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People DONíT do business with people they know!

by David & Lorrie Goldsmith

Unless youíve been living under a rock, youíve probably heard that ďrelationships are the most important part of business.Ē In other words, people buy from people they know. If you want to make sales and build loyal buyers, building relationships is the way to go. Well, the relationship theory is WRONG.

Maybe, like your sales staff, you donít believe us. Okay. Think for a moment about the number of insurance agents you know. Do you do business with ALL of them? How about attorneys and real estate agents?

Of course you donít. And why donít you? After all, they are your friends. You have relationships with them.

Maybe you believe that only one friend can service you the best. Perhaps you think you donít have that much business to spread around. Or, like many of our global consulting clients, you donít want your friends knowing your personal business.

But if you took a closer look, youíd realize that your buying decisions boil down to the same reason that everyone elseís doesóyou buy from those individuals whoís companies fill your needs bestÖperiod.

Your sales staff probably wonít be very happy to hear this news. If you spent your time kissing up, running ragged, and shaking hands, youíd want to know it paid off, too, wouldnít you? Unfortunately, the reality is, none of that matters if your firmís products and services donít meet the buyerís needs and expectations.

Think about it. Do you know the owner of the grocery store where you purchase the bulk of your food? How about the owner of the subway or pizza shop, dry cleaner, gas stations, or car dealership? You might know one of them, especially if you live in a small town, but honestly, most of us donít know our primary vendors well, if at all.

Think about how you decide to purchase from Amazon, Nordstroms, Toshiba or ChevyÖyou do so for the relationship? Nope.

Most likely, you donít purchase much of anything from people you know. So whatís this relationship thing all about, anyway? Two things.

First, relationships open doors of opportunity. If a relationship exists, a prospect might take your phone call, give your new products an extra long look, listen to your pitch for an extra few minutes, or dial your number to make an inquiry phone call. Thatís it. Even when your best buddy is the prospect, if you donít have the right product, you wonít make the sale.

Picture yourself as the buyer. Your friend works for a bank. He might provide special services for you that makes you want to do business with the bank again. Your friend moves to a different bank where he has less leverage. No special services. You have to set up new accounts, the online services are not as good, and the new bank lacks the history you so much enjoy when doing your taxes. Are you going to move to the new bank with your "relationship," or are you going to avoid your friend like the plague?

Second, the connection between the buyer and the COMPANY is the relationship. People donít buy from people they know as much as they buy from companies with products and services that they want. As much as you may want to give business to a friend, if the product isnít right, their company bills you incorrectly or sells shoddy workmanship, yet their competitor offers everything you need, the relationship that wins the sale is the one developed with the best company.

Letís transfer this to your business. You establish a relationship with someone, your new business friend, and everything seems fine until one day the vendor botches up a project or order. You call your friend and explain the situation. They promise to fix the problem on their end. The problem persists or recurs. You canít tolerate the incompetence and call your friendís competitor. Wow, to your surprise, the person on the other end of the line also wants to be your "friend." Offering better products and services, they win your business.

One-on-one relationships alone can get you only so far. Thatís why the responsibility of good management is to build organizations where relationships between buyer and company work. Good news for salespeople, if theyíre even involved in the sale at all, because the company that supports relationships increases sales and retains repeat buyers.

Here are 6 thoughts on how you can get started:
  • Provide products and services that do what you promise and have them available for purchase. You donít have to have the highest perceived quality in the industry, but you do have to offer something that consumers believe is worth the price. Then when they make the choice to use your firm, the product must be on the shelves so that they donít start developing new "friends."
  • Build in integrated accounting operations that make working with your firm a convenience, not a hindrance. Billing procedures should ensure accuracy and be completed in timely fashion. No buyer will tolerate errors where money is concerned forever.
  • Deliver on time. Late work, whether youíre a building contractor or a computer manufacturer, always leads to wasted money. If you want a strong relationship between your company and your customer, be sure you deliver as promised, or even early if you can. Constantly strive to deliver predictable, reliable results for the buyer.
  • Respond quickly. Return phone calls immediately. Issue refunds and replacements fast. Nothing blows a customerís trust faster than when he canít get a response within a reasonable time. In our office, consulting and speaking service inquiries gain a response within 3 hours. The relationship is stronger when people find youíre accessible when they need you.
  • Market clearly and honestly. Back every claim you make. Be sure that people understand what you sell and how theyíll benefit from working with you. Most importantly, if you can differentiate yourself from the pack and back it with your actions, the relationship is reinforced and competitively stronger.
  • Spread the tools around. Give every employee in every department the tools needed to keep up his end of the deal in your companyís relationships with customers. Good CRM (Customer Relationship Management) software helps customer service keep on top of each customerís needs by providing a history of the relationships. An integrated order processing system prevents important elements from falling through the cracks.
Finally, donít worry about freaking out your sales personnel. Sure, initially some people will be shocked to hear you say that people donít buy relationships. But the shock will turn into motivation once they understand that they no longer have to bear the entire burden of building and maintaining relationships alone. The company is just as responsible for the relationship as the sales person.

And thatís why you, the decision maker, get it. You know that people donít buy relationships, they buy what works for themÖand your organization is primed and ready to do just that.

Copyright David and Lorrie Goldsmith. All Rights Reserved.

David and Lorrie Goldsmith are managing partners of their own consulting group. Their firm offers consulting and speaking services internationally. David was named by Successful Meetings Magazine as one of the "26 Hottest Speakers in the Industry." Jeff Gitomer sayís "David Goldsmith is unique in that he can see a 30,000 feet view of business and then delivers the hand-to-hand tools for combat."

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