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Customer relationships: What does this concept have to do with strategy?

By Denise Harrison, Executive Vice President and COO

Strategic Planning Expert

Strategic Planning Expert

Frustrated by losing a bid, one CEO called up his peer at the procuring company and asked, “What could we have done better?”

The two firms had a long history of working together, and the CEO wanted to know what had gone wrong. The CEO at the procuring firm knew that the bidding process had changed: the procuring company had decided to turn it over to one if its “high potential” managers to develop a team to select the vendor.  The procuring company CEO asked the 28 year-old team leader how the team had selected the winning vendor.  The team leader said both companies were well-qualified to do the job, but the differentiating factor was that the winning company had communicated to him via text message every day.  The team felt that the winning company would be better at keeping the company informed concerning the progress of the project.  When the procuring company CEO communicated this to the bidding company’s CEO, the bidding company realized that they had missed an important factor in the bidding process.  What had the losing company done?  Requested face-to-face meetings.  While they were waiting for a returned phone call and an appointment, their competitor was staying in touch and following up with the information required via text message.  The face-to-face meetings had been successful in the past – but no one thought about how the new decision maker and his team might be different.

This anecdote was relayed to a group of fellow CEOs and other CEOs chimed in with their stories. One recounted how a new purchasing agent had specifically requested to be contacted only via email.  If everything is electronic, how do you build a relationship? Still, efforts for in-person meetings were rejected and the requests were a source of annoyance for the purchasing agent.   Another CEO was troubled that his company’s differentiator was building customer relationships – were they going to be able to continue to differentiate the company this way?  All agreed that the meaning of customer relationships has changed over the years.

Flow Chart

This transition has occurred over time – our quest for efficiency and our ability to communicate quickly has resulted in shrinking the number and length of in-person contacts.

How is this strategic?

One important way of gaining market share is to develop a better understanding of your customers’ needs and preferences and changing your practices and styles to meet emerging needs and preferences, faster than your competition.  To assume that your customers’ communication preferences do not change can cause you to lose customers, as demonstrated by our first CEO who had just lost a bid.  While his relationship with the other company’s CEO allowed him to understand why his company lost the bid, it did not change the decision.  Losing business because you do not understand the importance of speed and brevity over a “high touch” technique can be fatal if it is not assessed early. Embracing your customers’ communication preference will allow you to stay in the game.  CEOs and other executive officers often do not embrace new technologies or processes because these are not tools that were available when they learned the business – these are not the tools that made them successful.  It is important for senior management to work to understand and use the new tools so that they are able to leverage the advantages and not get left in the dust using an hour glass when watches and smart phones are available.  They must be sure they do not provide roadblocks to progress.  In addition, younger employees should be alert to the communication preferences in their interaction with others – they may find that some customers and co-workers prefer face-to-face meetings and believe that texting is for informal communication – not for business use.

Understanding the importance of communications preferences and the ability to utilize new communication technology is important to how your company is perceived by your customers and potential employees. Any company that is not able to adapt risks being painted as a dinosaur in the eyes of new up and comers, both internally and externally.

Recently I observed how one CEO, who was not comfortable with today’s technology, sent out a memo stating that all emails had to be reviewed by a senior officer before being sent to a client.  Needless to say, this slowed communication to customers.  In the past this company had differentiated itself with its unique technical solutions to client problems – however, their lack of adoption of email and text capabilities caused them to be perceived as a dinosaur by the people using their services.  What seemed on the surface to be a simple communications problem caused this company to lose their perceived comparative differential advantage in their clients’ eyes.  All the work building elegant technical solutions could not keep them from being viewed as technically less advanced due to a seemingly small tactic – an inability to effectively use email and text messaging.

Summary

How we communicate with clients is changing.  These changing techniques will change the way we build relationships with clients.  It is important to know when a text is best, when an email and when a phone call or in-person visit is required.  Being sensitive to your client’s preferences will allow you to build the relationship you want, but possibly just not in the way you have done it in the past.

Interested in more ways to improve your strategic planning process?  Download a complimentary copy of our Strategic Planning Tune-up book by clicking on Tune-up.

Denise Harrison is Executive Vice President and COO of the Center for Simplified Strategic Planning, Inc.  She can be reached at  harrison@cssp.com.

© Copyright 2014 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.