Browse by title articles:

Relationship Selling-No Longer A Valid Approach

by Thomas Fee    

Why isn’t relationship alone still sufficient? Because technology, both in the value chain and that being used by customers, is forcing additional criteria to be considered in purchasing decisions. Personal relationship has taken a less than primary role with accounts. That’s one reason many of them are pushing decisions down to lower levels in the organization.

Some of the new requirements for success are:

New and more sophisticated measures used in the business environment

Deeper knowledge of the connection between buyer and seller business objectives

Technical requirements for communication and support

Translation of the benefits of relationship into competitive advantages for the customer

Demonstration of sensitivity in the area of organizational culture and politics

What Is Relationship Selling?

Relationship selling is a traditional approach to selling that emphasizes selling yourself. On the surface, this seems reasonable enough, but everyone buys products and services from people they don’t like. Purchases are made based on information, need, interest, benefits and what’s in it for the customer. People buy products and services for reasons that benefit them, not to make others feel good.

Customers don’t buy from vendors they like: they buy from vendors they can depend on to deliver what they promise. Vendors who are willing to make the sacrifices necessary to ensure customer satisfaction get the business.

A Contrast of Models

There are two types of vendor relationships at each end of the spectrum. At the one end is pure relationship selling and at the other end is strategic supplier. Strategic suppliers are those who enable the customer to succeed by the value that they provide.

Customers buy products and services they need or want for peculiar reasons. Here are some comparisons between the elements of relationship selling and the role of the strategic supplier:

Relationship Selling

Strategic Supplier

Informal agreement to work together solving problems.

Formal process to periodically re-qualify by being measured against established benchmarks.

Promise of future business.

Commitment for future business.

Established relationship earns the right to compete for new business.

Must qualify for all new business based on performance and decision criteria.

Relationship overrides buying criteria.

Criteria diminishes value of personal relationship.

Focus on mutual profitability.

Customer focused.

Inwardly Focused Customers

Customers have become very inwardly focused. Their responsibility to themselves and their stakeholders (employees, stockholders, customers, etc.) has become their overriding concern.

In today’s market, customers are much more concerned with their own success than with that of their suppliers. They are forced by their own customers to be that way to survive.

Customer-Defined Relationships

The customer defines the relationship they want just like they define technical requirements. The concept of “partnering” has traditionally stood to mean that buyers and sellers would enter into a “mutually profitable” relationship. The problem is that buyers and sellers have developed different meanings for what partnering means. Partnering is perceived by most buyers to be a gimmick, the jargon of an all too common sales approach.

What has changed in relationship selling is that it has become a buying concept versus a sales concept. Customer-focused selling implies the customer prescribes the criteria for defining relationships and business requirements, and the supplier decides whether they can adjust or accommodate themselves to that set of requirements.

Resources

In today’s climate of doing more with less, sales resources are scarce and expensive. Many suppliers of goods and services are being forced to consider new and (formerly) unnatural relationships, which often include alliances with third parties including competitors.

This resource pinch is forcing vendors to consider new resources for sales success. The return on investment for sales is the driving force behind their approach to whom they choose to do business with and how they structure the deal. Relationship selling is the most time-consuming and costly method of selling–not a good fit in this environment.

New Skills

The challenge for sales is that new skills must be added by those who have traditionally sold using only the relationship approach. Many industries boasting individual high dollar sales are built on relationship selling but they are beginning to suffer losses as new competitors exhibit the value of a broader approach to new customer needs.

What new skills must be added? Here are some suggestions:

Implement methodologies that help vendor’s salespeople to understand the customer’s business better

Use existing account profiles to qualify more successful targets for the vendor’s unique products, services and characteristics

Build on existing relationships, helping them to set standards based on value that the vendor provides

Learn the difference between relationship and politics in the sale

Articulate competitive differences as part of the standard sales approach

Why Customers Buy

A sale is the result of a combination of the following elements:

Genuine or perceived need

Solution that will help customer achieve their business objectives

Relationship that facilitates movement of the decision process toward closure

Compelling reason for the customer to make a decision

A good relationship with the buying organization is important to success in sales, but it is not the only determining factor. If the elements for a successful sales campaign are not in place, the vendor must be ready to lose or walk away. Otherwise, their limited resources will be squandered and the right opportunities will get away.

Selling based on relationship alone is not a viable economic alternative in today’s market. The best return on investment on sales employs a combination of technology, best practices and account knowledge to help customers achieve their business objectives.


-----------------
Thomas Fee tomfee@procentral.com