Why Long-Term Relationships Beat Transactional Drag Every Time
When it comes to your client relationships, Transactional Drag may not be a phrase you’re familiar with – but the feeling almost certainly will be.
If you’re looking to grow your business, then it’s something you need to be naming, measuring, and actively managing as a vital step towards changing your client-focused organisation for the better.
So, what is Transactional Drag and why does it matter?
Transactional Drag is a term that Verity has coined to pinpoint an increasing shift in the focus of our customers – often advertising agencies – and their clients.
Essentially, it’s a narrowing of vision and diversion of attention away from relationships towards the functional or operational. The risk is that, left unchecked, it can reduce your client partnership to little more than a transaction. A tell-tale sign is that you’ll find you’re putting significantly more energy into the ‘what’ rather than the ‘how’, or consistently prioritising the immediate work over and above the long-term relationship.
It reduces the world of the client business and its challenges to a more myopic delivery of a service, the current brief over broader business, immediate clients over future decision makers, today over tomorrow.
This transactional bias is often at the expense of the intentional – and crucial – management of relationships as distinct from the brief. The best performers know that the relationship deserves (and needs) to be managed as a workstream in its own right. Unfortunately, as we see through our TRR industry insight, Transactional Drag is driving the opposite and growing dynamic.
Why are things getting worse?
The current playing conditions are a major factor in the rise of Transactional Drag. In an industry such as Advertising, client dynamics such as procurement functions commoditising agencies like never before, the rise in project-based work and faster review cycles, are often to the detriment of deep partnerships.
On the agency side several factors influence this bias – including the fast pace, increasing client demands, fragmentation of specialisms, stretched teams and a lack of investment in relationship skills.
The rapid increase in remote working and sustained communication via phones and screens has exacerbated a decline in the people skills that used to be essential in maintaining positive working relationships. Now these are often reduced to a ‘box’, with verbal-only communications, status-driven agendas and a prioritisation of efficiency over depth.
Why does it matter?
It matters because it’s on the rise. Back in 2021, when TRR ratings peaked for many advertising agencies, relational feedback was 9% higher than transactional feedback, compared to just a 2% differential today. This despite the fact that the most satisfied clients are three times more likely to talk about how it feels to work with an agency than the work itself.
It also matters because it’s bad for agency business. Transactional Drag inhibits long-term partnerships and long-term vision. It risks reducing agencies to being a supplier, rather than a strategic advisor.
This can have a significant commercial impact too, from reducing the longevity of your relationship, compromising the quality of your work and challenging talent retention.
How do you know if you’re suffering from Transactional Drag?
Now you know what it is, and why it’s important, there are ways you can tell if Transactional Drag is impacting your agency and your client relationships.
Through our comprehensive industry insight, and from working with clients and agencies on their relationships with each other, we’ve identified the top three warning signs to look for that may indicate Transactional Drag is a growing problem within your agency. You can read about them here.
