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The True Measure of Successful Business Relationships isn’t Kindness!

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Launching the University of York's latest skills development programme: Enterprise Works!

Like many of us over the last few years, I’ve read lots about creating strong and healthy relationships - with Partners, Customers and, especially since the pandemic, with ourselves.

There are many, so-called relationship gurus out there espousing a million different ways of measuring the strength or success of relationships and one of the methods that caught my eye is the 3Cs.

You may have heard or read about these 3Cs:

Communication, Compromise and Commitment.

Yes, sure, these 3 attributes are all very nice but, like many other sayings, they’re a bit warm and fluffy and fail to address the absolute core issue which is:

Can Your Key Customer Relationships Cope with Conflict?

Conflict. Wow. Really?

I say absolutely, it’s heavy stuff but this is about effective customer relationships – few things are more important to your business than this.

Here are a couple of definitions for Conflict you may find helpful

  • To come into collision or disagreement with; be contradictory, at variance, or in opposition; to clash:

  • A fight, battle, or struggle, especially a prolonged struggle; strife.

If your relationships - personal or professional - cannot cope with conflict, you’ll forever be on the back foot. You’ll never be equal in the relationship, and they will always have the upper hand. Advantage them!

Personal Experience #1

I had a banking customer who repeatedly swore and issued threats to cancel our IT Networks contract if we failed to deliver (we didn’t) and they negotiated a particular discount off the global list price from us.

Within the same account but a different Business Unit, another client spent around the same with us ($5m/pa) but who had a very different approach - they were collegiate and collaborative in nature.

Out of curiosity, I asked our finance people to run an account-level P&L on each customer and, guess what?

The customer that secured the biggest discount/best deal out of us was the collaborative/collegiate customer - like they’d charmed us into giving them better terms.

So, here’s a big lesson in negotiation:

You get more with honey than with vinegar!

It’s not always true (what in life is, these days?) but it’s mainly true.

Personal Experience #2

A few years back, I worked for a US-based, IT Outsourcing company whose no.1 customer - a global telecommunications firm - in terms of revenue (measured in $billions) had a big argument

The relationship had been imposed (they’d not been involved in the decision) on the outsourcing firm’s European operations which resulted in a large amount of resentment.

There was no real relationship in place; we were mandated to use this firm for all telecoms services which undermined the existing telecoms relationships we had.

All the usual qualities normally considered in large-scale business relationships such as Culture, Values and Strategic Fit

all went by the wayside and instead we just had to do business with this other firm.

That resentment I mentioned earlier is an example of conflict which, if unchecked, results in a poor relationship, which at some stage results in poor performance. In turn, poor performance flows through to costs.

Lesson learned: Poor relationships cost more money to maintain than strong relationships.

Conflict is All Around Us

Even as I write, my wife and I are having a little “conflict” with the hotel where we’re guests.

They’ve literally just asked us to move tables in the next 5-10mins as our table was actually reserved for someone else, which they neglected to tell us about when they sat us down for coffee!

My point is that conflict is all around us and we have to develop the skills to manage it or business will suffer; customer or working relationships will never realise their full potential and we’ll be forever at the mercy of external threats, such as competition.

Back to the outsourcing firm I mentioned earlier, we spent (or should that be invested?) >$30-million trying to understand the issues in order to get the relationship right with our single biggest customer.

Yep, more than $30-million!

Yet, that investment was been recouped many, many times over, not just in purely financial terms but in operational resilience terms too. It has withstood the constant threat of competition yet the relationship remains largely intact due to the investment in effective customer relationships.

My Take

  • Relationships or Deals are never in the bag, you cannot afford complacency

  • We can all get out-sold by a better, politically aligned competitor at any time

Customer relationships require continual investment and nurturing

My 5 x 5 Advice:

· Identify your top 5 customers by (preferably) profitability

· Create relationship strategies for the top 5 contacts in each

· Create a Strategic Plan for each Account

· Will the customer endorse and communicate your plan?

Remember, everyone in your company is either in sales or supporting sales - it’s not all down to you of course, but it is all down to you to manage!

Invest in your key relationships - find out where to prioritise your time

Identify specifically which relationships are the most important to you and Invest to protect and grow the account

Account Strategy/Plans?

· Always ask the “what if” question - what if we lose this account?

· Are any of your top 3 customer relationships in difficulty or at risk?

· What would happen if the customer terminated the contract? How would your fiscal performance look then?

If the answer to any of the above questions is either 'yes' or 'maybe' then maybe it's time to manage that risk.

Does any of this sound familiar?

I specialise in getting key customer relationships back on track and producing more for the benefit of all stakeholders.

So, for a confidential chat, message me

I look forward to hearing from you!

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