Q: A few years ago, I advertised a Memorial Day sale, and business that weekend was better than ever. Soon I was advertising sale after sale. Now it seems like I can't get a customer through the door unless I'm aggressively advertising deep discounts, so I'm making less money than ever. Can you tell me how to advertise so that my customers will let me make a profit?
A: I'm afraid you made the classic mistake of targeting "transactional customers" because they're the ones who respond most quickly to ads. Only the rarest of advertisers will ever dip into the ocean of profits offered by the relational customer.
Transactional customers care only about today's transaction, and their only fear is of "paying too much." Relational customers, on the other hand, are looking for a brand or a store they can trust. Their only fear is of making a poor decision--"buying the wrong one." Are you an expert I can trust? Convince me so in your ads, and I'll remember you when I need what you sell.
Transactional shoppers will go to whichever store is advertising the lowest prices. These are the shoppers you've been reaching, right? But customers who go back to the same stores over and over are shopping "relationally." In other words, there is something, or an assortment of somethings, that draws them back time after time. Other than your prices, are there any compelling reasons to do business with you? Tell me so in your ads, and I'll remember you when I need what you sell.
The goal of the transactional shopper is for you to make no profit on them. But the relational customer is happy for you to make a profit as long as you meet their needs. Are you going to meet my needs? Convince me so in your ads, and I'll remember you when I need what you sell.
Ads for groceries, furniture, electronics and cars would seem to indicate these retailers believe in attracting only the transactional shopper. Yet aren't these the same categories that crave strong "branding" and the relational customers it brings? Think about it. What are the odds of building a long-term relationship with ads that shout "You Must Act Now! Limited Time Offer! Tomorrow May Be Too Late!"
Am I suggesting that you abandon transactional advertising? In a prior day, I may have said yes, but that would have been unwise. Today I am suggesting only that a portion of your budget be diverted from the transactional effort and directed toward relational selling using an entirely different medium, probably TV or radio. Relational customers will switch to you, but only if you say the right thing and keep on saying it. But above all, you must deliver the experience you promised, because relational customers hate hype.
Moving from transactional to relational advertising is like turning a battleship in the Panama Canal. It can be done, but only if you know what you're doing. The wisest course of action would be to hire an ad firm that specializes in relational selling to develop your relational ad plan.
Note: The advertising professional who claims to be good at both transactional and relational selling will probably also claim to be an expert in both advertising and public relations. Yet the truth is that one precludes the other.
So which will it be? Business as usual, or loyal, high-profit customers? Keep in mind that relational advertising may require you to be patient before you begin seeing results. But if making a profit were quick and easy, everyone would be doing it.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.
Roy Williams is the founder and president of international ad agency Wizard of Ads. Roy is also the author of numerous books on improving your advertising efforts, including The Wizard of Ads and Secret Formulas of the Wizard of Ads.