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Relationships - a key driver of your company's value

(Warning: Halfway through this newsletter, I am going to make an accusation that might offend you.)

I believe this: Your company's value is directly related to the value of its customer relationships.

Agree with me or disagree with me, but please don't pass over this lightly. I am making a strong statement:

We need to recognize that the traditional methods of measuring a company's value (revenue and revenue growth, profit and profit growth, brand value, balance sheet metrics, etc.) are, ultimately, driven by the value of a company's customer relationships. Stronger customer relationships lead to stronger revenue growth, profit growth, brand value... even stronger balance sheets.

When a customer thinks she is in a relationship with your company, she will be more likely to do things that drive your company's results: She will buy more, pay more and rave more. She will resist competitive offers. She will be more likely to forgive the occasional misstep.

Now, here is my potentially offensive statement: Many executives who, on the surface, agree with the points I've just made, don't actually focus on the value of customer relationships. They give lip-service to the value of customer relationships, but their actions speak louder than their words. Managers are measured on their ability to create transactions and aggregated performance data, not on how they build customer relationships. Customer relationship management ("CRM") is a software project, managed in the IT department, not something everyone in the company is accountable for. Senior executives rarely have personal contact with real, live customers.

Think about your company, and the business metrics you measure.

When you talk about monthly revenue numbers, do you focus on the quality of the customer relationships that create that revenue?

When you focus on margins, do you look for a correlation between customers who think of you as "We" and your company's profitability?

And, when you look at individual customers, do you measure not only the volume and revenue you derive from that relationship, but the character of the relationship between the two of you?

Customer action is the direct driver of profits for your company. A customer is more likely to act in ways that drive your results if she believes she is in a relationship with you. My goal? To give you ideas for helping her feel that way.

You will find ideas for creating strong, We relationships with customers in this newsletter, in my book We: The Ideal Customer Relationship, and on my blog at www.yastrow.com. Also, as a reader of this newsletter you can download my ebook, Encounters: The Building Blocks of We Relationships, for free. And, here are a few things to think about and try - today:

Take Notice

When you are in the role of customer, do the companies with whom you do business seem to measure the value of your relationship with them? Or, do they focus more on the revenue and profit they are gaining from transactions with you? How would it affect your purchasing decisions if you felt they were focused on the value of your personal relationship with them?

How do you compare?

Does your company focus on customer relationships as a key driver of value? Or, are customer relationships a "nice" thing to have, but secondary to the "most important" business metrics?

Try this

In your business, look for connections between the quality and character of a relationship with an individual customer and how that customer contributes to your company's success. Are the strongest relationships making the biggest impact on success?

Focusing on creating strong customer relationships is the gateway to focusing on results. Enjoy your We relationships!
 

yastrow.com
steve@yastrow.com
P 847-686-0400

Click to buy Steve's new book, We: The Ideal Customer Relationship

In We, you will learn:
How to create relationship-building encounters, instead of relationship-eroding transactions
How to connect multiple customer encounters into an ongoing conversation that creates a strong We relationship
The power of We among many-- a relationship between many people in your organization and your customers

We is both a manifesto and a how-to guide that will change the way you interact with customers ... and change the way your customers think about you.  

Click to download your free ebook, Encounters: The Building Blocks of We Relationships

Learn more about Steve's other great book...

© 2008 Steve Yastrow. All rights reserved.