HOSPITALITY SALES MANAGEMENT

 

HA – 400

 

 

RELATIONSHIP MANAGEMENT Q&A

 

 


 

January 1999

Leadership Magazine

Relationship Management

                                     

Q & A with Jim Masciarelli


Introduction

 

            The only sustainable competitive advantage, in Jim Masciarelli's opinion, is relationship management. It's the means to customer retention and

steady profits.while at Data General Corporation in the 1970s, in the heady days of innovative frenzy chronicled by Tracy Kidder in The Soul of a New Machine, then-personnel director James P. Masciarelli observed that the most successful professionals invariably demonstrated solid relationship networks. Taking this cue, Masciarelli moved on from DG to found two executive search firms, one of which, Fenwick Partners, would become 12 years later an industry leader.

 

 Today, Jim Masciarelli leads Archer Consulting, a Gloucester, MA-based "relationship management" consulting firm that teaches companies how to create customer loyalty "beyond price." He is also advisor and coach to several corporate CEOs. In this interview, he shares his insights into what he calls the "only ultimate sustainable competitive advantage" in today's high-pressure business climate.

 

  We've always talked about the importance of networking in business but why do you insist that "managing" relationships is more important

  today?

 

  MASCIARELLI: In business, relationships determine results. With the rise of excellent companies competing against each other within the same industry, a

  defining difference will be customer "intimacy." Only those organizations that emphasize both building relationships and "managing" them throughout their entire

  value chain will be fully capable of achieving this difference. It's already been shown to be the key to true customer retention and steady profit. That's why, at

  Archer, we call relationship management the "ultimate sustainable competitive advantage."

 

 But aren't we really just talking about relationship marketing here? How is relationship management different?

 

 MASCIARELLI: No company can assemble and coordinate all the assets and skills it needs without a web of value-enhanced partnerships internally as well as externally. Applying relationship-building on a firmwide basis brings together organizational and business development efforts in a measurable, closed-loop system. You can’t just focus on external customers, as relationship marketing does. The other limitation of relationship marketing is that it is a one-way street of solicitations, without the essential relationship ingredient of mutual value.

 

Because products and organizational structures come and go, companies must reach beyond simple networking and relationship marketing techniques to the building of both value and "alignment" in key customer and industry relationships. You want everyone—managers, workers, customers, even suppliers—to be deeply committed and communicating on the same page. Such management of all your relationships is essential to achieving the vision of a high performance, customer-focused organization.

 

  How does relationship management facilitate an executive's or a manager's role?

 

  MASCIARELLI: Managers today must be more than bosses who just bark out orders; they must be leaders, coordinators, facilitators, communicators.

  True relationship management brings people together, inspires them, keeps them connected to the organization's vision. All of these links keep them

  customer-focused. By focusing on such skills as listening and coaching, two prominent relationship management activities, for instance, managers can best

  accomplish their goals through people.

 

  We often think of relationships as automatic, as just "clicking." How can we manage our professional relationships without being manipulative

  or disingenuous?

 

  MASCIARELLI: Business relationships by definition are goal-oriented and designed to create profit. While some people do mistake this goal orientation as

  an excuse to compromise principles, the most successful people instead focus on building long-term profitable relationships and treating them as assets. When

  we treat professional relationships as mere resources to be consumed, we erode trust, leaving us with short-term gains only. Manipulation, in the long run, just

  doesn't work.

 

  A good rule I follow is to try to turn my better clients into friends. This works better, by the way, than turning friends into clients! When your client becomes a

  friend, you can start thinking of him as "coach," as someone who can (and will) guide you through the sales process when dealing with his or her organization

  in the future. Chances are excellent you'll win a lot of new business this way.

 

  How do the best companies manage their relationships with their customers?

 

  MASCIARELLI: Amazon.com, the fast-rising Internet-based bookstore, keeps meticulous records of all books each of its customers buys, sends out

  announcements to individual customers when similar books come out, gets each ordered product out to the customer within three days, and in general makes

  itself easy to do business with.

 

  Likewise, Federal Express has made lots of companies forget about using regular mail, even though the post office offers identical express services, in some

  cases better services. For a long time, for example, Federal Express didn't deliver on Sundays while the post office did. Even so, many of us have had bad

  experiences with the post office over the years and no longer trust its dependability. FedEx, on the other hand, always comes through. Trust is a critical

  ingredient in any genuine relationship. Therefore, FedEx wins!

 

  Can relationship management help companies learn about their competition?

 

  MASCIARELLI: And how! Competitive intelligence experts will tell you that their most effective intelligence-gathering resources, by far, are customers,

  prospects, and suppliers.

 

  The key is to earn the right in advance to approach them, and learning how and when to ask. A well-served customer, for example, in the context of a trusting

  relationship can potentially provide invaluable business intelligence. Your customers can tell you what they've seen elsewhere and about their experience with

  others in your industry.

 

  Suppliers, too, will fill you in on the plans of your competitors if they trust you and if you bother to ask. You can think of it this way: If you follow a practice of

  regularly telling your customers and suppliers about things they don't already know about their own business or market, they will want to reciprocate. It's a

  two-way street.

 

  How can the effectiveness of relationship management be measured?

 

  MASCIARELLI: More and more companies are recognizing the limits of traditional financial measurements to forecast and assess business. Instead, loyalty

  measures like employee retention, share-of-customer, and lifetime client value are becoming new bellwethers for industry leaders.

 

  There are actually concrete ways to quantify all this through measurement tools. One way is to assess your own relationship management skills—we call them

  positioning, hunting, coaching, leading, and farming—and then work on them, develop them, and refine them over time. In terms of your effectiveness with

  your customers, you can calibrate your relationships using four measurement scales—depth, relevance, position, and influence. Then you develop action plans

  with clear-cut objectives that can be tracked and evaluated.

 

  I believe measurement is indeed very important to the ultimate success of relationship management efforts. You must quantify this, or it'll get lost as a priority.

  Remember, what gets measured gets done.


 

  James P. Masciarelli is Founding Partner of Archer Consulting in Gloucester, Mass., a leadership and organizational development firm.


 

                                           © 1999 Archer Consulting, Inc. All Rights Reserved