Interview by John Smibert – The best customer relationship
In this interview Keith Dugdale gives us advice as to the most effective type of relationship we should build with our client.
Keith outlines 4 types of customer relationships and talks about the pros and cons of each. As an example he shows us why a ‘social relationship’ can be counter productive and why a ‘technical relationship’ is risky. He explains the difference between these and a more effective ‘partner relationship’.
See more of the interview below
Keith is the owner of Business of Trust, the co-author of Smarter Selling, an international speaker and business coach.
John: Hello, I’m with Keith Dugdale again – welcome back, Keith!
Keith: Thank you, John!
John: Keith, I know you have a model for looking at types of relationships, and you’ve got four categories in that. Let’s talk about those a little bit.
Keith: Okay, thank you. Yeah, we see four distinct types of relationships.
John: Is it sales relationships?
Keith: Sales relationships, absolutely. It’s very important that you understand what sort of relationship you have with your clients, your customers, and also what sort of relationship you want to have, because unless you understand what those both are it’s impossible to shift them.
Keith: So, you know, we talk about a ‘Social Relationship’ for example. A ‘social relationship’ is one that’s driven by entertaining, having fun.
John: Yes, you become a mate with your customer.
Keith: You’re a mate, you’re a mate. It’s maybe an ex-university colleague, maybe friends of kids’ parents things, or someone you’ve just got really close to in a business environment.
John: And you can leverage that, can’t you?
Keith: You can, but it’s really hard.
Keith: We’d say it’s the lowest return on investment.
John: Okay – I thought you’d say that.
Keith: Fundamentally, how do you change the conversation from being about the weather and the score to “I want your money.”? So, what we would generally recommend in that situation—you can shift it, but generally we’d recommend to get somebody else involved to build the business relationship.
John: Right, okay.
Keith: But don’t introduce them at the barbecue, otherwise you’re going to recreate the same problem.
John: Yes, and obviously you don’t want to do that.
Keith: Yes. The second sort of relationship, and probably the most common we found is what we would call the ‘Technical Relationship’. A ‘technical relationship’ is one that’s driven by the fact they are buying the quality of your product and nothing else, product or service.
John: You have a great technical product, you’ve communicated it about that, they like your product.
Keith: Absolutely. You understand your product, they can see how the product will help.
John: Yes, good knowledge about your product and how it’s used.
Keith: Absolutely right. It’s kind of the traditional way of selling; understand your product. The problem now, as we all know, is that everything is becoming commoditised, and by the time that customer makes a decision they probably know 60% of what you know about the product already.
John: So, a ‘technical relationship’ is very dangerous from that point of view.
Keith: I think it’s the most dangerous, because people tend to look through the rear-view mirror and see “Our revenue stream is historically very good, therefore our relationship is good.” And the first time they realise they have a ‘technical relationship’ is when they get the communication that either says “Look, we’ve loved buying from you for all these years, but we decided to give this other mob a crack.” Or “We want to carry on working with you, but we’re going to need a discount.” Because they’ve found somewhere else they can get a very similar product for a lot less.
John: Right, okay. So, it is not the right sort of relationship in most cases.
Keith: Going forward I think it’s a very dangerous one.
John: Okay. And the third?
Keith: The third is, we call it the ‘Ad hoc Relationship’, and this is a kind of a reactive relationship. You wait until somebody contacts you, either with an RFP or a phone call, and you’re reacting to an immediate need. Two issues with that for us – actually, probably three issues for us – one is it’s a very expensive way of running business, that proposal process is typically very expensive. The second thing is you don’t know how many of these requests you’re not being invited to. And the third thing is, if you’re only getting involved at that stage then the price will be the driver.
John: So this is related to the last discussion we had, which was around RFP’s and RFT’s.
John: That’s doing all your business in that sort of environment; filling the pipeline, but an expensive thing to do when you’re not closing enough.
Keith: A very expensive thing to do. And also, even if you are closing, a very expensive thing to keep on doing.
John: Yes, exactly.
John: Okay. And the fourth?
Keith: The fourth is the hallowed goal, the fourth is the ‘Partner Relationship’. For us this is a very different relationship to the traditional relationship. This is a relationship where the customer needs you personally as much as you need your customer. This is a relationship where “Is your customer prepared to put their career on the line for you?”
John: This rings a bell for me, and a lot of things that we do and talk about, and I think what you’re saying is that if you’re in there creating value for your customer, helping the customer even when there’s nothing to sell, right?
John: You build a trusted relationship, and he or she then sees that you are driving value for them – they’re going to come to you when they have a specific need.
Keith: Absolutely right. And if you have that bravery and commitment to the client, then you will always win in the end. But if you’re only there – to steal David Maister’s language around self-orientation – you’re only there when there might be something in it for you, why should they trust you?
John: And the same here, you look at The Challenger Sale and the way they talk about the fact. You’ve got to be right there at the early part of the relationship, you’ve got to build that relationship, a trusted relationship. I know CEB talk about the word “relationship”, that there’s no such thing as relationship selling, but I think they’re talking about something different to this. Here we create trust by creating value, and we build a trusted relationship.
Keith: Yes. We actually went and spoke to CEB, we went over to Washington to talk to them about that whole notion about relationships don’t work, and they were very clearly saying that when they talk about relationships they’re talking about what we would call ‘social relationships’, and there’s an absolute correlation between The Challenger Sale and what we call a ‘partner relationship’.
John: I agree, I agree, and I just wanted to make sure that was clarified.
John: Okay. So, you see the four relationships, and obviously the fourth is having a partner type relationships, and the terminology you use – stay away from the technical relationship, stay away from the ad hoc, and the social. I think that’s great advice. It’s really tough, and I think we need to talk a lot more about how we do build partner relationships, but we all know now that that’s where we’ve got to focus.
Keith: Absolutely, and I think the market is now recognising that’s where they need to get to, but a lot are wrestling with what that journey looks like.
John: How do you get there.
John: Okay, we’ll talk about that more.
Keith: Thank you, John!
Other interviews with Keith Dugdale:
- “Failure of account planning programs”
- “Competitive landscape in professional services”
- “The most effective type of client relationship”
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