Transactional vs. Consultative Selling: Differentiation

Unlike many “natural-born salespeople”, I never had the childhood epiphany of, after selling newspaper subscriptions door-to-door, gloriously realizing that I loved to sell things. I never imagined myself in a position that would require selling, much less that I’d be blogging about it and teaching others how to do it. I learned to sell out of necessity; because if I didn’t, I wouldn’t be able to do what I truly loved—developing websites and helping clients market. Oh, and I wouldn’t make any money … did I mention that? In the beginning, I felt a certain disdain for the word, because it didn’t seem to fit what I did when I met with clients. Yet, when things didn’t go as planned, I sensed that the missing ingredient had something to do with “selling”—or my lack of skill at it. Perhaps “selling your services” feels more comfortable, but make no mistake, it’s still “selling.”

Sales people are not needed to quote prices. They are the bridge between the selling price and the perception of value provided to earn the sale. – Jeffrey Gitomer

Perhaps it will help to define exactly what type of selling our industry requires, because there are two different types: transactional and consultative. A Transactional sale is a simple, short-term sale in which the customer already knows what he needs, so little to no product knowledge is required on the sales side. Typically, these are product rather than service-based. Buying criteria usually hinges on price or ease of acquisition. Consultative selling is a more complex, long-term process involving collaboration of both buyer and seller, in which the latter must first develop an understanding of the customer’s business, industry, and needs, and then craft a solution to help the customer achieve their objectives. This is usually service or solution-based. The difference between the two can be easily understood from best-selling author Roy H. Williams’ comparison of the transactional vs. relational shopper:

The Transactional Shopper

Transactional shoppers are focused only on today’s transaction and give little thought to the possibility of future purchases.
Their only fear is of paying more than they had to pay. Transactional shoppers are looking for price and value.
They enjoy the process of comparing and negotiating and will likely shop at several stores before making their decision to purchase.
Transactional shoppers do their own research so they won’t need the help of an expert. Consumer Reports are published primarily for the transactional shopper.
Because they enjoy the process, transactional shoppers don’t consider their time spent shopping to be part of the purchase price.
Anxious to share the “good deal” they’ve found, transactional shoppers are excellent sources of word-of-mouth advertising.

The Relational Shopper

Relational shoppers consider today’s transaction to be one in a long series of many future purchases. They are looking less for a product than for a store in which to buy it.
Their only fear is of making a poor choice. Relational shoppers will purchase as soon as they have confidence. Will your store and your staff give them this confidence they seek?
They don’t enjoy the process of shopping and negotiating.
Relational shoppers are looking principally for an expert they can trust.
They consider their time to be part of the purchase price.
Confident that they have found “the right place to buy,” relational shoppers are very likely to become repeat customers.

The article goes on to say that, because some shoppers will be in transactional mode and others in relational mode, your success or failure hinges on knowing which and adjusting your selling style accordingly. In context, the article is talking to merchants and store owners, so his advice makes perfect sense. Some sales (like buying a cell phone) are not so black-and-white and end up being a mix of both transactional and consultative, depending on the buyer. Yet, in a purely consultative industry like ours, problems occurs when buyers attempt to engage our services using the transactional approach. These are people who won’t answer your questions, demand yousubmit a bid or want to know “how much?”

without providing any information in return. Your success, however, lies in how you deal with them, and not—I repeat, not—in adjusting your selling style to match their buying mode. Unless you enjoy being dictated to by demanding clients for whom “getting the lowest price” is the primary reason they buy. The trick is to get your prospects to change their buying mode, rather than adjusting your selling style. Can a transactional buyer be converted into a relational one mid-sales stream? In my opinion, yes, but not all of the time. Knowing how to “flip the switch” is one sales skill I learned to master. But knowing how to deal with those who can’t (or won’t) be converted is another one entirely. Continuing to deal with a prospect struck in transactional mode generally doesn’t turn out well, at least in my experience. What about you? Have you learned how to get transactional clients into a relational/consultative mode? Or do you default to switching your style to match theirs, then wonder why you lose the sale or end up cutting your price? Post your comments below.

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Frequently Asked Questions on Transactional vs Consultative Selling

What are the key differences between transactional and consultative selling?

Transactional selling is a sales approach that focuses on closing a quick sale with a customer. It is product-focused, with the salesperson emphasizing the features and benefits of the product to persuade the customer to make a purchase. On the other hand, consultative selling is a more customer-centric approach. It involves the salesperson acting as a consultant, understanding the customer’s needs and problems, and offering solutions that best address those needs. This approach builds long-term relationships with customers, leading to repeat business and customer loyalty.

Is one selling approach better than the other?

Neither approach is inherently better than the other. The effectiveness of each approach depends on the context and the specific sales situation. Transactional selling can be effective for low-cost, simple products where the customer already understands their needs. Consultative selling is more effective for complex, high-value products where the customer may need help understanding their needs and the best solutions.

How can I transition from transactional to consultative selling?

Transitioning from transactional to consultative selling involves a shift in mindset and approach. Instead of focusing on the product and the sale, focus on the customer and their needs. Develop your listening and questioning skills to better understand your customers. Offer solutions that address their needs, rather than pushing for a quick sale. This approach may take more time and effort, but it can lead to more satisfied customers and long-term business relationships.

What are the benefits of consultative selling?

Consultative selling offers several benefits. It allows you to build stronger relationships with your customers, leading to repeat business and customer loyalty. It can also lead to larger sales, as you are able to offer solutions that truly meet your customers’ needs. Additionally, consultative selling can differentiate you from competitors who are focused solely on making a quick sale.

What skills are needed for consultative selling?

Consultative selling requires a range of skills. These include active listening, to understand your customers’ needs and concerns; problem-solving, to offer solutions that address these needs; and communication, to effectively convey these solutions to your customers. It also requires patience and empathy, as consultative selling often involves building long-term relationships with customers.

Can consultative selling be used in any industry?

Yes, consultative selling can be used in any industry. It is particularly effective in industries where products or services are complex and high-value, and where customers may need help understanding their needs and the best solutions. However, even in industries where products are simpler and lower-value, consultative selling can still be effective by building stronger relationships with customers and differentiating you from competitors.

How does consultative selling affect customer satisfaction?

Consultative selling can greatly enhance customer satisfaction. By focusing on the customer’s needs and offering solutions that address these needs, you can ensure that the customer feels valued and understood. This can lead to higher customer satisfaction, repeat business, and positive word-of-mouth referrals.

What are the challenges of consultative selling?

Consultative selling can be more time-consuming and effort-intensive than transactional selling. It requires a deep understanding of your customers and their needs, as well as the ability to effectively communicate and offer solutions. However, the benefits of consultative selling, such as stronger customer relationships and larger sales, often outweigh these challenges.

How can I train my sales team in consultative selling?

Training your sales team in consultative selling involves developing their listening, questioning, problem-solving, and communication skills. It also involves shifting their mindset from focusing on the sale to focusing on the customer. This can be achieved through training programs, workshops, and ongoing coaching and feedback.

Can consultative selling be combined with transactional selling?

Yes, consultative selling and transactional selling are not mutually exclusive. In fact, combining the two approaches can be very effective. For example, you can use consultative selling to understand your customers’ needs and offer solutions, and then use transactional selling techniques to close the sale quickly and efficiently. This combination can offer the best of both worlds, leading to satisfied customers and successful sales.