Two Kinds of Customers
- from www.wizardacademy.com
The student became the teacher last week when Wizard Academy graduate Bill Bergh taught me something that I had never previously realized, even though Dr. Nick Grant had explained it to me at least half a dozen times. It was one of those times when you slap yourself on the forehead and ask, "Why did I never see that?"
Bergh said, "Shoppers tend to be either transactional or relational. Transactional shoppers are focused only on today's transaction. They're willing to deal with a supplier they don't trust because they've spent a lot of time investigating the product and consider themselves the expert. The only fear of a transactional shopper is that they might pay more than they had to pay. Transactional shoppers enjoy negotiating and are looking for the lowest-cost provider.
Relational shoppers, on the other hand, consider today's transaction to be one in a series of many. Relational shoppers don't enjoy comparison shopping or negotiating. They are looking for a supplier who is an expert that they can trust. Their only fear is of making a poor choice. Relational shoppers consider not only the money, but also the time that a transaction will take. Consequently, relational shoppers are far more likely to be repeat customers."
Five stores compete in a product category. Call them stores A, B, C, D and E. Betty and Bob are both transactional shoppers. Each of them will visit all five stores and deal extensively with the salespeople before making their decisions. Betty and Bob choose to buy at store B because this week store B is accepting competitor's coupons and offering free delivery and interest-free financing and giving away free movie tickets with every purchase. After having shopped at all 5 stores, Betty and Bob are each convinced that they have found the best deal in town.
Debbie, Doug and Elaine are relational shoppers who go directly to the store they believe to be the one best prepared to meet their needs. All 3 of them stay away from stores A and B because they perceive those stores to use hype and gimmicks to sell lower quality "promotional" merchandise. Debbie and Doug go directly to store D because they have a good feeling about it and each of them buys there. Elaine has a friend who works at store E so that's the only store she visits and it's where she buys.
In this example, 10 of 13 store visits, or 77 percent of all store traffic, was from Betty and Bob, the price-focused transactional shoppers. Yet they accounted for only 40 percent of sales. Store B is doing well because they're offering the transactional shopper more than their competitors. Store D is doing equally well because their long-term plan has been to be the store that customers think of first, and the one they feel the best about, when the need for the product arises. Store E is doing okay due to another type of relational selling (friends.) Stores A and C definitely need some help.
Does your company need some help?
Intentionally or unwittingly, successful companies will tightly target either the transactional shopper or the relational shopper. Who is your company targeting? Are you talking to the customer in the language of that customer about what matters to that customer?
Are you speaking the language of success?
Roy H. Williams
PS - Yes, a customer may be a relational shopper in one product category and a transactional shopper in another.
