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Tip of the Month Archives
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How’s Your Relationship with Your Business Partners?
March 2005 Relationship awareness represents 90% of your problems in dealing with your partners according to several multi-client studies. The relationship is divided into two parts. Many companies and partner managers forget to consider the whole picture when evaluating their business partnerships – frequently only looking at and evaluating the qualitative factors. For a complete profile, we suggest that you consider a balance and include the qualitative elements as well.
Successful relationship management depends upon understanding how relationships develop. It’s all about the qualitative factors:
Many companies are not aware of the state and stage of their relationship with each of their business partners. To help them clarify this, we use the models that occur in a “romantic” relationship to characterize the stages that a business relation may find itself in and travel through. From Courtship and Dating to Engagement to Honeymoon and Marriage or Wedlock – and possibly headed for Divorce. Within each stage, we measure the state of the relationship as below.
Typically, companies complain about a misallocation of resources (time, people, money, support, products, pricing, promotion, compensation, etc.) and suffer in that they do the wrong things with the wrong people and partners at the wrong place at the wrong time. Frequently, this is simply because they don’t know where they are in the relationship – be it as individual account managers or organizationally. And they suffer from false expectations for revenue and profit results because these will differ depending very much on the stage and the state of the relationship in which the partners find themselves. Frequently, with business partners, vendors expect fast and easy revenue and results, without considering the learning curve and where they are in the relationship with the selected partner. Getting Started: To determine your situation easily, try mapping out the kinds of activities that you are performing with and for your business partners. Then note how they differ in each stage, who should be involved, and what should be occurring per activity. Analysis: Once you have mapped out the activities that should occur and the resources allocated during these four stages, you can then analyze and position each of your business partners. You may discover that you have been allocating the wrong resources at the wrong time because of incorrect assumptions about the relationship and consequently have not experienced the results you anticipated. How does it work: Let’s take pricing as an activity – what should you be doing in the area of pricing at each stage? Courtship: Be prepared. It is best to have an already prepared standard price list and method of pricing (discounts, compensations, etc.). This is what any partner would want to know as a qualifier as they begin discussions with you and it is one of your initial attractions for them. Dating and Engagement: Each of you begins to discuss the pricing, assessing the relationship, looking at value-add, segments, strengths and weaknesses. It is during this stage that you begin to discover synergies and potential difficulties which in turn determine if you are ready to move forward to commit or to wait or to return to dating or courtship. It is best and constructive to have the tough discussions identifying the differences and similarities of perceptions, expectations and the organizations during this period. Plans are made and agreed upon for the next steps. Honeymoon: the commitment has been made. Prices and the basic pricing mechanisms have been established. During this stage, if all is good, there should be few if any discussions, maybe some fine tuning and small adjustments. Focus is shared. Sales and marketing are aggressive with the agreed pricing. Discussing or arguing should be the exception. Wedlock: this is the marriage period after the honeymoon. Life has settled down, back to the more daily routine. It is here that your observations and detailing of the situation are most important. Pay attention! Ideally, the characteristics of the honeymoon should remain and even improve as you learn through working together. You should be reaping increased profits, targets, and revenue while having few discussions on pricing other than the occasional ad hoc ones and the necessary adjustments from time to time and generally on a scheduled basis. Warning signs: for example, if you are discussing pricing (prices, discounts, compensation, etc.) every day with a business partner of long standing. If the discussions are frequent, heated, and unhappy, this could indicate a potentially unstable marriage – that you are not in the honeymoon or wedlock stage but rather in the early engagement stage or heading towards divorce. Steering the relationship: This analysis and mapping will help you determine:
A major benefit of this analysis allows you to have better control over resource allocation and costs by selectively targeting the most beneficial support to each partner. If you would like help in organizing such an event and in training your team and company to run their analysis and mapping included with tools and case studies, email MNSA with your requirements. Subscribe or Unsubscribe We hope you find the tips informative and relevant. If you know of others who would be interested in these tips, encourage them to sign up for our Tips via Email. Should you like to cancel your email subscription, please click here.
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