every year.  There is a huge disconnect between the way consumers use their product and the expectations of advertisers.  Advertisers expect a direct response that is simply not going to happen with any degree of consistency or predictability and they become dissatisfied.  Media sellers aren't sure what's going to happen when the advertiser's message hits the airwaves so they provide no leadership during the sales process.  

Attrition is the hole in the bottom of our boat.  We don't want to sink so we get a bunch of buckets labelled "New Business Development" and we bail the water like crazy.  Of course, the water never stops coming in so we get more buckets and more buckets.  Soon, we start measuring our bucket efficiency and those people who are charged with filling buckets are exhausted and disillusioned.  The stress on the entire organization is overwhelming.

Of course, we should fix the hole in the boat - stop the attrition.  But, most media sales organizations don't know how or don't believe it's possible.  After all, we've been living with this problem for decades.

The solution is in educating our advertisers about consumer behavior and then demonstrating to them the highest and best use of each type of media.  We need to explain Relational media and Transactional media and how they work together.  We need to provide leadership throughout the sales process and that requires that advertising sales people become experts in advertising.

Next week, we'll categorize the different media into either Relational or Transactional and discuss the highest and best use of both.  Stay tuned.

Posted by TRohrer1 at 7/8/2011 12:28 AM
Categories: Selling Techniques, Marketing
Tags: sales loudmouth the academy of marketing tim rohrer selling sales sales techniques selling technique
 

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  • 7/14/2011 11:22 AM Michele Bunn wrote:
    Tim - this is my first visit to your website/blog and I agree with everything you are saying. I look forward to more and your next chapter.

    Michele,

    Be sure to check out The Academy of Marketing on Facebook and "like" it.  Sometimes, there is content there that you won't find here and vice versa.

    Tim

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  • 8/7/2011 1:33 PM Larry Jennings wrote:
    Sales Loudmouth,

    Generally love the article. My departure from the premise presented here is that in a great many product categories, some consumers are purely motivated by Abraham Maslow’s Hierarchy of Needs along with a properly timed price/item message. This is particularly true with personal electronics and technology, apparel, entertainment, restaurants, food items, etc. Within certain categories (like the ones mentioned here), almost everyone is a transactional consumer.

    I also look at the fact that more than 80% of key and super key accounts on radio and TV are placed by local and national ad agencies. If this is true, at what point can a sales rep influence the media selection process or media strategy?

    I agree that we need to provide leadership through the sales process, but I believe that has to happen at the group sales level in cooperation with rep firms, clients who get it and research organizations who together can present a continuous and credible consultancy to the top media spenders in the nation. I do not believe that attacking the problem at the street level (either locally or nationally) will move the needle one digit.

    Just my perspective.

    Larry

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  • 8/12/2011 11:05 AM Dallas Roofing Contractors wrote:
    Tim - I appreciate everything you had to say about the different Target Markets. Such a simple concept, yet it was honestly something I hadn't thought about before. Your HVAC example made perfect sense, and is very applicable to the roofing industry, as well, since most people won't see a TV ad and suddenly decide to contact someone for roof work. I'm interested in reading the next post about categorizing the media.
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  • 8/14/2011 11:00 AM TRohrer1 wrote:
    Larry,

    Thanks for your thoughtful comments.  While it is true that for some products, consumers are transactional very frequently, I would have to disagree with some of your categories.

    A typical consumer is not transactional for personal electronics or technology or apparel most of the time.  While there are certainly some people who love to buy clothing and do so on a regular basis, those are not typical consumers.  When we teach our class, I always ask who among the students loves shoes.  Invariably, in a group of 25 students, I find one person who confesses to buying shoes roughly every two weeks.  Then, I ask the rest of the class, by a show of hands, who does not buy shoes once every two weeks and 24 out of 25 students raise their hands.

    This points out that the shoe buying cycle for most consumers is not based on the fact that they love to buy shoes.  These consumers buy shoes because a Situation has occurred to put them in to the shoe-buying market.  They've become transactional for shoes.  When we ask people what has happened to make them transactional for shoes, they say things like:  the other ones are worn out; outgrew the old ones; going on a job interview; just started a hobby that requires a type of shoe that they don't currently own; bought new clothes and needed to update shoe styles.  

    None of these people say that the price of shoes has caused them to go from Relational to Transactional.  Of course, among those people who are transactional for shoes, it wouldn't be uncommon for them to shop and buy from a retailer having a sale versus one who is not.  After all, consumers are savvy.  But, it is important to distinguish the acquisition of market share versus the ability to create demand (or create a market).  Local retailers can do the first but not the second.

    Sales reps must endeavor to get meetings with high-level decision makers and business owners and not rely on third party representatives to tell their story.  A media seller who can get these meetings and influence the thinking of these business leaders will be thought of as a valuable and trusted advisor.  Those who meet only with third party representatives will be thought of, correctly, as advertising vendors.

    Tim



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