Transactional and Relationship Business transformation

Transactional and Relationship Business transformationIs Market able to value businesses correctly​

By: Amit Bhushan Date: 7th Mar.2016

While on one hand we have rising tide of aspiring entrepreneurs trying to make foray into the digital business world, on the other hand we have the funding agents; angels and Venture funds, having second thoughts, about long terms viability of many such ventures, casting doubts about the availability of funds. One of the key issues is about the sustainability of the business models based on digital technologies. Many of these ventures have an initial high burn rate and this is likely to be the case of many of the upcoming ventures as well.

What investors are worried about is the continuance of the high business turnover and ability to manage margins in the scenarios when the investment tapers off. In other word the durability of business model is in question as investors have burnt hands with growth and volumes tapering off after promotions are done away with.For the aspiring ventures, this translates into question that how strong a bonding with stakeholders is being built by these businesses i.e. will the reliance on the digital world solutions continue even when initial promotions and sops thereunder start to thin and vanish. While we do have some of the home grown successes like the Talking Yellow Pages where bonding stuck with the free riding consumers continue, and this forces advertisers to keep posting the subscriptions.

Again the hotel booking apps have managed to gain reliance of consumers by helping gains on the bookings and therefore we find consumers keep fiddling with these apps, though these are still to make their presence felt in the lower end of the segment where such gains may be valued much more (by consumers) even though the overall room rents may be miniscule and there may be a need for local language as well as may be say dhramshala booking along with B&B sort of PG models as well. Airlines and logistics are other areas where such digital connects have managed to show their relevance even when promos have diminished. Goods movement, may still be held by transport centers with their politics rather than efficiency on account of web based apps, though. So a plethora of sectors remain where technology has not made any impact as of yet.

Then of course we have a plethora of job hunt sites, work order or tender listings for civil/construction work, large/decent value repair works (civil/machinery/lifts/construction equipment etc.), property brokerages, marriage brokers amongst others. Such sites continue in business due to their ability to provide value by making data available to users including ability to collect a reasonable precise data at very low cost. This is even as many such services have not yet made full use of mobile penetration or managed to transcend the language barrier as of yet.

The reach to cater to the needs of the small fry or minnows is also in doubt. Their growth to provide say best fit list or other value adds, has still not met market expectations, although sprouting of such businesses continue even if their reach to accommodate a greater number of people is still in doubt. Basic question about what the business means to its multiple stakeholders in the short to medium run and how businesses is being seen as evolving in the long run; is the key question. What has not happened is high cost service center bookings like say for car servicing during lean period with discount or say expensive medial non-emergency service bookings which continue to happen basis reference rather than as per grading by these web based apps or site.

The value model of internet retailers or markets is again in doubt with reference to kind of relationships with say either the retailers or with the buyers and the repeat visit/buys as well as sustainability of level of sales for retailers fluctuates a lot. Similar situation has stuck the ready-to-eat food retail sites which relied on promos, rather than striking relationship with stakeholders on a win-win basis. Off course these were totally absent in the bulk catering arena where such services can be valued much more as vendors have high investments while buyer have high stake for their events though again individual buyers may need local language and localized services, a point neglected by these sites/apps.

We still do not have search services for banquet/party venues, weekend holiday/picnic packs and similar services to the extent desired.Even though the news of drying up of funding is pouring through, what basically is being sought for by investors is more relationship based models where transactions and repeat businesses will be carried through even when the promotions and initial burn has dried up.

There of course exist a lot of experience in market to be able to throw in a lot of such ventures, where they can be unleashing significant value for the stakeholders to sustain their interests while ensuring a pie of returns for the investor and other stakeholders as well. May be it’s too early to write a requiem of the sector as of yet. It is investors searching for the right investment opportunity and viable business models for funding in a hyper-communication environment where too much trash comes in the way but needs to be filtered. Let’s see if anything changes with this article.

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[Swaswati Borpuzari]

In the dynamic landscape of modern business, the transformation from transactional to relationship-based models has become a pivotal strategy for companies aiming to achieve sustainable growth and customer loyalty. Traditionally, transactional business models have focused on single, isolated transactions, where the primary goal is to complete a sale or service delivery with minimal interaction beyond the immediate exchange. This approach, while efficient in terms of immediate sales, often fails to foster long-term customer relationships or loyalty. In contrast, relationship business models prioritize building and maintaining ongoing, value-driven interactions with customers. These models are characterized by a deep understanding of customer needs, personalized experiences, and continuous engagement, which can lead to higher customer retention rates, increased customer lifetime value, and a stronger brand reputation.

The shift towards relationship-based business models is not just a change in strategy but a fundamental transformation in how businesses operate. It requires a rethinking of organizational structures, processes, and technologies to support a customer-centric approach. For instance, companies must invest in data analytics and customer relationship management (CRM) systems to gather and analyze customer data, enabling them to deliver personalized experiences and anticipate customer needs. Additionally, fostering a culture of customer service and empathy within the organization is crucial, as employees play a vital role in building and maintaining these relationships.

Moreover, the transformation from transactional to relationship-based models is being accelerated by technological advancements and changing consumer expectations. Digital platforms and social media have made it easier for businesses to engage with customers in real-time, providing immediate feedback and support. This has not only enhanced the customer experience but also created new opportunities for businesses to gather insights and refine their offerings. As a result, companies that embrace this transformation are better positioned to adapt to market changes, innovate, and build a loyal customer base that can drive long-term success.

In conclusion, the transition from transactional to relationship-based business models is a strategic imperative for organizations in today's competitive and rapidly evolving market. By focusing on building lasting relationships, companies can create a more resilient and sustainable business model that not only meets the needs of customers but also drives growth and profitability.