“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
These are the words of Jeff Bezos, currently the worlds’ only centi-billionaire, one of whose mantras for running a successful business is: focus on your customers, not competitors.
In a business, transactional experiences are never a good long-term strategy, although a one-off transactional customer experience is enough in the short-term. Today we live in the emerging experience economy, where consumers and customers want long-term, relational experiences. Businesses are responding to this new demand for experiences by designing their services and offerings to make an emotional connection with their customers to boost their satisfaction.
In this three-part series, I will explore why customer experience is central to a successful business and identify key traits of short-term transactional and long-term relational experiences. Most importantly, I will discuss what it takes for a business to provide relational experience to its customers and consumers. These views and opinions are based on my personal experience working with a wide variety of businesses in different industry sectors across the globe.
Characteristics of transactional and relational experiences
Compare taking an Uber vs. owning a car. Simply speaking, taking an Uber is essentially a transactional experience – you buy a ride when you need it and don’t think about what happens to the car before or after the ride. On the other hand, your own car is a relational experience in every sense. You have multiple transactions, you care about the interior, care about performance, and care about scratches. Some people even name their cars.
Interactions between people or their surroundings are core to human existence, and these interactions define how we experience the world around us. All interactions in life can be classified as transactional or relational (relationship-based): families, roommates, friends, teachers, teams, bosses, leaders, possessions, clothes, toys, gadgets, pets, society, community, partners, customers, stakeholders, homes, mobile phones, even a government and its leaders. The nature of these interactions defines your engagement or connection with the other side.
Transactional experiences are ones where an interaction achieves a result and nothing else – it’s essentially a give-and-take. For example, at a coffee shop, you pay and receive a coffee in return. The only experience is the exchange of money and coffee – and a smile if you are lucky. Other examples could be hiring a temporary worker to carry out a task like mowing your lawn or hiring a marketing agency to carry out a campaign. It is a short-term experience, results-based, low (or zero) commitment, with no intention to continue.
Relational experiences, as the name suggests, are relationship-based experiences – much more than a give-and-take and they may consist of multiple transactions. For example, a service provider builds a relationship with the customer as it becomes mutually beneficial over the long run. The multiple experiences are designed to be long-term, trust-based commitments that are intended to continue for a long time (if not for life). Most marriages and employee-employer relationships are based on relational experiences.
Entire cultures or countries can be also be classified as transactional or relational.
This table explains why employees, marketers, social media, recruiters, political candidates, suppliers, and even your grandma want to move from transactional to relationship experiences.
This transition from transactional to relational experiences is what could define technology adoption by individuals (or a society). Most experiences with a new technology/experience are transactional in the beginning. The user interacts with the technology on a transactional basis, say buying on Amazon. Based on a few successful transactions, the user starts to form an unconscious relationship with the technology/experience. Over time and after multiple successful transactions, the user consciously forges a relationship with the technology/experience, such as signing up with Amazon Prime.
This handshake works great when both parties have the same expectations. Conflict arises when the expectations differ:
- An employee who complains that her manager is never available – never at work, works from home, or travels too much – is essentially complaining that the relationship is suffering. The manager, however, is quite confused, as he is always answering emails and attending meetings and has even promoted the employee. He does not understand what she wants from him. He is seeing the transactional side of management.
- Consider this feedback from a manager: “The employee only does the assigned tasks and barely on time. However, he doesn’t bring any ideas of his own to the job, doesn’t participate much in the team meetings, and comes up with excuses to avoid after-office team activities.” The manager is expecting the employee to care about the team – she is expecting a relational interaction, while the employee is looking at it as a transaction.
- After two years of contract work, a temporary employee sues the company for benefits or asks for equal pay and equal treatment – clearly an underlying difference in expectations between the worker and the company.
Customer experiences: Transactional or relational
Organizations should continuously evaluate whether their relationships with customers are transactional or relational and if both parties feel the same about the customer experience. Apple is famous for controlling the entire customer experience with its devices: from product design to packaging, from the purchasing experience to the product, and from device repair to disposal. Based on Apple’s consistently high ratings and customers-as-fans role, it is safe to assume that Apple’s customer experience can be classified as a relational experience. However, customers’ perception of the experience should be evaluated continuously so the organization can continue to fine-tune it.
It can be a challenge (or even a disaster) to have a mismatch in the customer experience perception between the organization and its customers. This happened in the book-selling industry. Most people have a connection with their books: personal bookshelves and libraries are the pride of those fortunate to have a collection. Bookstores believed that this relationship with books extended to bookstores; buying from a bookstore was perceived to be a relational interaction. But most readers didn’t think like that. For them, buying a book was just a transactional experience, even though they have a relational experience with a book. This made it easier for readers to switch from a corner bookstore to any big-box bookstore (Borders or Barnes & Noble). This was even starker when readers began buying books online from Amazon instead of a Barnes & Noble retail outlet. Relational bookstores are still thriving in niche areas and topics or in specific locations, like airports.
A similar scenario played out in the music industry: from buying albums to buying albums online to buying songs online to just streaming music via subscriptions. It seems listeners always have a relational experience with the song and performer. The buying experience, however, went from relational to transactional, which made it easier for listeners to switch from one model to another.
Organizations must continuously evaluate the nature of the customer experience (transactional or relational) and strive to build a relational experience with their customers.
Adoption of a new technology or way of doing something (for example, e-commerce instead of in-store sales) starts as a transaction, often a no-pain, low-commitment, and immediate-gratification deal. If it’s successful, it progresses to multiple transactions over a period of time, to daily transactions, to multiple transactions in a day. Over time and after multiple successful transactions, trust is established and the user starts to have relational experiences with the technology. Then usage metrics shoot up and only then can it be considered “adopted” by the masses. There are a multitude of technologies that never cross this chasm from transactional to relational.
In the second part of this series, we will apply the concept of transactional and relational experiences to emerging technologies and examine how experience makers can design applications to be more relational.
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A version of this post was published on LinkedIn Pulse and is reprinted with permission.