Wednesday, May 06, 2009

Winning In The Relationship Economy

We are living in a "relationship economy" where you need to have more than just skills to find success. There are many people with talent, as that is the currency you are expected to pay with to have a seat at the table. Talent and education are important, but they are not enough.

Hard work is good, but again, in the current global financial climate, everyone is working hard. There are still only 24 hours in the day. Time is the great equalizer in the current situation. No matter how hard you want to pretend you are working, others can match your effort.

Decision makers are facing hard choices in all areas and they cannot afford to make mistakes. Those selecting vendors or making hiring decisions are frightened as their own futures might be hanging in the balance. They are confused, as they have multiple options. They will use their heads to gather information, but will make the final choice with their heart.

It comes down to your reputation and how they "feel" about you. This can be your individual or corporate brand in the community, but in this "relationship economy" it is all about perception.

This angers some. One person I know with an MBA was dumbfounded when a promotion he coveted went to a co-worker who had never finished college, but had come up through the ranks in the company where they both worked. It never dawned on him that her relationships could trump his sheepskin in the world of the corner office.

A sales professional friend recently lost a deal to his competitor because an executive at the prospective client "liked" the owner of the other company. He did not even know how to compete in this arena, since he worked for a larger out-of-town corporation, thus he had no local boss.

The mistake that many people make is they put too much faith in the "USP" (Unique Selling Proposition) of their product or service, without regards to what the marketplace values. If you are selling a commodity (or if your clients can remotely see your product or service as a commodity.... remember, perception IS reality!), then you are wasting time in how you are pursuing business.

Relationships matter.

Do not rationalize your way around this.

Look at your competition. Do people know them better? Do referral sources like them better? Are they winning business? Are they opening new accounts that you are not aware were seeking your services until after the fact?

If you answered "yes" to the above four questions, or discovered yourself focused on the subjective nature of the words "know", "like", "winning" and "opening"...then you are in trouble in the new "relationship economy". I am not kidding. This is a problem.

With business environments changing, too many executives are hoping that the changes are not real. But the "relationship economy" is not a fad. People do business with those they know, like and trust. This has always been true, but now they know more people. The internet, social media and other technologies make introductions, communications and information more pervasive. "Like and trust" are now head and shoulders above "know". It is easy to be known, but harder to reach the deeper levels that are needed these days.

You cannot rely on prospective customers hearing what you are saying, as there is too much noise out there. You must enlist the community at large to help cultivate your reputation by making you part of the ongoing discussion. Both live and online, if nobody is talking about you, then nobody else is thinking about you. Out of sight is out of mind, and that equals death.

So what can you do? Make this a major priority NOW. There is no time to waste if you think your competition is currently engaged in creating strong personal connections with those who have the ear of your business community. Either you control the conversation or you allow others to dictate what is said about you and your industry.

For real impact you might need to have paradigm shifts. Who in your organization is leading the charge for your outreach? (in person and online). It does not need to be the CEO, but a person must be publicly acknowledged as the "face of the firm". This individual has to have the visible support of the company management internally and externally. They must be seen as the credible spokesperson and have the respect of their co-workers.

The effort to expand your reach has to be an agenda item at all meetings going forward. When a company makes their image and visibility a priority they will see results. If they are just giving lip service to the topic or think there is a short term fix, they are destined to fail.

Finally, you must make a financial and time investment in your plan. You cannot reach the highest levels of reputation prevalence without an entertainment and education budget. Hosting informational and social events for clients, prospects and referral sources are key to extending your reach. A combination of live events and online webinars along with newsletters, blogs, PR and participation in social media will all work together. A pre-planned schedule with mixed activities will allow you to touch everyone you desire in a variety of ways.

In the end, success in the "relationship economy" depends on your taking ownership of your relationships.

Have A Great Day.



Tim Tyrell-Smith said...

Hi Thom -

I love the sense of urgency here. It sure seems that the ones with the strong, well-crafted relationships will win! Keep the great books coming!

Rusty Shelton - Managing Director said...

Good article, Thom. My opinion has always been that relationships are everything and they are certainly becoming more important in this economy.

Keep up the good work.