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How to manage a (business) relationship

I’m the last person to advise on personal relationships but I do have some experience of building and managing channel relationships. On many levels, there are similarities between the two: success and failure depend on a great many subjective factors which cannot easily be measured. But it would be more than a little odd to plan, or gauge the success of, a personal relationship in terms of objective measurements.

Business relationships, on the other hand, typically involve many more interactions, with clearer intentions and better-defined roles and therefore benefit from proactive objective, management. In this article, I describe a methodology for planning, developing and managing business relationships. In our case, we apply that to major channel partner relationships, but the concept could be applied to other types of business relationship as well.

What’s the concept?

On one level, it might appear there are only two entities involved in a channel relationship: the supplier/vendor and the channel partner. Typically, there are specific individuals responsible for the success of the partnership (for example, the partner manager and supply chain manager). But of course, each company is made up of many individuals going about their business, some of which is directly to do with the partnership and some of which has broader responsibility. For a channel partnership to succeed, there needs to be communication, coordination and collaboration between individuals at many levels.

Why do we need a methodology?

Management at all levels should engage at least with their counterparts, and ideally more broadly, with the companies they’re working with. It is these interactions that make or break successful business partnerships. As with many aspects of management, measurement enables management.

Our methodology makes it easy to see where new relationships are needed, and where development of existing relationships is necessary. It can also show when there is too much dependency on individuals or departments. A strong company to company relationship requires both quantity and quality of individual relationships between relevant people.

What happens if we don’t use a methodology?

“If you can’t measure it, you can’t manage it.” Without an objective measurement of a situation it’s impossible to set goals or monitor progress towards those goals. Delegating responsibility to an individual line manager or leaving relationships to “sort themselves out” are missed management opportunities.

What is the methodology?

A relationship map of the relevant personnel from each company is used to facilitate discussion about who should have a relationship with whom, what the current level of that relationship is and what the level of relationship should be.

Developed over many years, our methodology provides objective measurement of:

  1. The current relationship between all relevant personnel.

  2. The desired level of relationship between each.

  3. The difference between the two.

Feeding this into our engagement matrix enables easy analysis and visualisation of areas for attention and work. Over time, it can also be used to monitor progress towards goals.

More strategically, the relationship map can be used to identify and address structural relationship issues, risks and weaknesses.

How does it work?

Here’s a simple example with just two relevant people at each company.

Across the top are two vendor personnel: the CEO (Person A) and the channel manager (Person B). In the first column are the channel partner personnel: the CEO (Person X) and the Vendor Manager (Person Y). This gives a total of four relationships as you can see.

The quality of each relationship is scored from 0 (no relationship) to 5 (close partnership). I’ve provided examples of what the different levels might mean but you can refine these in the context of your own business. It’s important that these are objective measurements that could, if necessary, be independently verified.

  1. The actual/existing/current level of the relationship. It’s sometimes tempting to overstate the level of a relationship, but this exercise works so much more effectively if the level is recorded objectively and accurately. This is not a one-off exercise; developing relationships can be tracked over time and if the relationship is mis-stated from the outset, development opportunities will be overlooked.

  2. The required/desired level of the relationship. It’s human nature to develop relationships and want to improve existing relationships. Here, it’s important to consider what is necessary for the business to succeed and what is feasible given time constraints and the relative importance of the relationship. We recommend setting realistic, achievable targets in the first instance and developing from there.

  3. Having scored each of the four relationships, it’s then easy to see where work is required and how much work is required. The “Delta” column shows a “red/amber/green” status for each individual relationship.

Why is this useful?

In a nutshell, so that we can see:

a) what is already working,

b) what work needs to be done,

c) what the priorities are.

In this example:

  1. Channel Manager and Vendor Manager. As the two individuals primarily responsible for the success of the partnership, the channel manager and vendor manager are in contact almost daily and view each other as key contacts for their respective companies. Hence the relationship has been scored as a “4” both for the actual relationship and the required relationship. For this example, it is considered that the level of relationship is sufficient; there is no relationship delta and the status is “green”. If the partnership is particularly strategic, the “required” relationship level might be set at 5 (the highest).

  2. Vendor CEO and Channel Partner CEO. These personnel are aware of each other and would recognise each other’s name, position and company. They would not however, pick up the phone or make contact directly with each other, hence their existing relationship has been scored as a “1”. In this example, it is considered that an improved relationship is important for the good of the partnership. We want to foster a closer relationship, not such that the CEOs are in daily contact but sufficient that each would make contact directly with the other should the need arise. The “Required” relationship has been set at level 2 leaving a relationship delta of 1 and a status of “amber”.

  3. Channel Manager and Channel Partner CEO. In this example scenario, the Channel Partner CEO is not aware of the Channel Manager, either by name or responsibility. Since it is the latter’s prime responsibility to manage the relationship, it’s considered that they should develop their relationship with the Channel Partner CEO and raise their profile. Broadening the relationship so that there are multiple points of contact with the channel partner is important. A status of “red” clearly shows this as highest priority.

  4. Vendor CEO and Vendor Manager. Although aware of each other, it is considered that the Vendor’s CEO should be better acquainted with the Channel Partner’s Vendor Manager. Not as a day-to-day contact but as an additional point of contact. The “amber” status shows this as requiring attention.

How does this work for engagements with more than four people?

Most business partnerships involve considerably more than two people from each company. In the next example, we show a slightly expanded team for both companies.

As you can see, the complexity of the relationship grows rapidly with more personnel. Crucially, when building the engagement matrix, we group these by department or function. This makes it easy to visualise where departments that should be working together are not and where work is required to connect them more fully.

Similarly, we can visualise where functions have become isolated. For example, if technical support personnel are only connected with their direct counterparts, they will be unaware of other business affecting issues such as marketing initiatives or finance matters.

In this example, we can see that the various personnel are nearly all well connected (most relationships are status “Green”. However, we can easily see that some work is required.

  1. The Vendor CEO is not sufficiently connected with the Channel Partner’s Marketing Manager. This might be considered worthy of attention for the launch of new initiatives for example (status “amber”).

  2. The Vendor Marketing Manager is completely unknown to the Channel Partner’s CEO. This could signify, for example, that the latter is unaware of marketing initiatives made by the vendor and consequently may be surprised when they take place and/or not appreciate their significance.

  3. The Vendor Technical Support representative is unknown to the Channel Partner’s Marketing Manager. Therefore, partner-led marketing initiatives that result in new business may be a surprise to the technical support department that must deal with issues arising.

How does this work for broader engagements?

In the real world, strategic channel partner relationships can include tens or hundreds of personnel. This can result in thousands of interactions to monitor. You might think that completing and updating the engagement matrix becomes overly burdensome at this stage.

However, think of it this way: if there really are thousands of interactions going on, that is a significant time, resource and financial commitment from both vendor and channel partner. Monitoring and managing these relationships are the keys to success. “If you can’t monitor it, you can’t manage it”.

Each team should contribute their own data and it is the responsibility of company management to ensure that appropriate goals are set, and progress is made towards those goals.

How does this work from the strategic perspective?

From the departmental perspective, the relationship can be monitored and managed as described above. From the executive perspective however, strategic trends, risks and issues can be monitored. Here are some examples:

1. Looks good, but is it?

In this example, all relationships are status “green” which must mean everything is going great surely? Not when you take the strategic view!

Here are a few things which become obvious when looking at the overall “shape” of the relationship:

CEOs have a 4-star relationship. The vendor CEO has a great relationship with their counterpart. But they don’t have a relationship with anyone at the Channel Partner apart from the CEO. None of the Channel Partner personnel even knows the CEO by name. The CEO should be seen as the overall figurehead and ultimate leader of the venture. To do this effectively, they need to at least be known to those they are leading, not just their direct reports.

In addition, key personnel are missing altogether. What happened, for example, to other members of the vendor executive such as CTO, COO, CFO and so on?

The Channel Manager is very well connected. It looks like the Channel Manager is doing a great job and knows everyone at the Channel Partner organisation. This is great but:

a) Can one person have, and maintain, great relationships with all of these people? Are they spreading themselves too thin?

b) There is a single point of failure: what happens if the Channel Manager leaves, is sick or changes role?

Each department is well connected with its counterpart. In this example, all other vendor departments onlyinteract with personnel from the equivalent department at the Channel Partner. Without broader engagement, it would be impossible for each department to understand or appreciate the value of the broader partnership.

It’s probably also quite difficult for each department to do their job properly. If Project Management, for example, are not connected with Technical Support or Operations how can they complete projects successfully? Perhaps they rely on the Channel Manager to bring everything together but, as above, this results in a single point of failure.

“Green is good”. Is this an accurate reflection of reality? Each of the Vendor personnel may perceive they have great relationships throughout but is this reflected by the view of Channel Partner personnel? Could Vendor personnel be overstating their position for fear of negative perceptions otherwise?

Similarly, is there really no need for improved relationships (there are no deltas showing anywhere)? Is there no benefit from developing a relationship from a “1” to a “2” and from a “2” to a “3”? Have the options been explored or does the relationship just rumble on from month to month and year to year? Has too much been taken for granted?

What’s missing? The large areas of white space (meaning that no relationship exists or is deemed necessary by the team) are a cause for concern. Perhaps each team has tunnel vision and does not appreciate their role in making the partnership a success? Perhaps each team has become reliant on the Channel Manager to “bring it all together” and coordinate between departments? Perhaps each team doesn’t really understand the nature of building a partnership?

Are there any departments not represented that should or could be? Even if not engaged now, should they be for the future?

2. Looks messy, but is it?

Relationships are messy; that’s the real world. Some people get along better than others. Some people come across counterparts in the normal course of their work but not others. Some departments are organised geographically or logically so that it’s not necessary for everyone to know everyone else. Some people leave or change jobs, others arrive; we can’t know everyone all of the time.

All of these factors contribute to what you see here: a broad range of relationships at various stages and with many opportunities for development.

Executive teams engaged. This illustration could, for example, be describing a relatively new business partnership. The respective CEOs have a great relationship, but the rest of the executive team have not yet developed their relationships to the desired level. The benefit of the engagement map is that is shows clearly where the priorities are and what level of interaction is expected.

Each department is well connected with its counterpart and beyond. You can see here that each Vendor department has considered their relationship with their Channel Partner counterparts and has identified where relationships are good and where work is required. Crucially, you can also see that technical/delivery/operations teams are well connected with other teams such that a more holistic view of the relationship can be formed, and cross-departmental effectiveness is maximised.

Some people don’t needto know each other. In this example, it’s been decided that the Vendor executive team does not need to know those within the Channel Partners technical hierarchy at this stage. This shows two things:

  1. Consideration has been given to the matter and a decision has been made. Without proactive relationship management, interactions are typically left to chance, need to be developed “on the fly” or simply reflect what has gone before (with associated potential for complacency).

  2. There is scope for a relationship map to be added at a later date, as the relationship progresses. Executive resource is a scarce commodity and needs to be deployed at the appropriate time.

We know what work needs to be done. The selection of “amber” statuses reflects that the relevant team has considered the relationships that are already in place and have a plan to improve them. This can be monitored over time, for example by looking for an increase in the sum of “actual” relationship level ratings and/or a reduction in the “delta”.

“Red is good” (as opposed to “green is good”). Not literally of course, but it’s vital that if there are areas where urgent work is required, these are identified. A “red” status identifies a high priority for action. This shows that the team has identified a clear opportunity for relationship development (demonstrating self-awareness and understanding) and that they have a plan to do something about it (demonstrating an opportunity).

The bottom line.

If you’ve got a valuable asset, it’s standard practice to monitor and manage it.

Business partnerships and the resources you invest in them are undoubtedly valuable, but a surprising number of companies have no objective method for assessing the relationship status or identifying areas for improvement.

Too often, vendors assess the quality of a relationship by historical revenue performance and, as we all know, past performance is no guarantee of future success. Or they rely on subjective assessments from those most closely involved and, as we also know, when you’re in the frame it’s hard to see the picture.

Instead, a rigorous and objective methodology helps you understand what is going on in the relationship, what work is required to improve it and what the priorities are. It also helps senior management understand structural issues and develop plans accordingly.

If you can measure it, you can manage it!

Ash Madden is Founder and Director of Madden Associates Limited, the Specialist Channel Sales & Partnering Consultancy

#channels #sales #startups #partners #management

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