The value of business relationships is a key component of the ‘intangibles’ that constitute the goodwill element that’s deemed so important in valuing organisations. Yet, the events of 2008 and 2009 taught many companies that their supposed deep understandings were merely transactional connections, and long-standing ‘partners’ seemed quite happy to do their business elsewhere.
The cost of winning work from a new client can be up to seven times higher than winning more work from an existing client. Yet few organisations are really aware of the power and long term financial value of building sustainable relationships with customers, where trust, insight and understanding make all the difference.
Andrew Brown, Managing Director of Predaptive OD told us: “In good times, it’s easy to think you have really great sales relationships. But the reality is that many salespeople are simply service providers or product fillers. There’s no real relationship based on insight or mutual understanding. The recession has amply demonstrated that. Now, post-recession, customers are much more challenging: they’re using professional procurement techniques and building their internal capabilities to create new forms of value. Unless salespeople can engage at a much deeper level they will become sidelined in that on-going process.”
He advises that organisations need to measure the impact of all the interfaces with customers. They should map current relationships against organisational aspirations and measure the gap.
“The goal has to be to enable salespeople to build such interesting, insightful conversations that the client chooses to ring them, creating a pull rather than push relationship with clients, one where clients are ringing wanting access to their problem solving insights.”
The benefits are:
- increased long-term value of the relationship
- locking -out transactional competition.
Keith Dugdale of IOWEU added: “We have to move from customer service managers being reactive problem solvers to building real trust with everyone we want to do business with. But we also need to be able to measure how effective these relationships are so that we can leverage off the really good ones but also work to improve those that aren’t so good yet – but could be really valuable in the future.
“Technology is part of this solution, but relationship capital has a huge human element. People are still rewarded for hitting short-term tactical targets that don’t square with the overall social, technical and business relationships that people in organisations have with customers and other stakeholders. The focus must move from the short-term hit based on meeting today’s target to a trusted relationship which, through the strength of its mutual understanding will open the door to a greater breadth and depth of business interaction.”
