Executive Summary
It is essential to note that the report’s purpose is to compare two different types of selling techniques, specifically consultative and transactional selling strategies. Thus, the report first explains these techniques and compares their main characteristics. Then, two examples of their application in practice are presented, highlighting the main advantages and disadvantages of consultative and transactional sales. Moreover, it provides methods to enhance these techniques and recommendations to enhance the effectiveness of their implementation.
Introduction
With increasing market competition, sellers are intensifying their search for effective methods to advertise and distribute their products. Even for non-competitive goods, finding methods to make them popular in the market is necessary. Therefore, more attention is focused on sales techniques that enable the attraction of customers, demonstrate the benefits of goods, and convert interested customers into regular buyers.
It is essential to choose the appropriate techniques that will maximize sales and ensure their cost is recovered. At the same time, these methods should be used correctly, taking into account the target audience for specific products. Therefore, it is essential to compare consulting and transactional sales strategies and identify their advantages and disadvantages.
Consulting Sales
Consulting sales is one of the basic types of sales. The essence is identifying the problem and providing information about the product to help resolve the difficulties. Therefore, this type of sales focuses not on selling the product but on solving the problem, and the essence is not reduced to closing the deal.
Buyers recognize that they are not experts, so they trust the solution to a professional, relying on their experience and knowledge. Essentially, the term “consulting sales” refers to providing information to the client about a product without reciprocal obligations or agreements (Cron, Alavi, and Habel, 2022). The seller must give potential customers time to identify their needs and offer the best solution for each case.
The simplest example would be a visit to a customer in a cell phone store. In this case, the consultative sale by the seller will appear as follows. The sales consultant will initially get acquainted with the potential client and begin the dialogue.
The goal is to interest and not scare customers; for example, they can inform customers about current promotions, price reductions, or new products, wait for a reaction, and only then clarify their needs (Cron, Alavi, and Habel, 2022). Then, the consultant, at random in the conversation, clarifies what device is needed, the purchase budget, and for whom it is being purchased. Once all this is explained, they can select the desired option solutions. Thus, the presentation of the chosen product. For this, it is essential to utilize the potential buyer’s audio and visual channels to provide a look and feel of the device, allow them to try it out, and highlight the characteristics that are most important to the consumer.
Obviously, sales consultants will request additional services that the mobile store can provide. This may include available accessories, the option to provide installment payments, and supplies for the device. If the purchase was made, it is necessary to congratulate the customers and part with them warmly, wishing them to revisit the salon. If customers decide not to buy the product, the sales consultants will kindly ask them to return next time and bid them farewell.
Moreover, for the B2B and B2C segments, consulting sales is not just intrinsic but organic (Schwepker, 2003). They sell luxury goods, clothing, cars, appliances, electronics, and real estate, along with consulting services. This type of sales is working well in promoting services: legal, banking, insurance, IT, and tourism.
Transactional Sales
It is essential to note that transactional selling is a form of cooperation in which customers are clear about the specific product they wish to obtain. Furthermore, clients gather information about a product on an online store’s website or from independent sources without a manager’s help. Transactional sales are named because cooperation is reduced to the transfer of funds (Millman & Wilson, 1995). As a result, users place an order on the site, sometimes even refusing confirmation over the phone, and then pay either by bank card online or upon receipt. Moreover, such transactions are characteristic of both retail and B2B segments.
Accordingly, an example of transactional sales could be an online order for the office. This way, people choose the model and capacity of the device of their own free will, add it to their shopping list, and indicate where they want to collect the goods. At the same time, after confirming that their goods are available, they proceed to the point of delivery and pay for the goods that are already packed (Millman & Wilson, 1995). Thus, such agreements can occur in various sectors, from online orders at productive stores to purchasing luxury cars. These are one-time deals in which customers only care about the price and the convenience of the purchase.
Comparison of Types and Benefits, and Disadvantages
Comparison
In sales management, knowledge of the type of sale is valuable for enhancing the effectiveness of the company’s sales process. In transactional and consulting sales, the sales process differs. The stages that form the process will differ in the types of work and their number, the duration of the work, the sales techniques used, and the indicators that control the quality of the manager’s work at each stage (Graziano & Flanagan, 2005).
Moreover, sales can be transactional and consultative when selling the same product, even to the same customer segment. The primary metric differentiating between transactional and advisory selling is the length of the transaction cycle (Graziano & Flanagan, 2005). It, in turn, is linearly dependent on whether or not the customer has a clear need. In transactional selling, a client approaches a salesperson with a clear understanding of what product they want to buy. In consultative selling, customers require assistance from vendors to make informed choices.
Notably, today’s market has shifted from being seller-focused to being customer-based. The buyers are more challenging to work with; they have become more demanding, and they often know more about the product than the salespeople. In transactional sales, customers care about their costs; they choose based on price and convenience. Meanwhile, in consultative sales, the customer is willing to pay extra for the added value created by the vendor (Graziano & Flanagan, 2005). Thus, clients interested in purchasing luxury products are more likely to consult with sales, while those seeking casual and affordable goods will opt for the transactional option.
Peculiarities
Additionally, there are some features of transactional and consulting sales. Consequently, the transactional sale is not necessarily a small transaction; large deals can also be transactional. Suppose clients have been well-prepared through consultations with competitor companies or by studying the information online (Shoemaker, 2001). In that case, they can choose a product for one reason or another by using transactional sales. In this case, the transaction cycle becomes short.
Customers can be transactional in one transaction, for example, in the first purchase, and advisory in another, in the second buy. Clients who do not have the answer to the problem will consult buyers. It is crucial to note that different salespeople require distinct transactional and advisory sales competencies.
For instance, handling warm inbound inquiries requires a salesperson who can manage multiple inquiries simultaneously without losing any. However, the type of salesperson-expert is needed to warm and develop contacts through exhibitions and cold calls (Graziano & Flanagan, 2005). That person understands the customers’ business and how the product enhances it.
Advantages and Disadvantages
It is essential to note that the critical aspect of transactional sales creates a competitive advantage for businesses. Firstly, a lower risk of transactional purchases is typically associated with a lower price, significantly reducing the potential customer’s liability in the event of a wrong decision. In contrast, the price is significantly higher in advisory purchases, especially in industries that offer expensive products (Doyle & Roth, 1992). Accordingly, the risk of an unsuccessful purchase will increase, and the clients will be interested in receiving a quality product. Otherwise, a return or other claims for damages are possible.
Another competitive advantage of transactional sales is the shorter sales cycle, with transactional sales sometimes closing within a few weeks. This provides a higher volume of transactions and more frequent payments. In contrast, consultative sales has a two-year cycle, regardless of whether customers buy a car or simply clothes. This is because involving a consultant in the selection process requires more time(Doyle & Roth, 1992). Accordingly, transactional sales businesses will profit more if the two strategies are used in the same price signal.
Additionally, fewer decision-makers are involved in transactional sales because each time another stakeholder is added to the process, it becomes more complicated. Instead, in a consultative strategy, customers interact with more store employees (Doyle & Roth, 1992). This strategy is not beneficial for stores with an average price level, but is required for the high segment.
Transactional sales are characterized by a short transaction cycle; they are profitable for the business because minimal effort is required to attract and serve the client. However, the format also has disadvantages: transactional consumers often buy where the most favorable prices and conditions are set, which is why a small percentage of repeated appeals (Weitz & Bradford, 1999). In fact, the advisory strategy is used to build trust in the brand and the store and to create a loyal customer base.
Improvement
In today’s world, it is essential to refine and update these two strategies. First, it is possible to turn a transactional customer into a loyal one. To achieve this, it is essential not to offer customers the lowest price, as it does not foster long-term relationships. Instead, it is possible to offer to participate in loyalty programs, subscribe, and buy several products at a discount (Grewal, Levy, and Marshall, 2002). Thus, this will create a certain base of regular customers in the transactional sales strategy. Secondly, increasing the probability of buying goods when using the consultative strategy is essential.
This is because sales consultants often spend a lot of time, but customers do not make a purchase. To achieve this, it is essential to provide better staff training and pay attention to the appearance of the staff, for example, by introducing a uniform or logo on the clothes. It is also crucial to develop a strategy to motivate staff through a system of material incentives, career growth, and a pleasant climate in the team (Arnett, Macy, and Wilcox, 2005). Accordingly, the workers will work harmoniously, and customers will trust them more.
Conclusion
Hence, in marketing, sales are divided into transactional and consulting sales. Classical transactional sales are when customers independently choose goods, and the seller conducts only financial transactions. However, in the consultative sales organization model, sellers act not as sellers but as consultants. Such sales are most actively used when selling complex or expensive products and services. In this case, the consultant gathers information about the client, studies materials, and then begins a consultation through which the sale occurs. To prevent defects and to gain a first impression of these two methods, it is vital to combine them to gain a constant income.
Recommendations
It is essential to combine these two methods to obtain permanent viability. The two strategies are crucial to combine. Thus, conducting advisory sales is required first, then selling the product repeatedly through short transactions.
This system is also suitable for selling a complex or intellectual product. As a rule, before purchasing a complex product, the consumer needs the help of a manager. The employees’ task is to use the usual sales techniques to identify the need (Arnett, Macy, and Wilcox, 2005).
The manager then presents the product, demonstrates its benefits, and convinces the buyer to purchase it. However, after the first transaction, the customer may return to the salesperson to regularly order the same product, such as purchasing consumables for production (Wang et al., 2020). In this case, the client will already know what they require. Then a consultant can no longer process the order, and a transactional strategy can be used.
Reference List
Arnett, D. B., Macy, B. A. and Wilcox, J. B. (2005) “The role of core selling teams in supplier–buyer relationships”, Journal of Personal Selling & Sales Management, 25(1), pp. 27-42.
Cron, W. L., Alavi, S. and Habel, J. (2022) “Adaptive selling in business-to-business markets: Contextual boundary of a selling strategy from retailing”, Journal of Personal Selling & Sales Management, pp. 1-11.
Doyle, S. X. and Roth, G. T. (1992) “Selling and sales management in action: The use of insight coaching to improve relationship selling”, Journal of Personal Selling & Sales Management, 12(1), pp. 59-64.
Graziano, J. E. and Flanagan, P. J. (2005) “Explore the art of consultative selling”, Journal of Accountancy, 199(1), p. 34.
Grewal, D., Levy, M. and Marshall, G. W. (2002) “Personal selling in retail settings: How does the internet and related technologies enable and limit successful selling?”, Journal of Marketing Management, 18(3-4), pp. 301-316.
Millman, T. and Wilson, K. (1995) “From key account selling to key account management. Journal of Marketing Practice: Applied marketing science”, Journal of Marketing Practice: Applied Marketing Science, 1(1), pp. 9-21.
Schwepker Jr, C. H. (2003) “Customer-oriented selling: A review, extension, and directions for future research”, Journal of Personal Selling & Sales Management, 23(2), pp. 151-171.
Shoemaker, M. E. (2001) “A framework for examining IT-enabled market relationships”, Journal of Personal Selling & Sales Management, 21(2), pp. 177-185.
Wang, H. et al. (2020) “Effectual selling in service ecosystems”, Journal of Personal Selling & Sales Management, 40(4), pp. 251-266.
Weitz, B. A. and Bradford, K. D. (1999) “Personal selling and sales management: A relationship marketing perspective”, Journal of the Academy of Marketing Science, 27(2), pp. 241-254.