As a friend and client provided the blow by blow account of his company’s participation in an online reverse auction, I listened in horror. As you may know, a reverse online auction is the business version of Online Limbo, in which the prospective customer or client invites suppliers to bid on a specific project or piece of business.
Once you register as a participating supplier, you check the specifications of both the auction and the product or service for which you’re bidding. Once the clock begins, you have a preset time period to bid for the work. Here’s the limbo piece: you choose, based on how badly you want the business, just how low you can go by the price you offer.
The worst news in such a scenario is not whether you’ll get the business or get it with a reasonable margin to deliver it. The toughest element here is that the relationship has been replaced with an impersonal, no-holds barred, price-comes-first basis for doing business. While this is often perceived as an extreme practice and a shock to those invited to participate, it signals a situation in which value has turned into a commodity and the customer or client now paints all prospective suppliers of the product or service with the same brush. In short, you just don’t want to be there.
The true value of customer relationship management
Consider this vintage bit of sage advice: The best time to make a friend is before you need one. If you’re blindsided by the invitation to such an event, make every effort to remove yourself from that situation, think hard whether you can afford not to participate and look closely at the relationship that hangs perilously in the balance.
Having worked with clients up to and through the onset of online, technological transformation of business sectors, I regularly see entire industries faced with the hijacking of key information. Individuals and businesses formerly held such information close to the vest as part of their client/customer value equation. It arrived earlier in some sectors and later in others. The common theme is that if it hasn’t already intervened in your value equation, expect that it will. If you haven’t already considered and/or taken action to somehow add it to your arsenal, you should at the very least evaluate it. Realistically, if you’re just now considering it, you may be hopelessly behind the curve, which could require a radical reshaping of your business model. That’s another topic for another time. For now, look at the impact that such advances may have on your client/customer relationships.
Consider the value of customer relationship management based on these facts:
- You lower your cost of sales with repeat and return business – Perhaps you’ve heard the research citing the savings involved. It costs a minimum of five to six times more to do business with a new client or customer than it does to continue, resume or restart doing business with someone who already depends or has counted on you for something he or she values.
- You improve the frequency and quality of referral business – Brian Tracy calls it the golden chain of referrals, that wonderful place characterized by getting so busy following up on referrals from clients, customers and friends that there’s no time for prospecting and cold calling. In addition, the selling cycle shortens, as it does with returning clients and customers, because the trust bond between your customer and the referral transfers to you. Note here that while referrals sometimes arrive as manna from heaven, top relationship managers ask for personal introductions and referrals as part of their regular sales improvement arsenal.
- You build credibility in the mind of new prospects with a strong client/customer list – When you can show a list of customers and clients that is a veritable who’s who in a vertical industry, specific profession or key geography, you can often gain instant credibility with those who are considering your products or services. This is also true with reference lists containing contact information of key clients and customers who can and will speak with prospects straightforwardly about the value you bring to them.
- You enjoy high strength of network – In addition to the value you can provide with your specific products and/or services, your ability to connect people often depends upon the level of your relationship with them. Recently I met the president of a business relocating to the area. In a first meeting, I was able to accomplish three key objectives. First, I secured an introductory meeting between him and the founder of a client organization. Both are busy executives, yet they afforded me the time to meet one another based on my knowledge of and relationship with the client. Second, the relocating executive also agreed to be my guest at a local business association luncheon, where he was able to make valuable new contacts for both business and networking purposes, as he’ll need many services covered by those attending the event. Third, the relocating executive provides a very attractive package for trade associations, so I was able to connect him and his offerings to several such organizations, either clients or professional groups of which my firm is a member.
Check your own level of customer and client relationships
How do you know just how strong the relationship is with your key customers or clients? Check each against this scale of customer relationship value:
- Top of the mountain – Your client or customer can’t live without you. You’re perceived as essential to his/her success/effectiveness. You enjoy consistent top of mind awareness (TOMA) in key outcome areas, and you’re asked as a trusted advisor before that client buys anything in or near the realm of what you provide.
- Near the summit – Your customer can live without you but would rather not. You’re perceived as helpful to client/customer success/effectiveness and you enjoy regular TOMA when one or two topics or areas of concern surface.
- Still climbing – This client can live without you and might miss you occasionally at holidays and other gift-giving times. You’re perceived as a role player who, if the price is right, can assist in some minor area of client/customer success/effectiveness.
- A few feet above the foot – This customer can live quite well without you and usually seems glad to hear from you. Your mailing goes into the inbox stack for later review and possible action.
- Sea level – This client is living very well without you and will take your e-newsletter as a kind gesture to avoid any hard feelings on your part that could result from his or her unsubscribe request. You figure into none of this client’s plans and rarely does your name surface in thinking or conversation. You’ve either been gone so long or never enjoyed any measure of standing. With no momentum, growing this relationship may be best characterized as slow and heavy lifting.
By looking realistically at your strength of relationship by client or customer, you can also predict with reasonable certainty the volume and profitability of business you’re likely to win from each.
How to build and enrich your customer and client relationships
Here are some ways in which you can be sure to maintain and enhance your relationships with key customers, clients, suppliers and associates:
- Be sincere about improving their results and show it – First and foremost, provide deep and lasting value with whatever you sell to your customers and clients. To the degree that you’ve done what you committed to doing to add value to a person, team or organization, you’ll be known as reliable and a valuable asset to that person or business.
- Show that you’re thinking of them when you’re not asking for business, money or favors – Reach out and touch with no strings attached. Read on their behalf and send a book, a clipping, a link to a story or web site that pertains to their business or industry. One of my favorite ways to do this is to share stories I’ve found in the online editions of newspapers and magazines to which I subscribe. They almost always provide subscribers with an easy way to e-mail a story or item to anyone with an e-mail address. It takes a few moments, costs nothing beyond your existing subscription and shows that you care.
- Read on their behalf – With the ever-increasing load of information available, no one can read everything pertinent to his or her business and interests. Become a valuable partner to someone by reading items and books valuable to them and their business. Send the book or article. Give a year’s subscription to a particular periodical and check back to see how valuable the recipient has found it to be.
- Connect with them while adding true value – As you deliver your product or service, provide a bonus of some sort. Go beyond their expectations of the typical transaction and delight them with a gift, an added volume of the product or service or a related item of value.
- Give them something they can find nowhere else – In a society where anyone can purchase virtually anything, provide a gift or product that’s otherwise unavailable. I learned this from Rufus Barkley, the late chairman of Cameron & Barkley Company. He would give friends, associates, employees, customers, suppliers – nearly anyone who stopped by his office – a special, homemade mustard that he had discovered locally. He apparently purchased cases of the product from its maker, who didn’t take the steps to make the mustard available commercially. You can do this with food items, innovative crafts and products from faraway lands.
- Be the best referral source they’ve ever seen – If you sincerely want to stay close to someone in business, send referrals, provide personal introductions and generate opportunities to sell that client’s products and services by bringing prospects and customers. Nothing says you love customers more than by beating the bushes to help them grow their own client or customer base, hit their numbers for the month or quarter and grow their own circle of influence. Be sure to ask them for the ideal profile of their customer or client, get to work combing through your own network and let the matchmaking begin.
- Change it up now and then – As Wayne Dyer has said, some people live to be 70 years old. Others live to be 30 and relive their 30th year 40 times. When you do the same old thing time after time, you run the risk of having someone feel as if you’re merely going through the motions. That, of course, defeats the original purpose. Instead, keep an eye out for new ways to tell others you appreciate and value them. Even if you just take a break from a particular method of giving for a year or two, you will likely see a renewed sense of gratitude when you return to that particular practice.