Client relationships are a peculiar, they can take forever to develop and nurture, and can be terminated at short notice. Conversely, they can feel secure and comfortable, yet don’t deliver as they should. How can you gauge the health of your relationships? What are the signs it may becoming just too cosy to deliver growth?
At sometime or other, most B2B relationships experience it. What starts as a simple transactional relationship develops through joint planning and mutual working into a mature interdependent relationship, and just as you think you’ve got it cracked, you find that it has slipped into overdependence which means that opportunities for commercial development have snapped shut. Or, in worse cases, become disadvantaged through coercive power – we really need an additional 2 % discount to offset the pressure from our competitors or we may need to look at other supply sources.
What are the signs to look out for?
- Do you rely on your client for informal feedback instead of putting robust monitoring systems in place?
- Do you feel so at ease and satisfied with the client relationship, that it’s become complacent? Do you avoid decision making, and settle for outcomes that don’t quite meet your objectives? Do you take at face value the performance levels?
- Is your relationship with the client full of unnecessary obligations? I.e. producing internal reports, undertaking analysis and insight generation , market reports, etc.
At best, when a B2B relationship displays these symptoms, it is likely to either be in decline or on the verge of decline, unless rescued.
A common theme of decline is the personal nature of the relationships, the ‘one to one’ contact that develops – ‘that’s Bill’s customer, everything has to go through him,’ and Bill deals with Roger, a similar gate-keeper on the customer side of the business. This way of working still dominates many sectors – Industrials, Financial Services and Investment banking B2B, to name but a few – you’ve only got to look at the sub-prime fiasco, and subsequent financial meltdown in 2008, to understand how over-dependent relationships decimated business.
This ‘gatekeeping function’ can extend to group thinking – people with strong bonds tend to build self-reinforcing business processes that make them less able to adapt to environmental changes. Potentially, this not only keeps situations stuck, but can amplify the cost of corrective action.
Lastly, these strong group bonds (inside or between companies?) can operate as a filter preventing information reaching the key relationship partners. This generates a cognitive ‘lock-in’ that isolates the organisation from the outside world, leading to relational inertia, and making high trust relationships extremely resilient to losses in the actual value they were set up to deliver in the first place.
To summarise, it pays to carefully monitor the quality of your client relationships. Excessive trust in one’s partner impedes you from taking corrective action facing an objective performance decline, which can lead to larger and more sustained losses, (advantageous to your client), before corrective action is ultimately engaged upon.
If You Only Do One Thing… rotate the account team on a three~ four year cycle.
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