A Tale of Two Customers

By Mike Dandridge

lowest price a gratifying part of the purchasing process. Dealers who believe he will pay more for a popular brand-well, they obviously don't know Jack.

On the other hand, Andy doesn't like price shopping or negotiating, at all. He considers it a waste of valuable time. He believes that the popularity of a name brand is due to the product's superior quality. As a Relational customer, he is interested in finding a supplier with whom he can entrust most of his business. Andy wants to find an expert he can depend upon to provide information and keep him informed of changes in the industry.

A NDY and Jack are both owners of small contracting lLfirms. Both are moderately successful. But the similarity ends there. They represent two entirely different categories of buyers. Andy is a Relational customer. Jack is a Transactional customer. To approach both with the same sales strategy is foolish and short-sighted. What would be exactly the right thing to say to one, would be exactly the wrong thing to say to the other.

As a Transactional customer, Jack is just interested in today's purchase. His loyalty lasts only until he finds a cheaper price. He researches the products he buys so he won't have to rely on service personnel to provide information. Jack considers himself an expert on most of the tools of his trade and sees no value in so-called knowledgeable salespeople behind the counter. He takes pleasure in negotiation and comparison pricing. Like the hunter who enjoys stalking his prey, Jack considers the quest for the

Relational Customers...

Think long term.

. Consider today's ffansaction to be one in a series of many.

Do not enjoy comparison shopping or negotiating.

. Fear only "making a poor choice."

. Hope to find an expert they can trust.

. Consider their time spent shopping to be part of the purchase price

. Are likely to become repeat customers.

Most customers fall into one of these two buying models. However, it's possible for a customer to be in Relational mode when purchasing certain products, but in Transactional mode when buying others. For instance, when I buy salt, I'm in Relational mode. I only buy Morton's brand. I pay a premium price for it. I don't know why. It could be because my mom always bought that brand. It could be because the girl with the umbrella is on the label. The point is there is no rational reason for me to prefer Morton's salt. Sodium chloride is sodium chloride. On the other hand, when it comes to milk, just a few aisles over, I switch to Transactional mode. I buy the cheapest brand on the shelf. After all, milk is milk.

And so it is with your customers. Let's say a customer in a Relational mode wants to buy side-cutters and industry-preferred Acme hand tools are the customer's brand of choice. If you have the item on the shelf, you'll likely to make the sale. However, a customer in Transactional mode doesn't see value in the brand, only in the price. If he knows that the local builder's supply private label side-cutters are a buck cheaper, then you can meet the price or lose the sale.

Either knowingly, or unwittingly, most distributors tend to cater to Jack, the Transactional customer. Yet, Andy, the Relational customer, represents higher closing ratios and

TFansactional Customers...

Think short term.

Care only about today's transaction.

Enjoy the process of negotiating.

Fear only "paying more than they had to pay."

Are willing to spend lots of time researching.

. Are self-proclaimed experts.

. Make every buying transaction on price.

higher margins. Do businesses focus on the Transactional customer because there are more of them than Relational customers? Not at all. Actually, it's about a 50-50 split. Transactional customers simply speak the loudest when arguing over a deal, while Relational customers quietly give you their money.

The solution is to be aware of the two types of buying modes. It makes sense that there are two catesories of selling, as well. These, too, are Transactional Jr Relational. Most advertising is Transactional selling. For example, the fliers that come in the newspaper invariably announce sales and deep discounts on the products they feature. The "Clearance" or "Sale" table that you place in your counter area to liquidate obsolete merchandise is Transactional selling. The brightly colored, high-end test meter display with eye-popping graphics standing in the middle of your counter sales floor is Relational selling. Counter Days, personalized services, and CRM software are all methods of Relational selling.

The irony is that most of the time distributors work hard to keep Jack happy while ignoring Andy. When Andy is the victim of a service mishap, it's easy to minimize the damage by saying, "Oh that's just Andy. He'll understand." The tendency is to take advantage of Andy's loyalty and to go overboard in trying to appease the transactional and demanding Jack. This doesn't make much sense when it's obvious that the Relational customers are responsible for turning brands into household names. For example, Apple, Harley-Davidson, and Oakley owe their iconic successes to Relational customers.

It pays bigger dividends to cater to the Relational buyer. Chances are you already have a base of Relational customers. Recognize them. Ask them to tell you what they

F , Ways to Keep Relctlonal Curtomerc

Okay. Now you've got them. How do you hold onto Relational customers?

r'. Identify them. Tell everyone at your branch who they are. Give them preferential treatment.

2. Show them that you appreciate their business. Never take them for ganted.

3. Assign your best inside and outside salespeople to them.

4. Provide incentives for them to stay loyal.

5. Make them feel as if they are special to the company. Treat them like good friends. They are!

perceive to be getting from you that they don't feel they can get from your competitors.

After you interview l0 to 20 Relational customers, you'll discover a few common denominators about what they think makes your company special. Spend atl of your available resources promoting these "special" benefits openly so that you may draw other Relational customers. By spending more time focusing on the Relational customer at your sales counter, you will build not only your company's image, but also add higher average sales, increase profit margins, and enhance your reputation as a person with Counter Intelligence.

- Mike Dandridge is founder of High Voltage Performance and author ry'The One Year Business Turnaround. Reach him at

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