Thursday, 28 January 2010

Managing Relationships

One of the main results of the internet's appearance at prices which most of us can afford is that we now have more information than ever. To help manage this, sites like GoCompare, Moneysupermarket, CompareTheMarket, Expedia, Plebble and others have all sprung up.

The idea behind most of these comparison sites is either to provide comparative information on the cost of whatever it is that you want to buy and/or reviews of products or services. As money-saving tools, they have their pros and cons. The pros are mainly that you'll have more information on which to base a buying decision and so could save money. In fact, many comparison sites offer the last as the reason to use them. Few people bother to think about the cons though.

One of the cons is illustrated by the old adages of "if you pay peanuts, expect monkeys" or "you get what you pay for". A great example of this are the low-cost airlines who make their money from people who don't want to pay the sort of prices charged by the big airlines and who don't mind putting up with flights leaving at inconvenient times of day from non-mainstream airports, no meal included as part of the price, only carry-on baggage (unless you pay extra AND book in your check-in suitcase in advance!) and delays. This attitude isn't only limited to the less well-off. I've even seen investment bankers fly low-cost airlines, despite the profits their firms make (or maybe this is one of the underlying reasons!).

The flip side is that if something goes wrong, the low-cost airline in question may not be all that equipped (or inclined) to sort out the problem and subsequent passenger relations issues. When questioned about this, the boss of one low-cost carrier simply suggested that if you pay rock-bottom fares, you should expect rock-bottom service and treatment. Not an unreasonable response, and one that no doubt generated further publicity for the carrier! Here's a case where relationship management plays second-fiddle to financial considerations and people accept the logic of it!

Another con is that comparison sites may not actually show you all the possibilities - only those from companies that pay them for advertising or by offering some other incentive to display their wares.

Now that it's so easy to find out who charges how much, for what and what current or previous users think of it, an attitude of going for the cheapest deal, and an expectation of no loyalty (on both sides) has begun to make itself felt. Consumer websites let us post comments on products and services for everyone to see and our expectations get adjusted by these reviews whether they're biased or not. The printed word still has tremendous impact.

The trouble is that thanks to all this, buyers (customers) and sellers (providers of goods and services) risk losing sight of what relationship management's about. I worry that the new millenium will see less loyalty on both sides as consumers and suppliers alike have more information to help them switch supplier or change prices, and expect less loyalty from their counterparties than before as a matter of course. I think that suppliers will need to be more "nimble" in dealing with buyer expectations, and that relying on contract provisions may backfire in some cases.

In the current economic climate, cost control is king, and we're all looking to save money however we can. Beware that what at first sight looks like saving might well turn into something more expensive in the long run as people go for lower costs at the expense of established relationships or quality standards. Of course, some suppliers are easier to change than others without too much trouble (mobile phone companies once your contract ends, airlines, electricity, gas, etc). Some are harder to change without potential risk to one's reputation (banks?).

Size does matter as well for two reasons. Larger suppliers may be able to ignore buyers leaving them (and even expect it in the case of "supermarket wars" where one chain may be flavour of the month for a while until they fall from grace). There are companies (again no names, no pack drill) that, despite a reputation for less than stellar service (see above) still manage to turn a profit because they provide what people want at a price they will pay - in other words, they are seen to give value for money. Others who are not so lucky have to rely on good old-fashioned service.

Let's not forget the supplier's point of view. It may simply not be workable for that supplier to service some types of buyers. I recently saw an article about "Jackass Clients" in which the writer exhorted suppliers of goods or services not to deal with certain types of buyer as in the end, this was going to cost them more than it was worth.

Do relationships matter? Consumers may want them to, but don't always behave as if they do. Are suppliers also giving the wrong signals? They want loyalty, but sometimes their behaviour suggests otherwise! For me, relationships do matter; happy customers will continue to buy from me, and happy suppliers will continue to deal with me.

Conclusion: both sides need to manage relationships, but if neither of you are giving value, expect people to walk!


Tuesday, 12 January 2010

Contingency Planning - A Waste of Time?

A number of businesses that I speak to don't have a Business Continuity Plan (BCP). For some, this is because they feel they're too small, because they think they can "wing it" when a crisis hits or (more often than not) because they haven't had time to think things through. Here's why you need a plan.

The heavy snowfalls in early 2010 in the UK resulted in a number of businesses suffering through staff not being able to get to work, disruption of supplies and/or an inablity to get goods out to buyers as postal and courier services have ground to a halt. In 2009, Swine Flu was the big concern, followed by threatened postal strikes disrupting christmas deliveries by small gift companies. A crisis can come from anywhere and, if not handled properly, can drive you out of business.

Any business needs to consider the following when planning for crises (whatever they may be):

Nature of Business




Health & Safety












The environment

This list isn't exhaustive, and will vary depending on the type of business, but using it as a framework will give you a start in working out what you'll need to do if something does go wrong. If you need help or further advice, let me know.