Collaborative relationships are at the heart of any successful business but especially so when managing your important account customers. They provide the source of two way information and understanding that can be built into added value activities. They also provide the foundations for long-term business based on mutual trust and confidence.
Relationship management is the glue that binds the whole process together. The task of relationship management can involve a significant investment – building relationships takes time, it can eat up resources and in itself doesn’t promise any particular return. There has to be a purpose to the relationship, a desired outcome, or we are at risk of building it simply for the sake of the thing, which can so easily lead to an escalation in costs and a reduction in our chances of an effective ROI.
What gets measured gets done! In organisations we measure everything in order to understand performance now and how we hope it turns out. Understanding the performance drivers of a collaborative relationship is essential because there will be a series of hard and soft measures that cross the boundaries of supplier and the customer.
Given the importance of account customers it is critical that key account managers and their senior managers know exactly what is going on in the relationship and where the trends are heading. Failure to understand crucial pointers buried deep in complex interactions between the two organisations can lead to mistrust and the eventual failure of the relationship.
KPI’s for the health of the relationship can be developed which may include the following:
It is important that these measures include some of the “softer” aspects of a relationship such as trust, commitment and long term orientation that have a motivational impact on performance.
What is a tool to measure account customer relationships to capture their value?
R-A-G’ or ‘traffic light reporting’.
If you have not come across this kind of reporting before, it really is as simple as it sounds… Every section of the report is given a status based upon the colours of a traffic light – Red, Amber and Green. To put it simply, Green is good, Amber is OK, and Red means that you have issues!!
Here’s an example of how RAG (Red Amber Green) reporting is used in a project:-
Long term orientation