It’s the relationship that counts

Using a perfect gel of the three types of relationships

Technology cannot replace the salesman’s ability to establish a relationship of trust with the client, react to his subtle cues and provide customised service. This relationship that is built by the salesman may slowly vanish as the firm focuses on deep relationships with the customer.

When a company focuses on deep relationships, both the purchasing and the selling firm synchronise their tasks. This is achieved by placing a staff member from the seller’s side into the purchaser’s firm. Transaction relationships are giving way to 'cooperative partnership relationships', where the focus is primarily on the supplier. Thus a relationship manager now replaces the salesman.

Managing relationships is nothing new. It has existed since the days of the caveman (when wheat bags were traded for buffaloes). In the current business scenario, relationships seek to deliver greater value to customers. In sales, there are three types of relationships.

1. Transactional relationships
This type of relationship represents a typical buyer-seller relationship. A transactional relationship works best in a scenario where price is a critical factor. A buyer contacts multiple suppliers/vendors and pits them against each other based on price.
Let us take the case of an automotive manufacturer looking for a supplier of ball bearings. The manufacturer would openly negotiate with each supplier letting the others know the prices that are being offered. He then chooses the supplier that offers the best match of price and quality.

Communications within these kinds of relationships are normally based on the traditional marketing approach. The advertising is impersonal which is supported by a strong sales effort. Transactional relationships often mirror conventional marketing strategies overlaid with a mix of advertising and sales support. Advertising, trade shows and other sales efforts create an awareness for the product/services. Obviously a direct sales effort is likely to make the most impact. Advertising chips in with some reminding and reinforcing.

The range of relationships (between the buyer and seller) may vary from a personal one to an impersonal and business-like relationship. In the latter, the parties hope to transact but have limited or no contact before and after the transaction.

At the centre of the transaction are the buyer and salesperson representing their respective firms. The salesperson obviously tries to persuade the buyer to do something that will benefit his firm.

Transactional relationships are often successful because the buyer and the seller work together in a cooperative non-threatening way.

2. Facilitative relationships
In these types of relationships, the supplier is proven as a quality performer who does not add value to the purchaser. The purchaser's objective is to procure the products at the lowest cost from the seller. Value is created for both the buyer and the seller when the price and operating costs are low. The purchaser gives all his business to a particular supplier, thus reducing his transaction cost by integrating all the activities (activities like movement of goods, documentation, etc).

When such a close working relationship is developed between the seller and the buyer, the seller does not need to advertise his product's existence in the market. Facilitative relationships are driven with the intention of reducing the ownership cost of the product.

3. Integrative relationships
The buyer develops a unifying relationship with a supplier who is reliable, offers the best quality, and adds value to his purchase decision. Value is created for both the buyer and the seller when the price and operating costs are low. In addition to that, the contribution the supplier makes by his core capabilities (e.g. making the buying process simple or bundling the product) is more important while adding value.

In an integrative relationship, the seller becomes the sole source in satisfying the customer's needs for a particular product.

Build an ever-lasting relationship with the customer, such that you don’t have to coax him into a sale every time. He should want to do business with you.

Related reading:
“Deep relationships: The case of the vanishing salesperson”; Wilson, David T; The Journal of Personal Selling & Sales Management; Winter 2000