10 Jun 3 Key Relationships every business needs to get right
Successful businesses are built around good relationships and it is important to understand how these fit into your business operations. Here we share our thoughts on the Key Relationships that you need to develop and share thoughts on how you can do this.
For most Retail Value Chains we will have the Purchasing function as the start of a process and this is the first relationship you should be managing. With the advancements in technology, we can source the product globally and as such there are a lot of available options. So what can you do here to make this work better?
- You are both in business, so there needs to be some profit for both of you, there is no value in you grinding your supplier into the ground all the time. Negotiate prices and terms, where you benefit but you also know they will make profit as well. The risk is, if they are not making profit, they may start cutting corners at their end and so you end up with a lesser quality product.
- Secondly, what communication do you maintain with them? If you can help them understand your long term needs and provide some commitment, then they can probably go out and get you better deals. Your Suppliers need to make decisions themselves on what to source / manufacture and so consider how you can reduce their risk by giving them a demand forecast, or giving honest feedback of your experience and intentions.
- Thirdly, good relationships blossom when you share values and beliefs. Work with people who you get along with.
The next relationship you need to pay attention to is with your employees. Most organisations need people and creating a good working environment is very hard for most employers. Its not just about rewarding your employees with more cash, nowadays employees want job security, a happier work environment, more holistic benefits than pay rewards. We are talking here about the Culture of your organisation. When you recruit someone you will ask them about their Values and Beliefs and you would have probably talked a little, then asked a question and then listened to what they had to say;
Why would you stop doing that once you become their boss?
Lots of employees feel no relationship with their bosses as they have no opportunity to share anything personal or business related. You need to build trust and allow your employees to feel a shared vision and goal for the organisation. You want to give them the feeling of confidence and safety as this will encourage them to explore and do more for you. Richard Branson has the right idea here, he says;
“If you take care of your Employees, they will take care of your Clients”.
Customers are the lifeblood of every company, without customers you will definitely go out of business. Why then are Customers not the focus of everything you do?
Whatever you stand for, be it Quality or Service, you should be clear on what Outcome you deliver to your customers. The customer is really interested in the outcome because that’s what they are going to get. You should look to cement this relationship by actually doing what you promise to do, so meet the expectations you set with your branding and your sales pitch. Its always surprising why in this relationship there is not more honesty; its worrying when there is more interest in the single transaction, rather than the Lifetime Value of that customer.
Consider, do you really want this £100 profit, or do you want a regular flow of £75 profit transactions? The sales process can be broken down into 40% “Selling You”, then 40% selling the product and the final 20% is your ability to close the sale. Once you win the trust of your customer, the next time you have already dealt with the first 40% and you only need to focus on the latter 60% of the process. If you also consider the fact that you now probably don’t have to spend as much marketing budget by retaining your customer, the ROI is even bigger
As a Business Owner, Manager or Entrepreneur consider how you currently manage these relationships and ask yourself. Is there something different you should be doing in your approach? Let us know if you want to discuss any aspect of this or previous newsletters and we will be happy to share our thoughts with you.