Are You Cheap Enough?

Back in December, I wrote about the difference between Relational and Transactional customers.

Specifically discussing Best Buy's successful efforts to re-engineer their operations, process, advertising, sales training and even store layout to attract more relational customers and to actually deter transactional customers.  I believe that is why they have ridden out the economic downturn so much better than Circuit City was able to.  Their brand was strengthened by the relational customers that they attracted and they weren't caught in a price war that diminished value.

When the following appeared today with Roy Williams' thoughts on relational v. transactional and how the shifting economy is shifting our approach to purchases, I had to read it twice to see if I agreed with him. 

I do agree that most consumers have shifted to a transactional mode of thinking for products that used to be purely relational.  However, the consumer is not simply buying the cheapest price, there is still a relational tendency at play.  I would hazard a guess that the average consumer is still willing to spend a little more for a product that they think can provide the best value, even if it isn't the cheapest price.  Value is the focus now.

What do you think?

Please click the link below to read his article in its entirety...

The New Magic of the Wizard of Ads

by Roy Williams

A high percentage of relational customers have shifted to a transactional frame of mind.

In other words, the rules of marketing are changing.

The buying mode and mood of the general public has moved from Intuitive and Feeling (NF, right brain/right brain, pattern recognition) to Sensing and Thinking (ST, left brain/left brain, sequential reasoning.) Frosted Frank, not Monet, will win the heart today. Abandon fuzzy angles of approach. Be direct, clear, concise. Clarity is more important than creativity. But it’s also more difficult to achieve.

Ad writers, you’re going to have to work harder than ever but so are your clients.

Money is tight.
Unemployment is rising.
People aren't shopping.
Traffic is King.

Click for FULL STORY

Brands Attract Relational Customers

There are 2 Kinds of Customers.

Each of us approaches a purchase in one of two ways; either relational or transactional. Depending on the product category determines which approach you will sub-consciously utilize.

For some, gas is a relational purchase in that the station is close to home or office, always clean, polite employees, some times cost a little more sometimes not but it doesn’t matter because I am comfortable and secure in my decision. For some people, gas is a transactional purchase because it is so expensive now; it’s worth it to drive around to find the best price.

For some, a buying a car is a relational purchase because they have to feel comfortable and secure with the dealer, known him all their life, bought every car there, the rest of the dealers are crooks. But for others, buying a car is incredibly transactional because they feel that you can’t trust any dealers, they are all crooks, so have to research on the web, shop around, and take a hard stand in negotiations.


Relational – These customers will be yours for life. They don’t shop around. They aren’t always looking for a way to save a little money. They have a commitment to you because of what your brand represents to them. They feel secure that you are the best value (which has nothing to do with price – it has to do with the perceived price v actual price)

Transactional – All about cost. Will drive all over town to save a little money. Does not have the confidence that you are the best value. Feels it necessary to continue to shop and look for specials or sales. Has no loyalty to you and will bring you less profit for more work.

Position your company, your product and your brands to attract Relational Customers.

That's what Best Buy did a few years ago. The revised the layout of the store, the training of the employees, started asking questions rather than blindly making recommendations, and stopped sending direct marketing to the 80% of customers that made up only 20% of their profit. They started spending their time and marketing on the 20% of the customers that account for 80% of their profit. And it paid off - Big.

You can do that with your company - Focus on the relationship. Stop attracting the transaction.