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Understanding your customers
Understanding your customers

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3.5 Relationships in business-to-business marketing

You will now examine the importance of relationships in business-to-business marketing and contrast it with transactional marketing followed by an interactive exercise to consolidate understanding of the difference between them.

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Figure 7 The future of relationship marketing as online and personal elements work together seamlessly

As well as involving multiple decision makers, customer behaviour in B2B tends to involve relatively long-term relationships with suppliers. This activity contrasts the kind of marketing involved in such relationships with the short-term approach still typical of consumer marketing.

Relationships and transactions

You may already have come across the concept of relationship marketing. It became fashionable in the 1980s and 1990s in academic research and marketing practice, though some scholars argue that relationships have always been at the heart of successful marketing (Malhotra et al., 2016)

Relationship marketing focuses on co-creating value with long-term customers. This is in contrast to a more transactional marketing approach, whereby organisations generate a series of anonymous transactions with little or no sense of a continuing link with the customer. Transactional marketing is still common in consumer markets, but in B2B, because of the greater specialisation of customer requirements, relationship marketing makes sense. If you commit to supplying a range of specialist products (for example, components for a particular type of mobility aid), your ability to serve a wide range of potential customers decreases. This makes you vulnerable to your existing customers going elsewhere if they can find a cheaper or better alternative. Should this happen, you might be left with stock or services that prove impossible to sell elsewhere.

Developing long-term relationships with customers – often with a contractual element – can reduce this vulnerability. The essential underpinning of a successful long-term relationship, however, is less a matter of contracts than of co-creating genuine mutual value to the point where a customer feels little need to look elsewhere.

Activity 12 Transaction marketing versus customer relationship marketing

Timing: Allow 25 minutes for this activity

This activity highlights the key differences between transaction marketing and relationship marketing (adapted from Tyler, 2007, p. 223). Fill in the gaps by dragging and dropping the phrases provided.

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The widespread adoption of technology such as loyalty cards by major supermarkets has allowed consumer marketers to build relationships with individual customers (for example, by offering discount vouchers targeted according to individual purchasing history). Nonetheless, relationship marketing is still far more common in B2B than in consumer marketing. Note how the characteristics of relationship marketing as listed in the interactive (e.g. frequent customer contact, high level of service, and marketing-led commitment from the whole organisation to deliver customer requirements) echo the elements of B2B marketing that set it apart from B2C marketing.