John is a young professional who is in his last semester of getting his MBA. He told me that he was passionate about sales and that he wanted to do something where his evaluation and compensation depended on his sales skills. I asked him did he like Transactional Sales or Relationship Sales, as there was a difference. He did not know the difference and asked me to explain.

In my view, transaction sales is selling a single transaction, product or deal. You are trying to provoke AN ACTION, at this moment in time, getting a customer to buy your product, process, or event. The important competitive parameters are your track record, price, extra amenities, or something else that you can deliver around that single transaction. Your ability and opportunity to compete is based on your product offering rather than your relationship with the customer. Examples of transaction sales are found in selling cars, clothes, pharmaceutical products, real estate, and even some financial services, especially daily trades, where the key competitive parameter is best price, for the largest volume, or in other words, best execution. Customer satisfaction in transaction sales is all about best execution on that single transaction. If you have the best price, can perform in the most efficient way, then you are competitive and have a high probability of winning in transaction sales. If you want to be successful in this space, you must be quick on your feet, very articulate, able to find the competitive edge, using track record, price, or a special offering and have the resources to deliver the product or process.

Relationship Sales is selling based on the length and strength of a relationship. A customer has to know and trust you as a sales person in order for you to even get an opportunity to compete for the business. Relationship selling has a long lead time, unlike transaction selling, where you can step up to compete as long as you have the required credentials and ability to deliver. Your ability to be taken seriously as a competitor for the business depends on how well the customer knows you as you enter into the competition. An example of relationship selling is selling asset management products to institutional allocators. In many cases, you have to be invited into the Request For Proposal (RFP), and will only be shortlisted, if the customer has a high degree of confidence that you will be able to deliver the desired services. The only way that they will acquire that degree of confidence is if they have spent time outside of the RFP process getting to know you, your company and the products that you have to offer.

In any industry, where there are a lot of competitors with similar track records and capabilities, relationship selling is going to be of paramount importance. In order to be a competitive and successful sales person, you have to have strong listening skills, patience, and a network that could be a competitive advantage in influencing any particular relationship. You also have to be prepared to invest a lot of time into building the relationship with the prospective customer and have the patience to develop that relationship over time.

It is important that you understand the competitive dynamic of the sales process that you are entering, in order to maximize your probability of winning the business. For example, if you enter a competitive dynamic that requires relationship sales, but you enter with a transactional sales demeanor, you will lose that business every time. Alternatively, if the competitive dynamic of the business is based on transactional requirements, but you approach the process banking only on the relationships that you have with the principles and your price or process is not comparable or better than the other alternative offerings, you will also lose the business. Understanding the difference between transactional and relationship sales is one of the most important things that you can do in your endeavor to win at sales!


Read more of Carla’s Pearls in her new book, Strategize to Win, available for pre-order now: