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Tuesday, July 11, 2006

Relationships keep us Honest - The Seven Levels of Relationship

Last week I read a book about personal relationships - I was intrigued by the title "Seven Levels of Intimacy" by Matthew Kelly, published by Beacon Publishing.

I had expected to see similarities and analogies, in fact, picked up the book hoping to get a fresh perspective on customer connections.

Still I was surprised about how much there is in common between personal relationships and business relationships. The title of this post is a quote from the book. Basically, the story about relationships is that relationships are about stories about people. Over time, our stories might change as our perspectives and priorities change. But our relationships with people who knew us in the past mean that they know the stories of our past, and as we evolve, the people we knew, help to keep us honest, keep our stories straight even for ourselves.

So with due acknowledgement to Matthew Kelly's classification, here's a postulation of the Seven Levels of Customer Relationship

Level 1 - The Encounter

For a business, this is "Customer Acquisition" and involves welcoming and engaging the interest of a prospective customer

For a customer, this stage is "First Impression" and involves working out whether or not to spend time to get to know the business, finding out whether the business can or cannot provide something of value

Level 1 is characterized by predictable behaviour on the part of both the business and customer, a series of transactions that may or may not be the beginning of a relationship

Level 2 - An Exchange of Facts

The business tries to find out if the customer is really serious about buying something they have to offer, if the customer has a need that the business can fulfil.

The customer tries to find out if the business can fulfil a current need

Level 2 encompasses the exchange of facts that determine whether or not both parties decide to move to the next level of relationship, the exchange of facts beyond the concrete parameters "I can deliver this by..." "I will need it delivered by.."

It is at this level that the words used by each party are very important as an indication of whether or not there is enough common ground, enough common perspective to move to a higher level of communication, to reveal information that will help make a deal.

Level 3 - Exchange of Opinions

The business starts to go beyond sharing factual capabilities, but begins to describe "why we are in business, why we would make a good partner"

The customer expands on what they need beyond the delivery of the goods or services - what the selection criteria might be that goes beyond the first transaction

At Level 3, both parties are starting to invest more of themselves in the exchange. The information shared at this stage is generally not freely shared at the beginning of the relationship, a degree of trust has been built up that both parties believe the other is likely to be receptive and react positively to the exchange of opinions at this stage.

Relationships only go up to the next level if both parties are ready and willing. Sometimes they fall back a level or two, if the expectations of one or both parties are not met at the higher level. It is possible to recover a fallen relationship after time has passed, whether this happens or not, depends on how important the relationship is to party who makes the first move to recovery.

Level 4 - The "We have a dream" stage....The stage of Common Purpose

When two parties come together, its because both parties get value out of having the relationship. The business gets the opportunity to get paid more than it cost to product the good or service. The customer gets the opportunity to gain more value than the price paid.

At Level 4, a sense of common purpose is achieved where both parties see that each benefits from the relationship, and the opportunity to transact will bring concrete benefits to both the business and the customer.

The "We have a dream" stage usually also involves "Delayed Gratification", the first few transactions are usually less valuable than the ones in the future.

Both sides invest in the initial transactions knowing that the payoff to the relationship comes over time, as each learn more about the other, and build a sense of shared purpose. The relationship begins to shift from adversarial to collaborative. Its not just about Win/Lose on Price anymore, but Win/Win becomes more important as the relationship bears richer fruit over time. The business and the customer help each other out in ways that would not have been possible at the beginning of the relationship.

Level 5 - The stage of Innovation, of taking Risks together

The relationship can expand to provide more value to both parties, mutual innovation, mutual learning provides gains that were not possible before.

The customer begins to depend on the business - this only happens as trust deepens

The business begins to depend on the customer - to grow the business, to expand in new ways

At this stage, Listening Carefully and Clearly are Critical skills for both sides.

Avoid the Dialogue of the Deaf!

Level 6 - The Honest Authentic Stage or the "I need help" stage

The business and customer have reached a stage of trust and acceptance of each other as dependable, trusted partners who will take risks for each other. Only then, are they able to move to the next stage of actually being ready to confess "I need help" or be willing to willingly admit fault and error knowing that the relationship is strong enough to be fully authentic with each other.

Level 7 - The Stage of "The Best Possible Version"

At this stage, both the business and the customer wish for and want the best possible version of each other. Both seek to help the other fulfil their potential, because both benefit from this fulfilment.

In CRM, people have called this, from the business perspective: Customer Asset Portfolio Management, where the business tries to maximize the customers considered as assets to the enterprise.

From the customer perspective, this has never (to my knowledge) been described, but you could call it "Supplier Asset Portfolio Management" - which is for a customer to manage the set of businesses that the customer depends on, so that each supplier provides the best possible set of services for the customer.

When a supplier knows that the customer wishes for the supplier to be the best possible supplier, they are more likely to fulfil that expectation.

When a customer knows that the supplier wants to provide services that will help the customer be the best possible version of the customer, then the whole game has shifted away from a Zero Sum game (I win, you lose) to a Positive Sum game (You win, I win) which expands the value for both sides.

What do you think? Does this describe levels of business relationships or not?