Sales are a key part of your fashion brand. Why are sales so important in business? Sales can act as a measure of your company’s performance. The more sales you make, the easier it will be to grow your brand. Plus sales forecasts are essential for business planning. If you are able to forecast sales accurately, there will be more predictability in your company. You should be motivated to find useful sales strategies because a lack of sales is a reason some small businesses fail in the retail industry.
There are different approaches to selling products that you should look into. For example, there is relationship selling and transactional selling. Relationship selling is a sales technique that focuses on satisfying customers and building strong relationships with them. Meanwhile, transactional selling, which is also known as traditional selling, aims to get the single sale without concentrating on the needs of customers. If you want your business to prosper, you will have to determine the most effective sales strategy for your company.
In this post, we are going to explore relationship selling and transactional selling to help you figure out which approach is best for your fashion brand:
- What are the Differences?
- Determine the Advantages of Each Strategy
- Consider the Drawbacks of Each Approach
- Make a Decision
1. What are the Differences?
It is crucial to understand the differences between relationship selling and transactional selling. Relationship selling is a strategy that retail businesses use to retain customers. Your fashion company puts in the effort to learn the needs and wants of your buyers and then offers products that will satisfy them. On the other hand, in transactional selling there is an emphasis on gaining new customers. This technique is all about promoting products to increase the quantity of individual sales.
The level of interaction with customers is not the same for these two strategies. With relationship selling, a high level of interaction between sellers and buyers is necessary. It will be very difficult to form a personal bond if you do not have frequent one-on-one conversations with a customer. Meanwhile, there is less engagement with buyers when you are utilizing transactional selling. After the sale is completed, little to no contact occurs with the customer.
Another difference between relationship selling and transactional selling is the time commitment. Relationship selling is a long-term strategy because it takes more than a day to earn customer loyalty. You need time to create and maintain meaningful connections. With transactional selling, there is a short sales cycle. Less time is required since quick decisions are made and you do not have to get to know your customers.
2. Determine the Advantages of Each Strategy
Next, you must determine the advantages of each strategy. There are many benefits of using relationship selling. With this approach, you can form long-lasting relationships with buyers and keep them coming back. These returning customers typically purchase more than first-time customers. Therefore, relationship selling can increase revenue for your fashion company.
In addition, you can get honest and valuable feedback when you are utilizing this sales technique. By having conversations often with your customers and actively listening to their opinions, you will gain insight into what you are doing right and what areas you can improve on. Relationship selling establishes trust between you and your buyers too. It is important to think long-term and this relationship value will give you a sustainable competitive advantage. As a result, your retail brand will stand out from other businesses in the fashion sector.
Furthermore, you may not have to spend as much money on marketing efforts. If your customers are happy with your retail company, they might write positive reviews that can catch the attention of potential buyers. Satisfied customers will also recommend your fashion brand to people they know. This word-of-mouth marketing is effective because individuals are more likely to trust the opinions of their family and friends over any form of advertising.
Transactional selling has multiple advantages as well. For instance, inventory turnover is a benefit of this strategy. It is expensive for your retail business to hold inventory. There is a lot of seasonal merchandise and with the fashion industry rapidly evolving, it is common for items to go out of style. Therefore, transactional selling is useful because it results in quick sales that clear space for new, more attractive products.
Time is a benefit of this sales technique. Since you are concentrating on short-term connections, you will not have to devote your time and energy to nurturing relationships with your buyers. Transactional selling allows you to gain more time every day, which increases the efficiency of your retail brand and reduces stress.
An added advantage of this strategy is its low cost. Transactional selling focuses on the product and price. Most fashion companies send promotional emails to encourage one-time purchases or offer incentives such as discounts, cashback offers, coupons, and limited time offers to increase sales. The expenses associated with these ways to acquire new customers are much less than long-term campaigns.
3. Consider the Drawbacks of Each Approach
If you want to figure out the best sales strategy, you must consider the drawbacks of each approach. There are various disadvantages of relationship selling. For example, this sales technique is time-consuming. Developing relationships with customers takes a lot of time and resources. You have to frequently interact with buyers to learn more about their specific situation and needs, give them advice, and figure out how you can deliver value to them over time. Your retail business will not be able to see results right away, which is a downside of this strategy. As a result, you have to be patient when using relationship selling.
Relationship selling can be hard to implement. If your company culture does not provide the engaging experience that customers expect when they visit your retail store, you will lose out on sales. Your employees need to be dedicated to building strong connections with buyers or else this strategy will not work well. It will not be easy to find such committed workers.
Keep in mind that connections with customers can become too personal. Although long-lasting bonds are crucial for this approach, all of your exchanges must still be professional. Relationships with customers should not prevent employees from getting other pressing tasks done. Also, some returning buyers may feel entitled to a discount or free clothing items, which can cause tension.
When you are utilizing relationship selling, your fashion brand prioritizes your current customer base. Therefore, new customers can be overlooked. If potential buyers are ignored, it can negatively impact your company. It only takes one unsatisfactory experience that is shared on social media platforms to lead customers to go buy from other retail businesses.
Transactional selling has its drawbacks too. One disadvantage is the lack of a reliable customer base. If you do not have loyal buyers, you will be working on attracting new customers all the time. It can be difficult to constantly come up with creative ideas to get buyers to make a one-time purchase. Plus you might lose money in the future if you do not have repeat customers.
Another downside of this approach is not being able to create a solid reputation for your fashion brand. Your company will not be well-known in the retail sector if there is no connection between you and your buyers. When customers have a natural relationship with you, they usually share their experiences with their family and friends, which results in more people recognizing your brand. When your customers’ main concern is the price, you will struggle to build your reputation because they will not keep buying from you if your competitors’ products are cheaper.
You will not receive any input from buyers, which is a drawback of this sales technique. Since you are focusing on quick sales with transactional selling, your interactions will be short-term and you will not be able to gather information about changes in customer preferences. You also will not get a chance to hear buyers’ opinions about new trends in the fashion industry.
Transactional selling is dependent on economic booms as well. During boom periods, your sales will increase. However, if the economy is struggling, there will be less demand for your products and it will be harder to gain new customers. The economy can be unpredictable, which will be stressful for you if you are using this strategy and possibly cause your retail business to fail.
4. Make a Decision
Now that you have learned the differences between relationship selling and transactional selling and analyzed the pros and cons of each strategy, you need to make a decision. You should select the approach that fits your fashion company the best.
Relationship selling may be ideal for you if you are eager to engage with customers. With this strategy, your interaction with buyers must go beyond just making the sale. I recommend this approach if you value feedback from your buyers as well. On the other hand, transactional selling might be right for you if you are looking for short-term benefits. With this sales technique, you will not have to wait long for results and the costs are low.
You can always choose to combine these two approaches. There is no rule preventing you from using both relationship selling and transactional selling. A balance between the two strategies may be more effective for you. For instance, you can devote some time to creating strong relationships with existing customers, while not completely forgetting about new buyers. Then you will be able to build a solid reputation for your retail company and increase sales without utilizing all of your time and resources.
Sales are necessary in business. Your fashion brand needs an effective sales strategy in order to be successful. In this article, we looked at relationship selling and transactional selling. First, you must understand the differences between these two approaches to selling products. Relationship selling focuses on customer retention and involves a high level of interaction with buyers and a long-term commitment to learning how to satisfy them. Meanwhile, transactional selling is all about acquiring new customers and does not require a lot of engagement and time.
The second step is to determine the advantages of each strategy. The benefits of relationship selling include long-lasting connections, an increase in revenue over time, meaningful feedback, a sustainable competitive advantage, and less money needed for marketing. With transactional selling, the advantages are inventory turnover, more time and energy for other business matters, as well as low costs.
Third, consider the drawbacks of each approach. The amount of time and resources required, and how hard it is to implement this strategy are disadvantages of relationship selling. Connections can also become too personal and new customers might be overlooked. The downsides of transactional selling are the lack of a reliable customer base, difficulty creating a strong reputation, no input from buyers, and its dependency on economic booms.
The fourth step is to make a decision. You have done all your research and now have to figure out which strategy to select. Relationship selling, transactional selling, or a combination of both approaches may be best for you. Make sure to choose a strategy that will be the most beneficial to your retail company.