We Are in a Trust Crisis — How to Navigate the Pitfalls of Transactional Behavior in Business Relationships Businesses must stop selling themselves as relationship-focused when reality tells a transactional tale.

By Jon Michail

Key Takeaways

  • A transactional behavior model might seem appealing and like a fast route for businesses, but it comes with risks.
  • Relationships are important to customers, and they quickly notice when the company's actions don't align with the initial promise.
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Across all industries, from new startups to companies listed on the New York Exchange, companies now fly their flags as being committed to building lasting relationships with their customers. They claim that their business is centered around building authentic relationships, which places high value on building customer relationships. Indeed, one of their most prominent selling points is that they claim to prioritize long-term connections with the hope of encouraging customer engagement, building trust and sparking feelings of loyalty.

Sadly, these claims couldn't be farther from the reality. Many businesses' practical behavior shows that they decidedly remain transactional or, worse, predatory. This begs why companies pretend to be relationship-focused when their behaviour suggests otherwise.

The promise of relationship business

Perhaps the first thing we should discuss is why businesses try to paint themselves as a relationship business even though they're mostly all about transactions. Companies understand that the concept of existing as a relationship business entices potential customers. By giving this impression, companies appear to care about their customers genuinely. It paints them as a body willing to go the extra mile not just to understand the needs of their customers but that they are also intentional about fostering long-term connections with their customers. By presenting this image, customers are enticed by the promise of a sense of belonging and personalized recommendations.

Related: How Entrepreneurs Can Fuel Innovation and Push Societal Limits

The reality of transactional behavior

In an ideal business world, building and maintaining business relationships can be a deciding factor in determining the long-term success of a business. Yet many businesses turn a blind eye to business relationships and instead focus on the short-term benefits of transactional behavior. In many instances, businesses' efforts end the moment they collect customer data or a sale. While one would imagine that such data would be used to personalize and deliver relevant experiences, many businesses simply fall short.

A common real-life example many consumers have experienced in their relationship with businesses is getting generic responses to their inquiries. Another transactional behavior common with businesses is outsourcing support to reduce their costs. Although there's nothing wrong with them trying to reduce costs, this move cannot come at the expense of the consumers. How? Outsourcing support often means consumers relate with people who are not very familiar with the business processes. The support offered then shifts focus from attending to consumer issues to just closing case tickets raised by the consumers. Actions like these point to one truth: the business prioritizes short-term gains over long-term customer satisfaction.

Why the discrepancy?

Naturally, businesses vary in their approach when delivering customer experience. Some companies emphasize personalizing interactions and invest in customer service training, while others employ cost-cutting measures; here, business is strictly transactional.

Typically, in businesses, there's usually a discrepancy because of the following reasons:

  1. Neglecting relationships means transactions are straightforward to manage because they don't involve human feelings. The summarised process is simply a buyer getting what they need from a seller, made available through a quick exchange and rarely any human interaction. This business model can be successful depending on the industry and business goals. However, it's a limited model if relationships are key to your existence.
  2. Pressure to deliver immediate results due to the fast-paced business environment is another reason businesses focus on transactional efficiency. Thus, they focus on quick transactions rather than building relationships that pay off over time because they're in a race to meet target earnings and satisfy investors.
  3. Strictly transactional businesses tend to generate more profit in the short term. This makes it a more enticing approach as companies prefer to focus on individual transactions and thus accommodate more customers in a shorter time frame.
  4. Companies that put up a front as a relationship business sometimes stop at just collecting customer data because of a lack of understanding of what the data says. Although they have the data, translating the data into actionable insights is something they don't understand and thus neglect.
  5. Businesses sometimes lack the understanding to justify allocating resources to building relationships. They don't understand the long-term benefits of customer relationships, such as customer loyalty, brand advocacy, and sustainable long-term repeat business.

Related: How Your Entrepreneurial Spirit Can Lead The Way in Crisis

The impact of transactional behavior

A transactional behavior model might seem appealing and like a fast route for businesses, but it comes with risks. Relationships are important to customers, and they quickly notice when the company's actions don't align with the initial promise. It's only a matter of time before they switch to alternatives that offer more genuine engagement. Other risks associated with adopting transactional behavior include:

  • Limited growth potential because of failure to cultivate customer loyalty. Such businesses miss out on repeat business and referrals, thus limiting their growth.
  • Creation of a negative perception among customers
  • Reduced job satisfaction and morale for team members in the business as they are just focused on pushing sales.

Embracing authentic relationship-building

All said and done, to bridge the gap between promise and disappointing reality, it is clear that businesses need to adopt the habit of authentic relationship building.

Here are some tips on how to become a relationship business:

  1. Foster a culture where customers' interest is ingrained in every decision.
  2. Train, coach, and equip your employees with the tools to build customer relationships. The goal should be to prioritize long-term values instead of quick wins.
  3. Invest in data analytics to better understand customer preferences and behaviors. This knowledge should be used to deliver personalized customer experience.
  4. Implement metrics that show customer satisfaction and retention indicators to inform your staff about the importance of genuine relationships, not only for the business's good but also for every team member's personal benefit.

Businesses must stop selling themselves as relationship-focused when reality tells a transactional tale. Companies should be ready and willing to commit to understanding customers intimately to achieve a shift towards authentic relationship building. Only with a dedication to delivering value over time can companies claim to be relationship businesses, and they'll be rewarded with their customers' trust and loyalty; your customers know when you are faking it.

Take the decisive next step: Forge, a culture brand that embodies authenticity and galvanizes a workforce dedicated to fulfilling its core promise unwaveringly. Act now to intentionally transform your vision and reap the benefits in the ever-changing marketplace.

Jon Michail

Entrepreneur Leadership Network® Contributor

Founder and Group CEO of Image Group International

Jon Michail is the CEO and founder of Image Group International, an Australia-based corporate and personal-brand image advisory and coaching organization that conducts transformational seminars, workshops and one-on-one coaching in over four continents.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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