Transactional vs. relationship based customer satisfaction


Joshua Horwitz (president and founder of Boulder Logic) approached me with some questions about transactional vs. relationship based satisfaction/happiness.  In my mind it was clear to that in a B2B setting a relationship based satisfaction is more important while in a B2C setting a transactional one is more important.  Then Joshua sent me some of his ideas and I began to think a bit more. 

Joshua: “No company is perfect all the time, and it is the manner in which bad transactions are handled that creates positive relationships, which in turn can become the foundation for an effective customer reference.” 

I couldn’t agree more with Joshua on this point. I recently had a customer tell me this and it was an “ah haaaa!” moment for me. It seems really obvious but at the same time I had never thought of it until my customer said it in an interview. He deals with tons of vendors and in IT he knows that he’s bound to run into issues where the product isn’t working correctly but, it’s the vendors that can help him solve problems quickly that he sticks with and is loyal to.

Joshua: “It is important to understand the difference between transactional and relational happiness, and recognize that relational is what’s truly important to an effective reference.” 

Sometimes.  What’s important is that you know what your prospect is looking for.  Know what the most important thing the prospect is looking for so that the most appropriate reference can be given. My dentist can be the nicest guy, send me cards on my birthday but if he does shady work, then the transactional is going to be more important than the relationship.  (see my previous blog “The weight of bad word of mouth”). On the same note, my surgeon has no bed side manner but does amazing work. So, transactional is definitely more important there. 

Joshua: “…it would be naïve to overlook the impact that bad incidents may have on a reference interaction with a prospect or analyst.  To the extent it is possible, it is important for a reference manager to understand past incidents and ensure they don’t directly conflict with the objectives of the reference.  This can be done by personally placing the reference or ensuring information is easily accessible during the reference search and request process.”

Yes.  You have to know what has gone wrong in the past so that if you know a reporter tends to do a deep dive with customers and ask about the past 5 years of a relationship, you don’t stick him/her with a customer who just became super pleased last week.  Same thing with a prospect.  If X is important to a prospect, then don’t set them up with a bad X reference. I can’t say the next part enough.  The job of a reference professional is to know the customers.  Know which ones are good at speaking on topics X, Y and Z, which ones are happy and which ones seem like good references but really aren’t. 

I think that what it ultimately comes down to a single question for each party.

For a business: what do you do when everything has gone wrong with the customer?

For the purchaser (consumer or business): how well does the company help me address problems?

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7 Responses

  1. Hi Maeve,
    Thanks for the post — and I agree with you on the value of building relationships one interaction at a time. Righting a bad experience is powerful. As the saying goes, “customer service is the new marketing” since now, more than ever, customers can broadcast that bad experience in any number of ways (word of mouth, blog, ratings and reviews etc.).
    I wanted to also take this one step further to suggest that most companies only look at the rational side of transactions, For years the emphasis of business transactions (checking in to a hotel, resolving a customer service issue, buying a product) has been on the efficiency of the transaction. Success is measured in time saved or dollars spent etc. Yet each transaction contains an emotional component that eludes our traditional metrics. Paying attention to the emotional component of each transaction (happiness, contentment, surprise, delight, insecurity) delivers the keys to the new kingdom; engagement, loyalty and community. ‘
    I just had a client experience that really drove the point home and wrote more about it here.
    http://www.opposableplanets.com/insight/2008/12/finding-the-emotional-transaction-delivers-customer-engagement-loyalty-and-community/
    Best,
    Josh

  2. Another difficult side of this issue is that in most large companies that have reference programs, sales, marketing, product development, and customer support are in 4 separate silos. If a customer is often a reference, but then tells someone who works on references that they are very frusterated with a feature or have another complaint, often that person has no way to help the customer. He or She may not even have any idea how to help get the issue resolved w/o escalating through director level channels. For example customer advisory boards are at a different point in the product lifecycle than sales references, and may be handled by a team in a different division.

    Because the cycle of the ralationship with customers can be so severed with a larg company, with different groups in the company talking with the customer at different points, it can be hard to maintain a relationship or relationship-based customer satisfaction.

    So what is a reference manager at a large company to do? How can we be better advocates for customers so that bad experiences turn into good ones through stronger relationships?

    • Anika-
      You are absolutely correct. Problems also arise when you have a worldwide program where a customer may be located in different regions. When possible, I suggest a centralized program to help avoid problems like this as well as customer burn-out.

  3. […] or the relationship Our friend Maeve Naughton posted recently about our conversation on transactional vs. relationship as it relates to customer satisfaction.  It a super important topic for customer reference […]

  4. cTsrH1 Thanks for good post

  5. […] Our friend Maeve Naughton posted recently about our conversation on transactional vs. relationship as it relates to customer satisfaction.  It a super important topic for customer reference […]

  6. […] friend Maeve Naughton posted recently about our conversation on transactional vs. relationship as it relates to customer satisfaction.  It a super important topic for customer reference […]

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