Building Relationship Equity | How-to Guides for running your business from Business.com

Successful companies develop relationships with people. When you talk of "my clients" or "my banker", you will have a person in mind, rather than an organization. Even if you tell someone, "My biggest client is XYZ, Inc.," you will be picturing John or Mary, the individual with whom you deal. Or if you say, "I bank with First National," you will see Fred or Joanie, the account manager that you deal with.

This not surprising; particularly if yours is a small business. You put a lot of effort and time into your relationships. For good reason: from them flow the life of the business. It is therefore worth your investment in them. This investment should yield a return. But just like the stock market, some 'stocks' will 'perform', while others will not. And also, just like your portfolio of securities, the value of your portfolio of contacts is most likely to grow if you select, monitor and manage them with care.

There are three overlapping people investment streams to work on: Customer, Commercial and Community. The last pool is 'catch all', but you never know where the current make take you. Like any investment, you have to put something in before you can get something out. You may have heard people talk about "give to get" marketing, but "giving to give" without an ulterior motive works best.

Above all, cultivate your curiosity!

Action Steps
The best contacts and resources to help you get it done

Collect Customer Intelligence

On the basis that you have no business until you have customers, customer equity has to be the principal focus of your people investment strategy. Before actually investing, you need to identify possible subjects.

I recommend: that you make very basic customer intelligence record keeping a daily activity. This will be either passive or active. Passive intelligence starts with CDB (Customer Database Building). CDB can take many forms. The data will come from many sources and may be raw. From my (long past) days in military intelligence, I learned that information must be not only collected, but also qualified. For active customer intelligence, see my next recommendation.

Create Customer Equity

Now you have prospect names, it is time to create customer equity. Of course you want to sell, but you will need to build relationships first. This is true even if you are cold calling (brrh!). And because relationships do not just happen, that is why you need to start long before the business is officially launched.

I recommend: that you offer more in use value than you charge for. I do not mean by giving away freebies or heavy discounting. I do mean ensuring that the transaction between the two of you ensures that the customer experiences real value from doing business with you. It is a matter of sharing meaning, rather than just the financial transaction. It is a big subject and the meaning is likely to come from your heart. Be sure that the experience goes all along the trail from first contact to repeat business.

Collect Commercial Intelligence

You know you need help, but you may not know what exactly or when you will need it. So make a point of collecting information about possible sources of finance or assistance, potential partners or collaborators, means of communication within your locality or business sector. Even if you already have a bank, for instance, alternative banks are good to know about; you may need a new line of credit, or maybe an Internet bank can offer additional services.

I recommend: that you make a regular habit of scanning your local press and trawling the Internet for new opportunities. There is a continuous flow of new offers out there. This is especially true in the peer-to-peer finance field that you can enter outside the banking world. But also make a point of meeting with local sources of finance. Get to know banks other than your own, see what other forms of commercial finance exist in your area and connect with other entrepreneurs or finance chiefs in bigger companies that may be able to give you tips. If you have a business broker who buys and sells companies in your locality, seek them out, even if you are not about to sell your business.

Create Commercial Equity

Here is a tougher aspect of building relationship equity. It is much more elusive than customer and community capital. It is about ensuring that your business is valued in your environment(s). You have less control over this. The ways you can impact it is by ensuring that your company maintains very high moral standards and lives its principles. It means paying your bills in a timely manner or negotiating any late payments ahead of due payment dates. It means establishing lines of credit at the bank before you fall into desperate need of funds. It means establishing clear and fair terms of trade or avoiding misleading advertising.

I recommend: that the first steps to setting up in business should be to question yourself really hard about why you want to do it and what your standards are. You have probably read about 'corporate values'. Here are IBM's values at work: "Dedication to every client's success. Innovation that matters, for our company and for the world. Trust and personal responsibility in all relationships".

Collect Community Intelligence

You may not think of your life in compartments, but you are part of many different communities: social, local, business, professional, associative, sporting and many more. If you make a point of codifying and classifying them, you will amaze yourself by the complexity. Each one of your communities has a huge amount of information that can be collected and organized.

I recommend: that you sit down and work out your own communities list and consider what investment you can or want to make in any of them. If you have a preference for putting the effort into something connected with business, then think about how you might contribute to the local not-for-profits, other business organizations or associations in fields of your interests. And you can turn the idea on its head: set up an advisory board and get the outside to come inside. Take care not to overdo it. Perhaps three people would be enough.

Create Community Equity

Creating community equity involves effort on your part. Hopefully you will get involved without too much of an ulterior motive and enjoy the process. Your rewards may turn out to surprise you. For instance you might involve yourself with your local chamber of commerce

I recommend: that you consider giving some time to a field that overlaps with your business interest. You can easily find your local chamber, or you might want to offer your energy to your professional association or trade body; perhaps you are passionate about sustainable business - then get involved. One idea could be to get to learn how to deliver the Entrepreneurial Training Program of NxLeveL. You may think this is strange, given that you are yourself only learning the entrepreneurial ropes yourself. But if you do, you will learn too. You probably have a favorite activity, but if you are looking to offer your time and you do not know where, try Volunteer Match or Action Without Borders. Whether you volunteer or not, make sure to list all the organizations in your communities, because you never know when meeting with them might not help you, or you may be able to help them with time, materials or facilities.

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