What’s the Difference Between Transactional and Consultative Selling?

What’s the Difference Between Transactional and Consultative Selling?

By Joe DiDonato | Chief of Staff | Baker Communications, Inc.

How do you know when you are selling transactionally?  The easiest symptom to diagnose is that you hear ‘price’ as the objection that kills your deal most of the time.  Challenge me all you want, but a transactional seller will hear it constantly.  In fact, when they’ve gained a lot of experience in “the art of deflection,” the transactional seller will oftentimes blame their company, Marketing, Sales Enablement, their management, the company’s products or the economy for their personal lack of sales.

But now that you know how to recognize the symptom, how do you fix the problem?  In this article, I’ll tell you a couple of stories that will show you the difference between the two types of sales.  So, let’s get started.

Probably the place where you hear this symptom the most is in retail but know that it happens everywhere.  Whenever there are a lot of competitors with very similar product offerings, the customer is bound to try to compare you on the basis of price.  We call that being “commodity sliced.”

So, let’s use a retail example, as that’s where we can all relate.  What’s your first reaction when a retail clerk comes up to you in a store and says, “Can I help you with anything?”  If you’re like me, my stock answer is “No thanks…  I’m just looking.”

In my mind, the sale is transactional.  For me, it’s much more about the product, its price, and it’s availability.  Why would I need a sales rep unless I had a question?  But let me show you how two different approaches might impact the sale.  One will be your traditional transactional seller, and the other will demonstrate the notion of being a consultative seller.

The example will be a retail hardware store because as an avid DIYer, I can more easily relate to that.  Here are the set-up and the story.  In both examples, I’ll be the floor associate responsible for sales.  And so that you know, I get 1% commissions on everything that I sell.

A customer walks in and I ask, “Can I help you find anything?”  The customer says, “A shovel.”  Having memorized the store, I’m quick to say, “They’re over here, just follow me.”  My theory is that if I can get the person to the right department quickly enough, I can conclude the transaction, ring him up, and get on to the next customer.  The more customers in the day, the more commissions.

The transaction concludes and I take the person over to a floor register and ring up the sale.  He grabbed one of the more expensive shovels, so I was happy.  It was a long-handled shovel that sold for $35.  That means I just made 35 cents in addition to my minimum wage.  If I can handle 50 of these sales each day, I’ll be able to pocket an additional $17.50 for the day.

Let’s do an intervention.

The store owner comes over to me in the morning and tells me that he’s really impressed with how many customers I’ve been able to handle each day.  He says he’s never seen so much hustle.  But then he hits me with a curveball.  He points out that my commissions are much lower than some of the other, more senior floor associates that have been around for a while.

That floors me.  Here I am trying to get a down payment together for a small home because my wife and I are expecting our first baby in a few months, and I can’t figure out how I can work any faster than I am right now.  “How is that possible?!?” I blurt out.

The store owner says to me, it’s because you haven’t learned how to sell ‘value’ yet.  He goes on to tell me how I might have handled that shovel sale differently.  He explained that ‘value’ always takes benefits into consideration, as well as cost and time.  Energized, I’m ready.

Sure enough, another DIYer walks in looking for a shovel.  This time, I know what to look for and I start off a conversation on the way over to the shovel area.

“What kind of a project is it?” I ask.

“I’m putting in some fence posts.  I’m going to need a long-handled shovel to dig the holes.”

“Okay.  I’ll show you where those are.  By the way, have you ever considered a post hole digger?”  (Basically, this is like two narrow shovels attached together by a hinge.)

“They seem kind of expensive,” the customer objects.

“Actually, they’re about the price of a good shovel, but that’s not the reason I’m suggesting one.”

Curiosity takes over and he responds with, “Tell me more.”

So, I explain to him that the diameter of the hole can be much smaller when you use the post hole digger, because the hinge makes it like two hands scooping out the dirt.  With a long-handled shovel, you have to basically dig a much wider hole so that you can angle the shovel to pull out the dirt.  The clincher was when I told him that he’d cut his work time in half.

With that out of the way, I asked the next question.  “What kind of fence are you putting in?”  That brought out a much longer response.

“Unfortunately, I have to put in a stockade fence.  It’s much more expensive, but we’ve got a ton of rabbits.  The stockade fence will keep them out, but we won’t get to see much of the plants without going inside the fence.”

What came next was what I learned in early product training.

“Let me show you something when we get done here with the shovels.  We have some split rail fencing in the back yard and some ‘invisible’ green rabbit fencing that can be tacked to the inside to keep the rabbits out.  It’s also a lot cheaper than the stockade fence because it has less wood.  And the good news is we can deliver it to your home, so you don’t have to rent a truck.”

The other thing that I added was, “You might want to also consider using raised planting beds.  That way, if a rabbit or some other critter did get in, they wouldn’t be able to get at the plants.”

He responded with, That’s a great idea!  Let’s go take a look.”

To make a long story short, not only did I get the shovel sale, but I also got the post hole digger, the split rail fencing for a 30’ x 40’ garden, the rabbit fencing, the u-nails for mounting the rabbit fencing, a gate and the related hardware, as well as enough lumber to build 6 planter boxes.  In the process, I had saved the man some money overall, but his outcome was a heck of a lot better than he had planned initially.  Value trumps price every time.

So, you might be wondering about the final sale total.  It was $2.250. Versus the $2,500 the customer was expecting to pay.  It was a lot less work, and the finished result was spectacular in his mind.   Commissions: $22.50 versus $.35.    But the really good news is that I had 3 more just like that in the afternoon.  In the long run, my guess is that the “garden guy” will ask for me when he comes into the store.  And who knows, someday I might even open up my own hardware store.

The difference that caused this turnaround in my sales was just asking some non-intrusive questions about the project, which was a brief aside on the way over to the shovel department when I asked him why he was buying the shovel in a genuine and kind way.  A good sales manager will not only spot the symptom, but he or she will be able to show you how to convert your selling style into a more consultative seller.

Would you like to learn more?  Sign up for our virtual Customer Outcome Selling workshop, and we’ll tell you how to hone this skill even further.  In this workshop we’ll show you how to build a complete value statement.  Want a 52-minute introduction to Consultative Selling?