HOSPITALITY SALES MANAGEMENT
HA – 400
RELATIONSHIP MANAGEMENT Q&A
January 1999
Leadership Magazine
Relationship Management
Q & A with Jim Masciarelli
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