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Business Relationship - partnership
Posted by Colin Wilson
In Jun 08
Here is the fourth post in this series… the final relationship unmasked.
However, before I move on and provide the last definition I thought I would explain that there is a ’so what’ that needs an answer for this series. It’s all well and good identifying the different types of business relationships, but there needs to be a purpose… we need to do something with them, they have to mean something, they need some form of application… but before I dive into the so what here are the details of the last business relationship…
Business Relationship
As I mentioned in a previous posts, I’m sure there may well be more than four, but these are my four…
- Transactional
- Dependable
- Consultative
- Partnership
Partnership
Relationship with Customer: High level excellent relationships. CxO level relationships, middle management and low level.
Relationship Status: Trusted Business Advisor.
Customer’s Knowledge of their situation and how Vendor can help: High in relation to understanding their business. Will have good understanding of the strategic relationship between own business and what the vendor can help them with.
Customer’s Risk: Considered to be high due the nature of looking to solve strategic problems. However, vendor trusted to help manage risk.
Customer’s Expectations of Vendor: To proactively identify and help solve business issues. To have good multidisciplinary relationships. To have problems quickly resolved.
How the Customer Buys: Vendor / Customer or both jointly identify business issue. Vendor submits proposal. No RFP issued.
Vendor’s Value to Customer: Understands customer and their market. Proactive at identifying strategic problems to solve in order to develop customer’s business. Delivers solutions that reduce customer’s risk.
Customer’s Value to Vendor: Will generally have large spending power that is secured in the favour of vendor due to trusted business advisor status. Major projects.
Salesperson’s Value to Customer: High due to strong personal relationships and acting as trusted business advisor. Adds value to people by helping them achieve their personal agendas. Acts as customer advocate in own organisation. Finds the right resources to deliver on promises. Facilitates peer to peer relationships.
Competitive Advantage: Relationships. Understanding of customer’s business. Ability to deliver strategic solutions. Possibly share in risk with customer.
Salesperson’s Value to Own Business: Relationships with customer leading to managing strategic client and thus maintaining predictable high volume of revenue.
Role in Customer Process: Part of the customer team that looks at the strategic development of the company.
Business Relationships… the so what
The diagram below (click on it to get a bigger and better view) shows how the four business relationships can be brought together to form an anlysis of the sales territory. I define a sales territory as a set of managed or targeted accounts from which the sales professional is expected to find, manage and close opportunities in order to meet their sales target. It is therefore about focusing on and managing those accounts that currently provide the greatest return for the resources invested. However, in addition, territory management is about the future and is therefore also about identifying and developing those accounts that will provide maximum future returns.
There are two things to consider if you wish to maximize your return on resources deployed… the first is how much money can the customer spend, if you like… the size of their wallet for your type of products / services - Potential - and what is your Influence. The potential should be measured over a 12 month period and the grading Poor, Reasonable, Good and Excellent will differ from account set to account set. The influence I will cover in a minute, but first I want to explain how this matrix is used.
Territory Analysis - an analogy.
Territory analysis is like going deep sea fishing. You don’t just go out on a boat on to the vast ocean and throw your line over the side hoping to catch something. An experienced skipper of a boat will know where to go fishing… it will depend on the time of year, the weather and the tides and then once you know where you are going you need to use the right bait. The matrix above is about helping you to know where to go fishing… and depending on which quadrant you want to go fishing in… will also depend on what bait you use. Transactional selling is very different to Partnership selling.
Knowing Where to Fish… the proactive part of selling
If you have a number of accounts, broken down into a number of different Decision Making Units (DMU) then you need to know where to go fishing for the biggest returns. Go out to catch more transactional business will not provide the best return for time employed… low influence , low spend… not the best combination. So the first use of the matrix is a quick analysis of where to going fishing. The amount of time it takes you to complete the matrix should be no more than 30 mins… and if you get it wrong it doesn’t matter all you are doing is giving some indication of where to fish… if you find out more info, then make changes.
There is a lot more to using this diagram and how it helps with understanding and managing the territory, however, in the hope of trying to keep this post to a reasonable length… not massively too long… then I will have to leave the further explanation to another day and therefore finish this post on a final thought… business relationships and pipeline management.
Business Relationships and Pipeline Management
Hopefully a number of you reading this will have read my past musings on pipeline management and may well have got the impression that it’s a passion of mine… well, you would be right if you did. Have a look at the diagram below… a diagrammatic view of Firstborder’s pipeline methodology… and see where new deals enter the pipeline depending on the business relationship for that deal. Have a look at the competitive advantage and the primary sales discussion… again, like the diagram above, click on it to get a better view.
I don’t know about you, but if you are involved in a high value business to business opportunity then I know where i would want to enter the pipeline… too far to the right and I have no control and the opportunity will have to sit in the ‘upside’. Come in at the left… right at the beginning of exploring the need… and the opportunity will flow along the bottom… in the ‘commit’… and in your control.
There is a lot more to be said about both subjects… Territory Management and Pipeline Management, but I’ve got you started with two key diagrams… and hopefully started to answer some of the ’so what’ about business relationships.
8 Comments
I have enjoyed this series very much and you saved the best for last! Nicely done.
Colin,
This has been a brilliant and thought provoking series of articles which you have tidied up beautifully with your closing ’so what’ summary.
Colin, a fantastic post and I have thoroughly enjoyed your four definition articles. Can’t remember who talked about ‘eureka’ moments, but sometimes I get that when reading an in depth article such as this. The penny dropped with your discussion on pipeline management, which I too share an interest.
What, I find interesting, is highlighted by your pipeline diagram which shows the evident (and optimal) time and resource dedication that should be utilised for each type of relationship. One of the difficulties that some businesses may face is a tendency to treat the relationship they actually have, with the dedication of another type ie. spending time and effort in a consultative sale when in a transactional relationship. Is this a problem that you frequently see?
Nesh, very insightful observation… yes I do see people who spend time and effort in a consultative sale when in a transactional relationship. The territory analysis is about how you view the relationship… I will be posting a similar framework, but from the customer viewpoint… it’s the differences between the views that are interesting.
An amazing quadrant relationship worthy of Gartner. You have really exhausted a subject in superb fashion. Without a doubt everyone should strive for the right level of relationship based on ASV and SSL.
Great post Colin - and great to see an explanation of how to use the framework rather than just the framwork itself.
Ian
[...] Colin Wilson wrote an interesting post today on Business Relationship - partnership. Here’s a quick excerpt: [...]
I have really enjoyed this series so far. I’m hoping we will see some info on how you go about moving clients from one type to the next or is that not important in this model so long as you sell to each client in the correct way?
In my personal experience I used 4 similar categories but my real goal was to get everyone to the partnership stage where I was viewed as a valuable resource. This was easier with some clients than others, but those account were where most of my money was made.
-Brad