Transaction vs. relationship
A transaction can be defined as an ‘exchange’. In business, many times it’s thought of as a “one time deal”…There are more one time deals than relatioships, unfortunately – but think of the TIME and energy that would be saved if you had 4 or 5 stong business relationships that could produce the same amount of business or revenue as 70 transactional deals. Let’s take an example from the ‘real business world’…AND what industry is better or easier for me to use than higher education? So…let’s take one of the MAJOR universities like University of Pheonix or Kaplan, etc. They have numerous marketing and business strategies in place, BUT most are transactional. So, each month, these schools pay millions of dollars for leads that have been purchased from one of any 100 lead aggregators. These lead aggregators have purchased their leads from one of any other lead aggregators, publishers, affiliates, etc. Now – how can any of these leads convert? AND how can any of them even be thought of as exclusive? They CANT and they arent. Hence, the conversion rate on these leads is about 1-2%, which has become industry standard. Now let’s take a different approach. Let’s approach our business (or school in this case) and say “we are only allowed to use relationships to drive our business”. How would I go about that? First, I would take my products (degree programs, in this case) and see what types of businesses I can partner with. So, if we are looking at distributing business degrees, I would want to partner with major companies OR small organizations that can endorse my product. You always want to test different types of relationships because while there may be a larger ausince with a bigger company…there may also be a more personal feel and more attention given to you from a smaller organization or business. Both partnerships can be profitable, drive revenue, and increase your brand awareness. Once I have my ‘list’ of potential partners to prospect, I would review the long term business relationships I have had in the past. Am I still connected with these businessmen? What are they doing now? Are there any synergies between our two businesses? How can we help one another? Does this businessman have any possible connections or other relationships that can help me? It always helps to start with a previously nurtured relationship for a few reasons: 1) the trust factor is there 2) A recommendation from a company will always be responded to more quickly than a ‘cold call’. 3) Implied credibility. So to go back to our example at hand; you are selling BS in Business degrees and want to partner with 2 businesses for testing purposes. You find that from prior connections, you have potential recommendations to American Airlines and the Miami Business Association. American Airlines has over 100K employees / potential revenue generators and the Miami Business Association has 5K members. You then GOOGLE these companies to find out what types of propoerties (websites) they own, what the mission of their company is, HOW YOU can help achieve this company’s objectives, and equally important; how can they meet yours? So, with American Airlines you find that they have thousands of websites, including an intranet for employees. You find that they have an employee assistance program and a page for employee benefits. TBC….