It’s a Relationship Business!
That four-word phrase is probably the most common statement we hear when we talk to sales people about their business. It is even more common than the statement, “It’s a Price-Driven Market” – though more often than not those two statements travel closely together.
Do You Have Brothers and/or Sisters? The Limits of the Relationship
To challenge the assumption that businesses are primarily relationship-driven we ask salespeople the following questions. Here they are, with the typical answers.
Q. “Do you have a brother and / or a sister?” A. “Yes.”
Q. “Do you have a good relationship with your brother or sister?” A. “Yes”
Q. “If your brother or sister tried to sell you something that would be detrimental to your business, would you buy it?” A. “No (expletive deleted) Way”
Q. “What if they threatened to would tell your Mom that you refused to buy from them, would it change your mind?” A. Laughter. “No”
Here’s the point: All relationships, even good ones, have their limits
Relationships are based on trust.
Any activity that violates trust, violates and detracts from the relationship.
Let’s look at the Trust Equation, developed by David Maister, Charles Green and Robert Galford in their wonderful book “The Trusted Advisor“. According to Maister et al, Trust equals the sum of= (Credibility + Reliability + Intimacy) divided by (Self Interest).
T = (C + R + I) / SI
Anything a sales person or their company does to lower Credibility, Reliability or Intimacy, lowers Trust and damages the business Relationship. As you can also see from the equation, anything that blatantly demonstrates your, or your firm’s, Self-Interest also damages Trust and thereby the Relationship.
Nothing in the equation can affect Trust more than the amount of your self-interest perceived by the customer. The higher the Self-Interest perceived, the lower the Trust.
Here’s the point. Depending on the Relationship alone can be perceived by the customer as inherently demonstrative of high Self-Interest. In Relationship terms, “They want me only for my money.”
What Relationships Can and Can’t Do
Relationships can:
- Get you an audience to make your case
- Buy you some time and patience when you or your company screw up
- Get you early, but not necessarily exclusive, notice of a new opportunity at an account
Relationships can’t:
- Make up for a significant competitive shortcoming in your product or service offering
- Repeatedly cover for your operational team’s inability to deliver
- Make up for poor product or service quality
- Find and win completely new accounts
- Provide you more than a few percent price premiums
- Make up for poor market targeting
- Make up for fundamentally slow market momentum
- Fix functional short-comings in your products
Here’s the Point: Don’t get complacent because you have good relationships.
Don’t Shoot Yourself in the Foot
Believing that your relationships give you enormous power is, for the most part, fallacious thinking, and can actually ill-inform you on what you and your company need to do. Here are some examples:
- If it’s all about relationships, what impetus will your engineering team have to design better products?
- If it’s all about relationships, why should your firm ever reduce prices or negotiate terms?
- If it’s about relationships, why should operations need to worry about quality? Or delivery?
Here’s the point: Bragging about the customer relationships you have can simply provide unjustifiable cover for others in the organization to not execute their job as effectively as they should. Remember, it’s still a very competitive world out there.
One More Point: The Fallacy of the Rolodex of Relationships
More often than is advisable, a client will enthusiastically recruit a sales person based on the contacts that sales candidate has amassed during their illustrious sales career. Sales people treasure and protect to the death, their sales contacts and consider that list as a strategic personal asset. It becomes a key feature in the personal selling proposition they use in seeking a new job.
Rolodex provides a great tool for managing those. However, even the best list of Rolodex or CRM-managed contacts, can rarely, for the long term make up for business shortcomings in product, service, delivery, quality, competitiveness and value.
Let me illustrate. In 1970, General Motors had roughly a 50% share of the US auto market. That market share was supported by an incredibly, well-established national network of dealers and sales people. Everyone knew everyone.
Since 2000 General Motors had lost roughly 50% of that 50% share.
Here’s the Point: Relationships aren’t everything.
Recommendations:
As much as has been written in this blog about the fallacies and dangers of dependence on customer relationships, let me make a final few points.
- You must continue to develop your business relationships
- You must continue to nurture those relationships based on paying close attention to each of the key elements of the trust equation
- You must not, for a moment, let the rest of your business team off the hook by bragging and convincing them they only need to depend on your ability to develop and maintain good customer relationships
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Copyright 2013 The QMP Group, Inc. All Rights Reserved
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