Relationships are THE most underutilized competitive advantage there is. Innovation needs to start there with the relationship development process—to compete on relationships. All companies face the huge challenge of superior revenue growth. Yet many firms ignore the key factor in improving revenue and bottom line results--their relationships.
As the Information Age morphs into the Relationship Age, the most important thing Frontline Staff can do is develop deep relationships with customers. The most important thing their Managers can do is measure the relationship development process innovation for repeatable success.
There is a cacophony of competing ideas and products in the market. Without a strong relationship between the buyer and the seller, innovative products and services won’t sell in the Relationship Age—they probably won’t be noticed. It is even more complicated in high-value B2B (business-to-business) enterprises where there are multiple buyer relationships for any one sale.
Relationships drive business. Yet no one knows who does what to whom, when, for what result in marketing, sales, and customer service to develop relationships—not within the function nor cross-functionally. The innovation of top performers in relationship development is lost—no repeatable process here. No foundation to build future process innovation upon. As Peter Drucker famously said, “What gets measured, gets managed.”
Operational CRI (Customer Relationship Intelligence) and its breakthrough, new metric—Relationship Value—makes it possible to measure the relationship development process. Relationships are built one Interaction or experience at a time—over a lifetime. Interactions are the “cause” and Relationship Value is the “effect” in relationship cause-and-effect. Relationship Value is a Key Performance Indicator (KPI) for relationship development and a leading indicator for profit and satisfaction.
The Relationship Value Metric is Elegant.
With Relationship Value, Frontline Staff and their Managers (users) monitor Interactions as they occur to gain insight into effectively developing individual relationships and analyze progress against a norm. Relationship Value
- Measures whether an Interaction moves the relationship forward or backward, and
- Expresses the cumulative effect of a series of Interactions in developing a relationship.
It takes a series of Interactions over time to develop a relationship. It is the cumulative effect of the Interactions in developing the relationship that is determinative--not what Interactions were used or even how many--as long as the Interactions execute a cohesive, integrated Tactics Plan, over time. Many alternative Interaction combinations are possible.
Relationship Value makes details of Interactions operationally immaterial for the most part. Relationship Value measures the cumulative effect, essentially becoming a numeric proxy for the underlying Interactions, enabling a strategic overview.
Operational CRI with the Relationship Value metric is well suited for high-value B2B, delivers significant improvements faster, and is cost effective. In high-value B2B, the people in the company are likely to be actively involved in developing a relationship, will know the customer personally, and need the “hands-on” operational guidance of the Relationship Value KPI. See our HACK Measure Strategy Execution.
Emulate Top Team Performance for Repeatable Success:
Compare the RV pattern of the set of Individual Contacts managed by top performers to other team members to see how far off the norm they are.
- Identify Virtual Account Team reps that create the most RV Units with buyers for the least Interaction Cost, resulting in positive outcomes for the seller.
- Encourage collaboration among team members to innovate new approaches, to unleash the creativity of the team, and to improve the process ongoing.
- Develop cross-functional reward/recognition programs to promote long term value creation.
- Model best practices to emulate across the Customer Lifecycle.
- Employ gamification tools to automate where practical.
Optimize Customer Outcomes with Pattern Analysis:
Both Frontline Staff and their Managers use real-time Relationship Value pattern analysis to compare Individual Contacts to any Aggregate and Subsets within specific Aggregates to easily see what is normal and manage to that norm, saving effort for the exceptions, the anomalies. Managers watch what is working in real time and make interim adjustments to the process.
Common Aggregates and Subsets:
Performance itself 1st, then apply to Event, Profit, and Stakeholder Community.
Performance Subsets: Team, industry, territory, contact source, company revenue, etc. By team particularly, either the entire Virtual Account Team that is handling the same set of customers across Acquisition/ Closing/ Retention Stages, or different reps within a Stage handling different customers.
Event Subsets: Those who repeat, refer, up sell, cross sell, increase volume, have a bad experience, etc.
Profit Subsets: High Profit customers, Low Profit customers, those with Profit Improvement Potential.
Stakeholder Community Subsets: Leaders, Doers, and Watchers in terms of their Community Engagement, then by Events as described above plus those who recommend, create, share, download, etc.
Compare Competing Business Units, Distributors, or Partners:
Executives use Relationship Value patterns to facilitate confidential high-level coherent comparison of and communication about the depth of the relationships being developed by competing Business Units, Distributors, or Partners.
RV summarizes Interaction effectiveness. RV can be shared without compromising private information about the Individual Contact or exactly what Interactions the sales organization has had with that Individual Contact. Both the company and the sales organizations find out what they really need to know. The company knows the depth of the relationships being built on its behalf, and the sales organization keeps the details of the Interactions private.
Innovate Cross-Functional Best Practices:
Managers compare RV patterns across industries, territories, product lines, regions, divisions, business units, etc. Correlate to profit and satisfaction. Drill down to compare RV development in Customer Lifecycle Stages to develop best practices and allocate resources--tied to outcomes.
An RV-Q Pilot Project can address critical questions:
Can a discernable difference be seen in the historical record between the Relationship Value patterns of these customers:
- Those contributing the highest profit and those where money is lost?
- Where revenue is growing and those where revenue is shrinking?
- Where share of wallet is growing and those where share of wallet is shrinking?
- Participants in a Stakeholder Community and those not, tied to financial gain? See our HACK Measure Innovation Community with CRI.
- Any other extreme within a customer segment.
Is Relationship Value a leading indicator for these or for other significant segments within the customer base? How does what people DO, quantified by RV-Q, correlate to what people SAY?
Step One: Identify top priority customers in a specific geography and within a narrowly defined product group for an RV-Q Pilot Project.
Step Two: Develop pro forma high-level Customer Relationship Process model of ~ 100 major Interactions and some 30 associated Voice of the Customer Interactions. Determine what data is available to support it.
Step Four: Populate the pro forma model’s major Interactions with Relationship Value and Variable Interaction Costs. Correlate to actual historical Interaction Record of customers. Demonstrate the efficacy of RV as a leading indicator.
Step Five: Track RV-Q and what people DO going forward with a Social CRI-->CRI (Customer Relationship Intelligence) Tracking System. See our HACK Measure Management 2.0.
Alternatively, instead of viewing the RV-Q Pilot as an opportunity to foster cross-functional cooperation, it could be run as a Business Intelligence Unit project preliminarily before seeking broader involvement.
Additionally, focus on an Innovation Community Initiative as a way to get started. See our HACK Measure Innovation Community.
It Takes a COMMUNITY and dedicated, innovative professionals to collaborate on the scale needed to develop Relationship Age business processes to:
- Retool from a company/product focus to a customer focus from strategy to execution to profit,
- Share operational control among Frontline Staff, Managers, and Executives,
- Reward the unsung heroes in sales and marketing and customer service for the value they create every day by developing relationships with customers,
- Build on proven methods, many of which our team has pioneered including profitability segmentation, Voice of the Customer, customer experience engineering, and valuing intangibles, and
- Invent new ones like Value Creation Mapping, Product Relationship Roadmap, and the Social CRI-->CRI Tracking System with its revolutionary metric Relationship Value.
Thanks to all the others on the Religence CRI Team: Jim White, Bob Sabath, George Fruehan, Kathleen Robinson, Ray Dunaway, Eve Thompson, John Kauke, Steven Cox, and Anne Chambers plus our late colleague Richard Taylor. This team of experienced senior people represent marketing, operations, finance, IT, and change management. A customer-focused enterprise is everyone’s job. Together we have commercialized our CEO’s business process patent and built out the Religence Framework for CRI. What a total pleasure it is to collaborate with this innovative, multidisciplinary team. Thank you.
Many, Many More Acknowledgements can be found at the end of our HACK Measure Management 2.0 with CRI for Real-Time Management/ Operational Control/ Profit.
FREE Electronic Copy of CRI Book. At the end of our HACK Measure Management 2.0 in the Helpful Materials section is an electronic copy of the second edition of our CEO’s book—Customer Relationship Intelligence: A Breakthrough Way to Measure and Manage Sales and Marketing.
©2013 Religence®, Registered USPTO, Patent Number US 7,526,434