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Rule 4: Build Relationships for Repeat Business

Overview

Long-term relationships are based on trust and integrity. Integrity is doing the right thing. Trust is established by honesty, competency, consistency, and follow-through.

Time after time, salespeople describe their industry to me as "a relationship business," reflecting their belief that to cultivate repeat business, salespeople must develop relationships. As we said when we started, customers buy from those they trust. If they are misled, they take the solemn vow, "I will never buy from that company again." So developing and protecting the relationship you have with your customers becomes paramount to your ability to grow your business.

Salespeople also say that this is a people business, which it is. While sales depend on products or services and the companies that supply them, it's people who make decisions about whether to buy. Outstanding salespeople have a balance between their technical and people skills. Salespeople who are too technical may lose business when people can't relate to them. Salespeople who are too focused on the relationship may lose business to salespeople who are able to put together a good technical solution.

Relationships in this context are all about trust. Can your customer trust you to deliver what you've promised, when you've promised it, at the price you've promised, and to stand behind it with service when needed? If you were to ask your customers, you would probably find that most of them have been burned at some time in their careers by someone who oversold them. They don't want it to happen again. So when they find a trustworthy supplier, they value that relationship.

Too many salespeople work on a transactional basis. They are out to make the sale, regardless of whether it will lead to additional business. They won't turn down business that they legitimately should. They may overpromise and underdeliver. They may be product peddlers instead of problem solvers. They have no meaningful business relationship with the customer beyond getting paid for that one transaction. It's an expensive way to do business.

The relationship is about trust in how you and your company perform. Always keep in mind that it is your consistent delivery of solutions to your customers' problems that will keep them coming back.

Three Common Mistakes Salespeople Make

How do salespeople run into difficulties with customers? Sales and Marketing Management magazine in its February 2000 issue featured interviews with buyers responsible for billions of dollars in purchases. Their insights reflected these areas of concerns:

What Do Customers Value in a Salesperson?

In interviews with customers of clients, the following qualities emerged as those that customers value in a salesperson:

Credibility means that you can be trusted to do what you say you will do. The right attitude makes you willing to go to bat for customers, taking every step possible to get them what they need and always maintaining a can-do, positive outlook. Communication means that you keep customers informed about price or product changes and status of orders, and that you respond quickly to phone calls. Thorough product knowledge is self-explanatory, but you'd be surprised at how it can set you apart. Understanding customer needs may mean looking beyond the buyer to the user and even to their customers. Support is never taking the customer for granted, never letting your guard down.

When you work with your customers within this set of responsibilities, they recognize, respond to, and reward it. You may have noticed that the items listed form the acronym CACTUS. A cactus is a tough, prickly plant that can take the heat. This image is an appropriate reminder of the toughness needed to succeed in sales.

Customer Relationships Defined

Sales are built on relationships. But what does a business relationship look like? How is it different from a personal relationship? Can you mix the two? Should you?

Customers are interested in business relationships because they expect certain results from that relationship. What they want varies depending on the customer, but some common themes emerge.

All people enter into relationships because they expect to get something from them. In personal relationships, we look for love, compassion, support, understanding, companionship, fun, immortality, and strengths we don't have. Business relationships are different. Businesspeople typically want predictable and consistent performance, outcomes, and support that helps them succeed in their careers. They usually want to work with people who make their work easier. They often have their own customers to satisfy. They may want low-risk solutions, they may want to keep a low profile, or they may want innovation. But you can see the clear distinctions between personal and business relationships. When you confuse a business relationship with a personal relationship, you can end up losing the business relationship.

During one discussion with a sales executive he related how he and his company had a strong relationship with one of their largest customers. They had such a strong relationship that when the sales executive went to the customer's town, they went out to dinner together and he stayed at the customer's home. It had been this way for a long time. But all of a sudden, he got a call from the customer saying he was switching his business to a competitor. You can imagine how shocked and chagrined the executive was.

He acknowledged that he had mistaken the personal relationship for a business one, and in the process ended up not being aware that a competitor had even approached the customer. The customer, quite naturally, also saw the relationship as a personal one. He didn't place a great deal of value on it from a business point of view, which actually was consistent with what he saw from the supplier.

Building Customer Relationships Is a Critical Part of Selling

I surveyed sales professionals at a national sales meeting about their experience in developing and maintaining relationships with customers. Here is a compiled and edited summary of their responses.

What are the benefits of having a productive business relationship with the customer?

What do you do to help build strong relationships with your customers?

What have you found you need to avoid in maintaining good relationships?

Building strong customer relationships helps build loyalty. Building relationships allows you to partner with and be integrated into the customer's company. You're not considered just another salesperson pushing product. You and your customer can have a sense of trust about your relationship. Never take the relationship for granted - as soon as you do, you'll start to lose the trust that you worked so hard to gain.

Marriott International is a leader. Its salespeople are recognized as being among the best in the hospitality industry. How do they do it? John Marriott, executive vice president of lodging for Marriott International (which includes sales and marketing), said, "At Marriott, our salespeople are highly regarded because they are knowledgeable about their customers and spend as much time listening as they do selling. They welcome feedback and always follow up on concerns and issues."

When asked what advice he would pass along to new and experienced salespeople who wanted to truly be successful, he responded as follows:

To be successful in sales, you must spend time building relationships with your customers and learning as much about them and their business as possible. This is best accomplished by getting out of the office and meeting the customer face to face, not sitting back waiting for the phone to ring. From the junior salesperson to the CEO, it is critical that every salesperson establish solid relationships and true understanding of the wants and needs of his or her customers. Use every interaction as an opportunity to strengthen your relationship.

Effective salespeople are also highly confident. They know what they are talking about. I recommend that any salesperson going after a piece of business spend time learning about their customer's company and looking for ways to provide service and value that is relevant to their needs. Your knowledge, understanding, and interest will be highly appreciated and will play a key role in your ability to complete a sale. As you learn about your customer's business and develop relationships within the organization, you'll be viewed as an active partner and someone who is helping the company succeed.

For the more experienced salesperson, John concluded by stressing the importance of staying close to customers: "Don't take them for granted. This is just what your competition is waiting for - an opportunity to call on a customer that you have failed to visit or contact. It is also important to stay current. Their business will grow and change along with what they expect from you. By constantly staying focused on your customer's wants and needs, you will earn their trust and respect and establish a solid relationship that will be profitable for everyone."

It's clear from John Marriott's comments and from all of the other points discussed in this section that maintaining a business relationship is a critical priority. The following three recommendations can help you make it work.

An Integrated Solution

"Wow!" That's how fans respond to Reliant Stadium, home to the Houston Texans football franchise. According to Steve Patterson, senior vice president and chief development officer for the Texans, once people get to the building they are awed. "It's been an overwhelmingly positive response, whether it's the open-air stadium keeping fans cool with the air control systems, the media and their access to state-of-the-art communications, or the safety and security of the facility. We tried to make this building the best it could be in every aspect, and it turned out that way."

Patterson credits much of this success to the company that won the bid and became his "technology partner," Siemens. Siemens is a network encompassing more than 426,000 people in 193 countries. It provides customers with a "business portfolio" of solutions in the fields of information and communications, automation and control, power, lighting, transportation, and medical. But rather than send in representatives from each of its divisions to sell individual products and services as independent units, the company approached Reliant Stadium as one organization with an integrated solution across its multiple product lines. The integrated solution that the Siemens sales team developed for Reliant Stadium included all of its technologies from throughout its vast organization. Moreover, Siemens proposed that it be the infrastructure general contractor on the project, which would lead to further cost savings during construction. This was an innovative sales approach developed and led by the sales team, starting with its vision for the stadium, which came from understanding the customer's business needs.

Understanding the Customer

Owen Arkison, one of the Siemens sales executives who oversaw this sale, said: "The Siemens sales team developed a vision for how its systems could save money and enhance revenue for the stadium's owner and tenants. The sales team did this by seeking to understand not just the customers' technical needs, which you'd expect, but by also understanding the customers' businesses and their individual needs. The various Siemens companies worked together to present a plan for an integrated solution, one that would not only save money, but that would also enhance the complex's ability to deliver the best sporting experience possible."

The sales team went through a detailed process over a span of more than a year to understand the unique business situation and each of the stakeholders' individual needs. It was a special situation because there is one owner of the facility (the county) and two tenants (the Houston Texans and RODEOHOUSTON, the world's largest rodeo), each with distinctly different needs. In trying to understand their needs, Arkison said the question became, "How can we help them do their business and generate income?" In the case of the Texans, for example, an important source of income is suite sales. The county, on the other hand, wanted a high-tech facility that would operate at a reasonable cost and that would bring in convention and other entertainment business.

Creating Value Through Vision

Siemens's vision for the project was to provide a state-of-the art facility that would enhance revenues for the tenants, give fans a spectacular experience, and save money for the owner and tenants during both construction and operation.

Steve Patterson believes that the Siemens team accomplished its objectives:

"We had significant cost savings because of the great efficiencies of combining the different systems. The ‘one-stop shopping' also helped in terms of timing, meeting tight schedule deadlines. We anticipate even greater savings in the operation of the stadium. Siemens understood how to integrate the various operating systems and provided a more holistic approach to managing the construction and the operational side. It would have been much more difficult if we had had to coordinate all of the subcontractors."

Scope of the Project

Reliant Stadium was designed to be an advanced entertainment center. The stadium is located in a campus-like setting of 350 acres. The stadium and its companion exhibition hall, the 1.4-million-square-foot Reliant Center, both use state-of-the-art telecommunications, fiber-optic networking switchgear, and intelligent control systems for comfort, fire safety, security, and lighting, each provided by Siemens as part of its integrated solution.

Communicating the Vision

Arkison knew that developing this highly competitive proposal would be a team effort: "Each member of our team did as much research as possible within our respective specialties to build a sound, cohesive, and smart proposal. We went beyond the customers' requirements in preparing for the presentation because we were trying to create a different approach to selling in this market. We knew we could no longer cut prices. We had to be creative in how we sold the project, maintaining a reasonable profit for Siemens while providing good value to the customer. The key was combining all of the divisions of our company. By doing this, we took ourselves out of the competitors' realm."

The team held fifteen- to thirty-minute face-to-face or phone meetings at least once a day to update everyone and identify and address potential problems. They asked three questions:

The team leader was the one point of contact with the customer.

Demonstrating They Were the Best Company for the Job

According to Arkison, "The most important thing we proved to them was that we had the team in place with the depth and breadth that was needed for a project of this scope. We presented to the whole construction team and proved that Siemens had an understanding of the project that went far beyond that of other companies. And we brought more advanced and sophisticated technology to the project.

"Our value proposition was that Siemens would provide the customers a single point of contact and develop a partnership, not just a contract. This evolved to the point where the customer considered our ability to manage a complex project within a tight time frame as the strongest value of our proposal."

Steve Patterson supports this contention. "They coordinated a complicated project on a fast track while the rest of the complex was also under construction - not an easy task."

An Important Lesson

When the Siemens team first started out, they were enthusiastic about their approach. But one of the challenges they faced early on was that the customers, and even Siemens's own internal people, had reservations about whether the integrated approach was a realistic idea.

Owen Arkison said, "We needed to create a new mind-set with the customer. We spent a year trying to convince them that we had a good approach, and then we realized we needed to adjust what we were saying slightly, to fit it into the norm they already accepted and practiced. Later, we approached the business the same way: instead of trying to change the whole process, we tailored it to fit within their existing mind-set."

Internal Barriers

While the Siemens team was ultimately successful, success wasn't guaranteed. Internal barriers were potentially a big issue because the sales team was creating a new approach. Like many organizations, Siemens had people who were comfortable doing things a certain, perhaps traditional, way, but Arkison said they were able to overcome this resistance. "First we started picking people who had the vision and the right attitude, then we broke the vision down into smaller components, so they saw they could do it. Otherwise, the big picture was too big. We had to keep it in their comfort zone. We had to adjust our approach internally just as we had externally."

The Foundation for Success

According to Arkison, there were two fundamental elements that inspired success: the team was highly motivated, and they had the right attitude about the project. Their attitude, he believes, was created by the exciting vision, their commitment to that vision, their creative thinking about how to achieve it, and the excitement of actually doing it. "These people have been in business a long time, and have done the same thing over and over. In this case, it was something different, something new." Arkison said he hated to use the term, but "thinking out of the box" and then making it happen was what enabled them to succeed.

Siemens had just begun offering this kind of integrated approach to its customers, and developing a full-scale plan of this size and complexity was different for the company. It was an ambitious departure from the existing way of doing business for them, for their customer, and even for their industry. Sales executives had discussed bringing their many different divisions under one contract at other times, but they found that people needed time to accept the idea. "It's a credit to management and to the people here that, as large a company as Siemens is, once we made the decision to go to market this way we were able to make this change and do it quickly," Arkison noted.

As a result of the innovative approach and success with this project, Siemens now looks to its sales professionals to be business development managers for integrated solutions. They have also created a new company, Siemens One, to coordinate such integrated designs.

Fundamentals of Business Case Development

If you uncover an opportunity for an innovative solution that your company doesn't currently offer, depending on the nature of the solution, you may need to work with your marketing, product management, and financial people to present a business case to get backing to move ahead. The larger, the more unique, and the riskier the sale, the more likely it is that you will need some type of business case.

If you are going to be involved in presenting a business case, it's important to thoroughly prepare the case. If the sale is a significant one, it will be worth the effort you'll invest. The more complete and compelling your case, the more likely it is that you will win approval and that you will also get the internal support you'll need to implement the solution.

The following are key items you'll want to include in your business case:

According to Steve Celic, a product manager with experience at several large companies, "You have to have solid numbers, both quantitatively and qualitatively, to get buyoff from management, and your assumptions need to be well supported. It used to be that if the numbers weren't strong, you could still make your case strategically, but that's no longer true." He stresses that "upper-level managers are now ‘all from Missouri' when it comes to financial expectations in business cases, and increasingly, CFOs track results because experience has shown that these projections tend to be optimistic. Given past results, approvals aren't easy to get. Companies want immediate cash flow and would rather invest in several bigger programs than a lot of smaller ones. Typically, companies like to get their money back in the first year, and few will look out more than three."

Product managers are typically going to view this in a similar way. With limited resources, they will want a solution that's right not just for the customer, but also for the company. If it's not right for the company, why do it?

While you may have a high hurdle to clear in presenting a convincing business case, once you do the momentum will be on your side.

In developing your proposal, build relationships with the right people in the customer's organization, the community of key decision makers and decision influencers who make the buying decision, define requirements, or control budgets. They may be in a number of different organizations, including operations, marketing, or even supply chain organizations.

If what you're seeking is going to have wider application with other customers, it may be possible to make it a standard part of your product offering. That will help lower costs and make it more attractive financially.

Celic also cautions salespeople to be careful about establishing understandings to provide something other than what's formally been agreed to. He noted that in trying to get the sale or accommodate the customer, salespeople might undermine their company's ability to meet the customer's expectations, or do it profitably. As a salesperson, you are representing your company and need to negotiate for your company's interests.

Creating a New Relationship

Bayer Polyurethane has developed a program that has led to long-term partnering relationships. This is not just a way for Bayer to sell its raw materials; more important, it's a way to give the customer extra value, according to Charles Valentine, national sales director.

Bayer Polyurethane accomplishes this through an agreement that increases its usage and their linkage to the customer. This arrangement provides the customer with additional support and access to Bayer's technology. It also helps improve the customer's product and manufacturing process. In this relationship, the technology door is open; Bayer shares technology with the customer that would be held close to the vest within a normal business relationship for fear that the technology could be used with a competitor's materials.

A team came up with this new approach. At first, it was met with customer reluctance. Some of the customer's people considered Bayer's effort intrusive. They were protective of their own technology and way of doing things. They said, "We will solve our own problems." Convincing the customer to be open to this new approach wasn't easy, but Bayer worked hard to convince the customers that it had a vast number of resources that could help them solve their problem.

Valentine offered the following advice based on how Bayer developed this new relationship:

Valentine says, "American businesses used to be innovators; but too often today, businesses try to save their way into prosperity. Instead of managing their business, they manage costs. I don't know what the solution is, but we have to keep remembering that there is a business behind every decision. The bottom line is the value of the long-term relationship. For us it means knowing where 90 percent of our capacity is going, which is significant for our business."

Communication

One of the other things that Valentine's salespeople do is to have what they call "commercial discussions" prior to technical discussions. They want to be able to prove to the customer the value of their proposal on a business basis before they prove it in on a technical basis.

Members of the Bayer sales force may communicate different things to different people, depending on their function, but they communicate the same core messages to each, such as the value of the innovative approach they are proposing. Valentine says, "One of the keys is if you're going to invest a half million dollars in a project and you are talking with marketing and they don't have a marketing plan, then you don't have a commitment. The customer's internal communications may not be all that good."

He continues, "This approach helps expands our customers' market and thereby increases our own; it should lead to a long-term arrangement. There are benefits to planning and partnering this way, and one of them is the intangible cost of switching vendors or customers. The costs of switching are not a line item, so you don't want the customer to overlook them."

The approach Bayer uses today is, "Let's see if we can find more innovative ways to increase our comfort level in revealing the technology." Valentine says the real issue is not a matter of mistrust; it's that people change positions and larger corporations are multidimensional, so not everyone may be aware of the value you bring. "There are different departments within the customer's organization, and each can pull in separate directions. If purchasing is measured on reduction in cost, how do they justify paying a higher price? And could they perceive you as taking away their job? Even upper management has to justify the difference. We use constant communications to all levels and across all departments to inform people about the value of what we bring and to keep people up to date."

According to Valentine, Bayer has always sold technology, but the difference was that most times a supplier and customer would reveal as little as possible about the technology. They would try to incorporate technology into the product in such a way that the customer couldn't misappropriate it for use with another supplier.

The Core of Rule 4: Build Relationships for Repeat Business

A business relationship is not a personal relationship, and building that business relationship is a critical part of your job.


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