What is Transactional Drag, and why should it matter to me?

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 this year, then it’s something every agency needs to be naming, measuring and actively managing as a vital step towards changing your client-focused organisation for the better.

So, what is it and why does it matter?

What is Transactional Drag?

Transactional Drag is a term that we, at CRC, have coined to pinpoint an increasing shift in the focus of 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 you’re 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. 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 a number of 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 and status-driven agendas and a prioritisation of efficiency over depth.

Why does it matter?

It matters because it’s on the rise. In 2021, when TRR ratings peaked for many agencies, relational feedback was 9% higher than transactional feedback, compared to just a 2% differential today. This is in spite of 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 you to 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. Find out what they are here.

CRC, the Client Relationship Consultancy, has been working across the entire marketing services spectrum from advertising and PR to digital and media since 2004. Today we work with 1,230 agency offices in 92 countries, from large global networks to boutique independents, to help them maintain, grow and improve their client relationships through our international family of consultants, data and insights experts. We’re committed to putting positive, long-term working relationships back at the heart of your business.

Emma Kelly
The Client Relationship Consultancy