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BizReport : Ecommerce : March 11, 2016

Expert: How to tell if your business is transactional or relationship

There are two basic forms of commerce - transactional and relationship. Which there are benefits to both, it is crucial that brands understand which form is right for their business. One expert explains.

by Kristina Knight

Kristina: What is transactional commerce?

Eldar Sadikov, Jetlore: The primary mechanism for acquiring customers through transactional commerce is search. This strategy exists in the bottom of the funnel and isn't activated until consumers reach a brand's website organically. Amazon, Google (SEM $), and brands with SEO-optimized websites are generally the winners of this battle.

Once the consumer reaches the site, e-commerce sites use personalization technology to drive them down the sales funnel through a number of different strategies. Whether it's product recommendations of similar products, browsing or shopping cart email triggers, or a simplified checkout process, these tactics help maximize the transactional revenue per acquired customer.

Kristina: What about relationship commerce?

Eldar: Relationship commerce, on the other hand, starts at the top of the funnel to anticipate what customers may want to buy, continuously probing user tastes and adapting quickly to changing consumer intent. The goal is to acquire loyal customers by offering meaningful reasons for them to feel a connection and keep coming back.

In this model, search is viewed as a user acquisition mechanism rather than a transaction driver. Most revenue and profit comes from repeat buyers rather than one-time transactions through strategies such as email subscriptions, social mechanics, and a stream of uniquely curated content.

Kristina: How can brands determine if they're currently transactional or relationship?

Eldar: Most brands that do a close analysis of their current personalization strategies will find that they are executing bottom of the funnel, transactional commerce. Most e-commerce personalization only touches on optimizing user experiences within the context of specific transactions. Brands that are using reactive strategies, such as similar product recommendations, browsing and cart triggers are executing what we consider transactional commerce. On the other hand, retailers that are using passive data and other behavioral triggers to proactively categorize and rank content are driving purchases through relationship commerce.

Image via Shutterstock

Tags: ecommerce, ecommerce trends, Jetlore, relationship commerce, transactional business

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