Thanks to the internet, customers are now more informed than ever before. While this is bad news for salespeople using unethical and underhanded tactics to seal the deal, it’s great news for sales reps who enjoy consultative sales and creating a strong relationship with their customers.
Instead of turning to salespeople to be told what they need, buyers now come to the table already armed with information. In fact, a Harvard Business Review article published back in 2012 suggests that “customers completed on average nearly 60% of a typical buying decision before even having a conversation with a supplier”. This makes some traditional sales methods redundant and requires a new sales approach to secure the sale.
However, it’s not always cut and dry. Some sales methodologies are more suited to certain situations and industries than others. For example, a transactional approach to sales may be more appropriate in a retail environment, while a consultative sales approach often works better in more complex environments such as B2B, SaaS, customisable products and tailored services. Financial services products such as insurance plans are also more suited to this method of selling due to their bespoke nature.
We explore this more below as we take a deep dive into consultative vs transactional selling.
What is consultative selling?
A report from Salesforce has shown that 84% of business buyers are more likely to buy from sales reps who understand their goals. That’s your role as a consultative salesperson. Instead of trying to sell a certain product, as with transactional selling, consultative sellers don’t hyper-focus on selling one specific product. Instead, they offer a number of appropriate solutions to a prospective customer with no bias and work together with them to figure out which one is best for them. Remember that the customer is already informed at this point, having read blogs, watched videos, received peer recommendations and taken part in webinars. Your job as a consultative seller is to find the right solution for them.
Consultative selling, which differs from solution selling, works well in complex sales situations and often becomes a long-term process. This is because the consultative salesperson focuses on customer success as an outcome, building a relationship with the prospective customer. For customers, this means receiving advice from a consultant rather than a salesperson. For salespeople, the focus should be on adding value to the conversation and finding the perfect solution.
Remember that with the consultative sales process, there will usually be multiple decision-makers involved to get the final sign-off. The consultative approach involves educating your prospect and using them as an internal product champion within their business to get the green light from other stakeholders.
Consultative selling techniques include:
- Active listening
- Asking consultative selling questions — probing, investigative and open-ended queries
- An in-depth understanding of all the products, services and solutions available
- Focusing on creating an objective solution without bias
- Providing insights, information and resources to support the customer in making a decision
- The ability to gain a deep understanding of the customer’s needs, pain points and requirements.
Advantages and disadvantages of consultative selling
There are plenty of advantages to using the consultative sales approach. These include:
- Creating a strong and long-lasting customer relationship
- Increased revenue due to higher close rates
- Shortened sales cycles
- Increased perceived value and therefore a reduction in discussions about price or hefty pricing negotiations.
However, the consultative selling approach comes with its disadvantages, too:
- It’s time-intensive and relies on a lot of research, authority and expertise
- Consultative selling doesn’t work in a transactional selling environment because these buyers are focused on price rather than value.
What is transactional selling?
Transactional selling is a simple, short-term and sometimes one-off sale where the customer already knows exactly what they want. In essence, think of the brands you regularly use as a consumer: laundry detergent, your favourite home-brewed coffee or a certain brand of paper towels.
As a consumer, you’re aware that you need the item, maybe you’ve run out of it, you’re familiar with the brand and your only worry is availability and finding it at the lowest price. While this is an oversimplified example, the reasoning applies to B2B markets, too.
A transactional sale generally happens quickly. In a B2B environment, goods are quickly exchanged and that’s often the end of the sale. Sometimes, a warehouse manager, office assistant or another member of staff may be included in the sales process.
When considering transactional selling, it’s generally well-suited to industries with high inventory turnover and one-off sales. This sales methodology doesn’t rely on building relationships. It’s focused on offering a product or a service for the best price. Successful transactional sales and marketing techniques include:
- Buy one, get one free
- Discounts or bulk discounts to encourage a potential customer to invest in larger quantities
- Short-term sales promotions
- Point of sale deals (at checkout).
What is a transactional customer?
A transactional customer is only focused on getting the product at the right price at the right time. These types of consumers aren’t planning for the long term with their purchases. They will spend a significant amount of time researching products. This is often underpinned by online marketing efforts towards them.
Transactional customers aren’t looking for a salesperson’s advice, knowledge or support to help them make a decision on what to buy; they are focused on harnessing negotiating skills to shop for good deals and a low price.
Advantages and disadvantages of transactional selling
Some of the advantages of transactional selling are:
- Low marketing costs
- Little effort required with brand image, messaging or driving brand loyalty
- A focus on one or two USPs, one of which is price
- Supporting fast-moving inventory and leaving space for the next ‘big thing’.
However, disadvantages include:
- No brand loyalty from customers
- Little to no investment into product development or improvements to the customer experience (CX) as this is seen as unnecessary unless all competitors are doing the same
- No emotional attachment as the sale is only based on availability and price, so the brand is easy to undercut by competitors
- Sometimes pushy and off-putting to customers as a tactic, particularly if the product or service isn’t 100% right for them.
Consultative selling vs transactional selling
So, when it comes down to it, how do the two sales approaches differ? Let’s explore using the table below.
|Factors||Consultative selling||Transactional selling|
|Sales focus||Service or solution-based with emphasis on value||Product-based with emphasis on features and price|
|Length of relationship||Long-term relationships focused on customer success||One-off, one-time purchase|
|Customer focus||Value and benefits||Price and availability|
|Sales volume and value||Low volume, high value||High value, low volume|
Consultative selling vs transactional selling example
A great example that highlights the difference between the two sales approaches is a car showroom. A customer has entered the showroom knowing that they need a new car and has a good idea about the available options as well as what they need and are looking for in a car.
A) The transactional salesperson
This method doesn’t shy away from asking questions, but would only ask a handful of questions to narrow down the options available. For example, they might try to understand the customer’s budget, size requirement and basic needs. At this point, a transactional salesperson would choose one specific car to push to the customer and is unlikely to give alternative options. The ultimate goal here is to get the customer to commit to a test drive or buying a car based on one or two simple needs and then send them on their way.
B) The consultative salesperson
The same customer walks into the same showroom. The consultative seller begins by asking several probing questions, understanding the restrictions or issues with the customer’s current car/mode of transportation and taking the time to uncover their needs. The next step in the consultative selling process is to offer several carefully explained solutions. While the ultimate goal is still to drive a sale, this method isn’t about delivering a big, exciting sales pitch. It’s about working closely with the customer to understand their needs.
Which one should you choose?
So, when it comes to consultative vs transactional selling, which one should you choose?
Customer-centric over product-centric
If you want to take a customer-centric approach, consultative selling is the way forward. 53% of consumers say that they always carry out research before buying a product or service, so leading with the benefits of a product is unnecessary as part of the sales process. Instead of focusing on the product, as with transactional selling, taking the customer-centric approach would be more appropriate in most situations today.
Social selling over promotional selling
The transactional approach means focusing on promoting sales, discounts, deals and bundles to beat the competition based on pricing and availability. The consultative approach to sales means using channels such as social media to educate prospective customers on the solution to their problems. In the latter case, getting in front of customers at the research stage of the buying journey is crucial.
Qualifying over convincing
Often, the transactional sales model includes convincing a customer that the product or service is right for them by focusing on its features and benefits. Instead, consultative selling techniques include qualifying the lead throughout the process. Over two-thirds (67%) of lost sales are as a result of poor lead qualification. This makes qualification key before spending your time convincing a customer who doesn’t have the need to buy your product.
When is consultative selling better than transactional selling?
The consultative method is more suited to complex sales environments. If the customer is unsure what they need exactly, current pain points or the route to achieving their goal, this is a good time for consultative sales professionals to step in. Instead of leading with a specific product or service in mind to sell (as in transactional selling), consultative salespeople lead by finding a solution that is right for the potential customer.
What is the problem when you are consultative rather than transactional?
There are two big things to look out for when sales teams employ the consultative sales approach. If the customer doesn’t need the full consultative experience, your sales reps could be spending too much time on a sale, meaning that they work too hard for low-value sales and smaller opportunities. Focusing time this way may also lead to overlooking and missing out on bigger opportunities that are available.
Which method is better for high-ticket sales?
Sales professionals that employ the consultative selling technique are more likely to close high-ticket sales. Prospective buyers who want to invest in a new solution may be risk-averse. As well as this, getting buy-in from all stakeholders and decision-makers from within the business is critical to secure the sale. Transactional selling doesn’t focus on educating the prospect and doesn’t tailor a solution to the customer, making it often inappropriate for high-ticket sales.
To conclude, both of these sales methods are effective in different circumstances. Ultimately, it depends on the buyer’s needs, motivations and other variables such as price. An experienced salesperson should excel in both methods and be able to switch between the two as appropriate to save on resources. Remember, when comparing consultative vs transactional selling, it’s important to create an effective dialogue and a two-way conversation.
The first step in starting a conversation is finding your ideal prospects online. Try fullinfo today to discover all about the contacts you want to reach.
References & further reading
- Try These Modern Sales Approaches And See The Difference
- The 16 Must-Try Prospecting Techniques For Sales
- Solution Selling Vs Consultative Selling: What Is The Difference?
- [Step-by-Step] The Consultative Sales Approach
- Are You Asking These Consultative Selling Questions? You Should Be!
- The Simple Guide To Sales Qualification Frameworks