Building Great Business Relationships for Business Success : Feature Article; V3 Issue 4

Your customer, your supplier, your strategic partner, your vendor, your banker and others who help you execute your role responsibilities and do your job smoothly are all people that you have a business relationship with. Apart from delivering quality service or making timely payments ever thought about how your business relationships can be strengthened. Why? Well, look at the benefits of building a strong business relationship and see if you can think of any reason why you shouldn’t.

The benefits of building strong business relationships

The benefits of building a strong business relationship can be best illustrated with some examples. The benefits are also indicators of a great business relationship.

Ok so there are plenty of reasons why you should be forging strong business relationships. Now how did Raj, Sameena, Gautam and Shibu build these relationships? Is there a formula? Perhaps yes. 

Building business relationships

Talk to a few people who have built great business relationships and this is what you will discover. While depending on one’s’ personality and creativity there are umpteen styles one can adopt, from enquiring about family to playing golf, to build a relationship, there are still some fundamental rules which apply. These tried and tested rules for building and sustaining a good business relationship are:-

• Learn as much as you can about them: What is their business strategy? What are their short term and long term goals? What are their company values? What is their internal structure and practices? Who do we need to know at the organization to build the relationship? Don’t just learn about them, act on that knowledge. When their needs change, be there to provide them with what they need to stay happy with your business. Knowing the client/vendor partner/ service provider in and out will help you extract better value over time from them.
• Set clear expectations and provide support: Tell your clients what you can and cannot do. Tell your vendors how they can assist you. Give them all the information and support they need to serve you. Suppose your six sigma consultant wants all key stakeholders to be there in the kick off meeting, ensure they are there.
• Strive for mutual benefits: If you want them to work for the success of your business, you need to also do the same for them. When you renew that contract with your supplier don’t just work out the savings you will make but also the value of additional business the supplier will enjoy. Highlight to your partners, the additional benefits they get from working with you – they will value your business more.
• Enjoy equal relationships: Interact with your clients / vendor partners on a platform of equality. Drive them to respect you for your intellectual contributions to their business. Look for these opportunities and play an ‘Advisory’ role to all. Once your intellectual contribution to their business creates value for them they are hooked to you - provided you keep following up with more intellectual contributions!
• Communicate: Inform them about changes that take place. Acknowledge mistakes and keep them informed of the corrective actions being undertaken. In difficult situations avoiding phone calls and emails simply because you do not know what to say or are afraid of saying the wrong thing will lead your client thinking the worst. If your business partner or client knows and understands your situation, they are much more likely to accommodate any inconveniences caused.
• Stay connected: Find ways to remain connected through phone calls, personal visits etc with people you want to further business with in future even if today they are not doing business with you.
• Connect emotionally: A 2003 Gallup study suggested that no matter how high a company's customer satisfaction levels may appear to be, "satisfying customers without creating an emotional connection with them has no real value.” Some of the ways you can connect emotionally with people you want to build business relationships with are by…
  
  
  • Listening: Listen carefully to what they have to say, to their opinions and feelings. This way you will be able to empathize with them and understand their needs well.
  • Telling stories: Sharing with your customers, stories of challenges you have encountered in business in the past is a way of humanizing who you are. These stories remind them that you are not all that different in terms of your aspirations, goals, as well as in terms of what you worry about. This increases their feeling of connectedness to you.
  • Being thankful: Take every opportunity you can to demonstrate how thankful you are of them associating with you in business. It can take the form of thank-you cards, festival greetings, spending time with them over lunch etc.
  • Being thoughtful: This requires knowing the different needs of different people. So while one business partner may value a book, another may value tickets to a cricket match and another an interesting article on the internet related to their business.
• Show appreciation: Always recognize a job well done. Everyone likes to be told they've done a good job. Give a ‘Best vendor’ award. Call your banker to tell him/her how much you appreciate him/her for doing a good job of managing your funds. Include your business associates in your company’s celebrations of business success.
• Act with integrity: A key component of having a successful business relationship is integrity ie., honesty, truthfulness, honour, veracity, reliability and uprightness. It is the quality of possessing and steadfastly adhering to high moral principles or professional standards. This means you honour your commitments be it making payment to a supplier or meeting your client delivery schedule. They will trust you because they know they can accept your words as honorable, without any hidden meaning or agenda.
• Refer business to them: Refer business whenever you can to a person you are in business with. Rest assured you will have earned a well-wisher for your company.
• Be responsive and punctual: Return all phone calls and emails as soon as possible. Your delay in response will be considered a sign of not caring enough for the relationship. Value their time. Be on time for your appointments with them.
• Be flexible: Being flexible when say a vendor cannot supply the required material, but is providing an alternate material, is important for strengthening the relationship. Instead of getting annoyed, try and understand the problem the vendor is having and how you can minimize the impact on your business.
• Don’t be rude: This is an obvious but important rule. If you don’t’ like the design options given to you by your website designer, there is no need to be rude about it. Give him/her feedback about what you like and want different in a nice way. Be pleasant and respectful at all times.

The Relationship strategy

Now is it possible and is it required that you build enduring business relationships with every person you interact with at work. No, that would take up too much of your time and energy. Everybody need not be rewarded with your loyalty. You should instead follow a relationship strategy that allows you to focus 80% of your time on 20% of the relationships that can help you reach 80% of your business goals. A core relationship strategy has five steps:

1. Develop criteria for ideal and nightmare business relationships: For instance some common criteria for ideal client relationships are:- 

• Long-term revenue and profit potential (beyond one year)
• Fit with your personality style
• Fit with your target market
• A budget for your services, and willingness to pay
• Fit of their needs with your skills and capabilities
• Visibility of the client and their projects
• Opportunity for you to develop new skills, a new marketable product or service

You must choose criteria that are most suitable for you and make them as specific as possible. For instance it could be ‘The client will challenge me to remain on the leading edge of software design techniques and tools’.

2. Rank your relationships: Once you have a good list of criteria for each kind of relationship, you should list all your clients, vendors etc and rank them in terms of the criteria.

3. Focus on the top ones: Develop a plan to reach out to, and build your relationship with the top 20% on each of your list i.e., client, vendor etc. Most likely these 20% will turn out to be completely different from the ones you are today spending a lot of time on. Don’t worry about it.

4. Do away with the bottom ones: You should discontinue relationships that are a nightmare. That way you no longer have to tolerate poor service and serve clients who are unwilling to pay you adequately for your work. Part company gracefully and gradually. Explain diplomatically why you need to move on. Suggest to them some other resources that can help them.

 5. Watch the middle ones: These are neither your best nor worst relationships. Relationships in this category are to be watched. Serve them well, and see if you can convert them to meet more of your ideal criteria. Focus your attention on your top relationships, but do not abandon the revenue and goodwill that comes from the middle of the pack.

Conclusion

If after having followed the relationship building rules and strategy you find you are still not benefitting, just give it time. It is going to bear fruit one way or the other. Take for instance what happened with us. We send our newsletter Prerana to all our existing and potential clients. A company we have been sending the newsletter for two years contacted us recently and we have signed a long term contract with them.

References

  10 Ways To Strengthen Your Business Relationships, December 7, 2007

  Pedro, O, Building Customer Relationships as a Critical Part of Selling July, 2006

  The Key Component To Having A Successful Business Relationship, July 15, 2008

  Francis,C, Connecting Emotionally: a Vital Way to Build Deeper, Meaningful Business Relationships January 15, 2009

  Neitlich, A, ‘How a Core Relationship Strategy Can Help You Increase Profits’, January 4, 2005

Recession proofing your business – Going beyond Cost cutting : Feature Article; V2 Issue3

There is a dip in profits. Budgets are getting smaller. Company stock prices have plummeted. Recruitments are slowing down. Demand for goods and services are falling. Are we or are we not in a recession? While the debate is still on, business managers cannot afford to simply wait doing nothing. It’s prudent to start taking appropriate measures to recession proof your business at the earliest. Use this time to become a leaner, more cost-effective and more efficient operation.

Recession proofing your business must start with remaining a cost effective enterprise through the current downturn.  I am sure your company must be already on to cost management measures like conserving cash, minimizing inventories, monitoring cash flow, making purchases wisely etc. While it is important to manage your costs it is equally important to manage other areas of your business to outsmart your competitors in times like this. Let’s look at what you as a manager can do.

Beyond managing costs
Needless to say you must do all you can to effectively implement in the department, unit or team you are managing, the cost management plans developed by your finance team. But look beyond that to manage recession.

• Adapt quickly: This is an obvious one. When conditions change you can survive only if you adapt to them. Review the area of business you are managing and see how you need to adapt it to it, not only to combat problems but also seize opportunities. You may have to modify your selling strategy or change your employee engagement plans or take a re-look at your sourcing channels.

• Stick to your long-term vision: Your long term vision tells you the reason for your business’ or department’s existence. Reconnecting to that vision will help you stick to your long-term approach and keep you going even though you are tempted to adopt short term measures.

• Sharpen focus on business plan: Your team will look to you for company, department or team priorities. A clear business plan, an appropriate team structure, streamlined processes, the right performance measures, accountability system and rewards are extremely important in times of uncertainty. Make adjustments to how you recognize people during these times. You need everyone to be focused on revenues and costs.

• Get aggressive in the marketplace: Continue actively selling and marketing your product or service. Consider adding a salesperson or even an additional service to give you an edge over competition. Being in front of customers or vendors builds confidence that you are a long term player. You can gain market share from competitors unable to adjust to shifting market conditions. Similarly don’t stop recruiting altogether. Ensure company presence in the recruitment market by continuing recruiting. You would want to retain recall of your company among your prospective employees.

• Provide quality service/products: The buying power or willingness to spend is lessened during tough economic times. So to build your customer base and induce current customers to raise revenues, it is importance to provide good service/product. Don’t compromise on service or product quality especially by being understaffed. Instead of hiring full time employees, explore other options like freelancers, consultants and part-time employees. This holds true for not only external customers, but also internal ones.

• Keep your people engaged: Your most valuable assets are your team members and to get the best of them, you need to keep them engaged. Anxiety levels among them can be high in tough times. So make sure they understand that you are building a lasting and successful enterprise and that some of the cost cutting measures, including layoffs, are necessary for the health of the company. Make your people part of the solution by involving them in initiatives related to cost cutting etc. Avoid widespread cost cutting and layoffs that can undermine employee morale. Disengaged employees can weaken competitive position, endanger future profits and increase turnover inducing star performers to leave. And this is definitely a time when you need your stars to help you figure out things.

• Train your team members: While you may think it is wise to cut down training expenses, experts say this is a good time to invest in training especially on-the-job and cross training. This will also engage employees and help you get ready to take on the market when conditions improve.

• Improve productivity: Monitor and improve productivity levels. Get more out of your team by helping them focus on the right deliverables. Use technologies that enable you to eliminate inefficiencies and reduce costs.

• Maintain strong relationships: While maintaining good relationships is important at all times, during a slowdown one may forget to do so. Don’t!

  • Customers –Did you know the costs of acquiring new customers are up to five times those of maintaining and selling to existing customers? Hence allocate resources to strengthen relationships with your best customers. Being close to them will also alert you incase competition is trying to acquire them as their customers.

  • Suppliers – Even though you may shop for cheaper sources of raw material etc, do not cut off all relationships with existing suppliers. Let them still fulfill part of your need. You do not want to antagonize them since you never know who you may need in future.

  • Banks – Banks are looking for business to boost their income, but are also trying to minimize risk. They are careful about what kind of loans they give. Assure them of your financial position so that they give you an ‘over draft’ facility when required etc. However, seeking additional credit during a recession is not advisable.

• Be prepared for economic recovery: During the 1990 -1991 recession, Dell perfected its demand-pull production system, and Intel launched its “Intel Inside” branding campaign. Both companies emerged as stronger competitors and grabbed the largest share of profits in their industries over the following years. If you have viable business idea, invest in it, maybe conservatively, but do invest. This is the time to look out for talent, physical assets that were not available to you earlier. A friend of mine working in a financial company tells me every second day he gets a CV of a talented financial professional. This was unheard of in the past.

• Think long term:  In every aspect of the business think long term. For instance though every rupee saved is a rupee earned, you should be careful while cost cutting. Very often we tend to focus on immediate, piece-meal remedies and ignore the long-term implications. But wise cost management is not only about reducing short-term costs but also achieving lasting competitive advantage. Your business must incur costs to remain competitive - costs of attracting and retaining talent, costs of research and development, costs of building your company’s brand and maintaining company infrastructure.

Doing things differently, some examples….
If you thought cost cutting, reducing reliance on financial sectors or US markets and layoffs are the only measures being undertaken by companies, you are wrong. This is a time to think afresh and get creative on running a business. Check out what some companies are doing or have done differently to manage recession.

Conclusion

Of course what may work for other companies may not work for your company. Figure out what does. What is important is that you take a holistic approach and manage all aspects of business effectively. That way your company will be better positioned to do well when the economic conditions improve or you may just find for example that when business picks up you have client orders, but no talented employees left to execute them. Also remember the lessons learnt during recession. They can be valuable to you even in good times. All the best!

References

1. Legge,B, ‘Managing During the Recession’, http://www.leggecompany.com/Managing%20During%20the%20Recession.pdf.
2. ‘Survival Tips for Managing During an Economic Downturn’, http://www.sba.gov/idc/groups/public/documents/ri_providence/ri_econ_survival_tips.pdf.
3. Sujan, S, ‘Ten Tips For Startups To Ride Out The Economic Slowdown’, October 27, 2008 ,http://www.vccircle.com/columns/ten-tips-for-startups-to-ride-out-the-economic-slowdown.
4. Radjou , N, ‘Recession-Hit Indian Firms Experiment with New Innovation Strategies’, November 7, 2008 , http://discussionleader.hbsp.com/radjou/2008/11/recessionhit-indian-
it-vendors.html?cm_mmc=npv-_-DAILY_STAT-_-NOV_2008-_-STAT1107.
5. McGregor ,J, ‘Managing Employees in a Downturn’, November 3, 2008, http://www.businessweek.com/magazine/content/08_44/b4106051107138.htm.
6. Kumar , D, S, ‘Economic Slowdown: Consumer durable companies put up a brave’, October 27, 2008, http://www.afaqs.com/perl/news/?sid=22479.

Social Networking – Changing the Context of Doing Business: Management Funda; V2 Issue 2

You find a perfect candidate for the new role in your department. You get insight into the management philosophy of your competition. Your company gets publicity.  All with some clicks of your mouse! Without attending networking conferences or exchanging business cards! Welcome to the new form of networking - social networking!

How does social networking work?

In general this is how social networking works…

1. A website owner establishes the style of the network, provides the functionality, creates/imports content and sets the rules.

2. A friend or contact invites you to join the networking service or you join by visiting the site and signing up. With most services the initial signup is free.

3. You create a profile describing yourself/your company and your interests.

4. You connect to your friends/colleagues or clients/suppliers and their network.

5. You further expand your own network via message boards, emails, blogs and by connecting with members with similar interests.

The best part of a social networking site is that it enables you and your company to connect with people who may not be familiar with you, or with your organization. Because you already know someone who knows them, you can begin a relationship with more trust and warmth than with a total stranger. According to the Hitwise, the online intelligence service, internet visits to the top 20 social networking websites in 2007 accounted for 6.5 per cent of all internet visits. The popular Orkut and Facebook are some of the networking sites used for personal purposes. LinkedIn.com and Ryze.com are some of the networking sites used mainly for professional and business purposes.

Social Networking changing business context

But should you or your company be investng time on networking? Because though it is in the early stages, social networking along with other web 2.0 tools (blogging, wikis) is changing the way we do business.

• New customer relationship management tool: Entrepreneurs and small businesses can expand their contact base easily since social networks connect people at low cost. These networks can act as a customer relationship management tool for selling products and services. Companies can advertise in the form of banners and text ads. For businesses operating globally, social networks can make it easier to keep in touch with contacts around the world. It helps in being more responsive to customers. Gerson Lehrman Group’s expert network connects customers to subject matter experts who can address their concerns etc.

• Increased internal and external communication: Social networking tools are easy and simple to use.So more and more people are communicating things they would otherwise not have communicated. Federal Aviation Administration (FAA)’s 200 or so disaster recovery specialists have invited people to join their networks so that post disasters, through communication with their contacts they can respond faster and more effectively.

• Collaboration and better knowledge management: Individuals and organizations needing a capability or service that is not within their reach, use social networking to work together with other individuals, communities and organisations. Flowserve, an industrial manufacturer built an internal version of Facebook. Its employees spread across 55 locations could now develop relationships and communicate with each other to leverage on each other’s knowledgebase to solve common problems.       

• Innovation: The collective intelligence of colleagues, peers in other companies, suppliers and customers can be tapped to develop innovative services and products. IBM India has seen that their social networking tools create healthy discussions around research and development thus contributing to the improvement of their products, processes and policies.

• More transparency and accountability: With increased levels of communication comes greater tranparency and companies are becoming more accountable for their actions to their consumers and employees.

• Hiring and working with people we know: Studies have found that those hired through social networks have a lower attrition rate and earn more than employees hired through other hiring methods.

• More connected workforce: More than 300 Zappos (an online shoe retailer) employees use social networking to let friends, colleagues and customers know what they are doing at any given time in the day. This informal and frequent communciation keeps employees connected. In India TCS is developing an interactive corporate directory called My Site. Employees can create a buddy list and connect with others having similar interests thus increasing bonding among employees irrespective of hierarchy.

• Increased C2C marketing: Messages being delivered from business to consumer (B2C) are being supplemented with consumer-to-consumer (C2C) messages about products and services through the social networks. So companies are finding ways to tap into them in order to be aware of them and influence them positively.

Looks like social networking will provide a new powerful way to get work done by making individuals and organizations more agile and efficient through better communications and sharing of expertise. Of course all this is possible if you use social networking effectively.

Using social networking effectively- few tips

• Choose the networking sites wisely – those which suit your requirement rather than the ones people have sent you invites for or other companies are using.

• Create a user friendly profile by ensuring it contains all the relevant details and gives the right impression about you or your company.

• Extend invitations to connect to friends and people or in the case of a company, clients, suppliers who know you.  You don’t want to create spam for people who have not heard of you right. Also don’t be pushy. It may put off people.

• When you make a request for connection clarify your intentions ie., is it to find a candidate, discuss common interests, get product improvement ideas etc.

• Invest time in networking. Learn what works and does not work. Be clear what you are trying to accomplish through networking to use the time spent on it fruitfully.

• Display networking etiquette like responding to requests promptly, being truthful about your employment status etc while connecting with people and by not connecting with people every time you have news about yourself /your company or need some help.

• Aim for relationships rather than transactions. Help others before seeking help from them.

Conclusion

Is there a downside to social networking? Though networking sites are mindful of your privacy you cannot stop a person from writing to you or writing about your company. Maintaining your network will require taking out time from your already packed schedule. You may also feel emotionally disconnected with people you are in touch with only online. Valid concerns. But there are ways to take care of them. For instance you can talk to your contacts on phone or meet them in person to get a feel of the real people behind the emails.  And considering its various benefits it is worth making the effort. Soon social networking tools developed for use within organisations will be here (A McKinsey's survey found that 37 per cent of the executives interviewed were using or planned to use social networking functionality within their companies.) And when it does you and your organisation will be ready.

References

1. Taylor,D,“The Business Blog at Intuitive.com”, http://www.intuitive.com/blog/etiquette_for_linkedin_and_the_professional_networking_world.html.
2. Hoffman, A, “Seven Tips for Social Networking Online”, http://career-advice.monster.com/career-networking/Seven-Tips-for-Social-Networking-On/home.aspx.
3. Steckerl,S,“Start Networking Online”, Jan 2, 2007,http://www.ere.net/2007/01/02/start-networking-online/.
4. Fitzgerald ,M, “Why Social Computing Aids Knowledge Management”,http://www.cio.com/article/395113/Why_Social_Computing_Aids_Knowledge_Management_.
5. “The impact of social media on corporate culture”, http://gneil.blogspot.com/2008/06/impact-of-social-media-on-corporate.html.
6. http://www.livemint.com/2008/06/10001221/IT-companies-jump-on-the-socia.html?d=1.
7. Atchison, S, “Social Networking ROI: Measuring the Impact of C2C”, Jul 12, 2007,
   http://www.clickz.com/showPage.html?page=362638.
8. “Social network service”, http://en.wikipedia.org/wiki/Social_networking.