There are five stages in B2B customer relationship building that a supplier of high-end products and services can have with its clients. If you want to reach the top tier, a Strategic Business Advisor to any of your clients, you usually have to climb through all four previous stages. The real key is understanding if your client wants you to be a Strategic Business Advisor or not, and then being aware of the effort and time you must put in to become a Strategic Business Advisor.
Many firms are happy being in any of the four lower stages. But you need to understand what your relationship is from your client’s viewpoint, if you are in any of these stages. The five stages are represented in the graph below, and they are;
2. Preferred Supplier
3. Solution Provider
4. Trusted Partner
5. Strategic Business Advisor
Let’s have a look at each of these stages, and from there, you can decide what stage you want to be in, with each of your clients.
They are quotation makers and order takers. In some industries, however, vendor is a perfectly acceptable term used to denote where someone falls in the supply chain. You are viewed as a Vendor where your services and company reputation attract Requests for Proposals (‘RFP’s’), or Invitations to Tender, or similar terms. As such, you are almost always in reactive mode, waiting by the phone or your inbox, for the nod to get involved. You are mostly tactical, rarely strategic. Your main contacts are lower level managers such as the purchasing or procurement managers.
Often companies find themselves as Vendors when they are considered to be commodity providers. A Vendor only gets involved when the client is ready to evaluate commodity services, and exits soon after the deal is done. Being a Vendor isn’t always a bad thing, as it depends upon you, your services and how your clients perceive those services.
Preferred Supplier – Reliable Source
This is the term we use to describe the level of relationship where you have become a steady, reliable supplier of products or services. You may have developed a few contacts apart from the purchasing or procurement manager in your account. You may be considered a Reliable Source by lower management level contacts, if you consistently meet or exceed their expectations. You can be counted on to give them what they want.
In contrast to a vendor, as a Reliable Source, you enter the process just before the client is ready to evaluate services like yours, probably because you are on an approved supplier list already, which has the added bonus for you, providing a barrier to new vendors looking for a slice of the pie.
You exit just after the solution has been implemented. Maybe you get a pretty fair share of the deals, along with the other suppliers. You’re not dominant, but you do have some traction. Being a Credible Source requires more interaction on your part, and it’s rewarded – relatively more so than a Vendor.
However, your main contacts are still the purchasing or procurement managers, usually within a specific department. In both of these first two levels, you rarely, if ever, have any contact with the VP level or higher.
As either a Preferred Supplier or a Vendor, your margins are usually quite low, and you must rely on a lot of volume to be profitable.
The Solution Provider is a larger part of the client’s fabric than the Reliable Source. This level of relationship takes on a more strategic dimension; is deeper and more rewarding. You’re getting to be pretty knowledgeable of the client’s industry and what makes it tick.
Being more proactive, at higher management levels, gives you visibility of existing business problems, and you become their Solution Provider, perhaps helping to write the RFP. In so doing, of course, you can guide it in the direction that best creates mutual value for you and your client.
As a Solution Provider, your involvement expands further, and your appearance in the decision process cycle lasts longer. Sometimes you enter the process just before the client has initiated a project, and you’re involved in the evaluating, proving, contracting and implementing stages. You exit the process after the measurement of the results. You are a valuable asset to your client, and you have every reason to feel pleased with yourself.
Generally, as you move up the Value Relationship Chain (the top three positions in the graphic), your margins increase as your products and services are considered more valuable to your clients. But more importantly, your Account Manager and your internal client team become more valuable to your client.
At this level, it is imperative to have strategic account plans in place to ensure you are working hand-in-hand with your clients.
Above and beyond the services you offer, your clients see you as a source of strategic planning assistance, for dealing with broader-based challenges they are currently facing.
You are sometimes called into assist in the planning process, and often senior management will call you, or someone in your firm, for advice on issues they feel you can give trusted counsel on.
Attaining this level is where most professional services firms end up. Although not quite the top level, it is the level that gives you a say in how your client runs his business.
Strategic Business Advisor
This is the hallowed ground. As a Strategic Business Advisor you work with the executives to explore emerging needs and direction on a confidential basis, similar to the role of a consultant.
At this level, in the context of the decision making process, you really don’t enter or exit. You’re part of the circle and when the client and you – with your objective external perspective – identify an issue together, you both assess the problem and create a solution.
Where do You Want to Be
Now that we have described the various levels of relationship we see in account management, we can see how these map into involvement in the client’s decision-making process.
Clearly, being a trusted advisor carries some major implications for the account manager. What we find is that a lot of professional services firms believe they are already at the Strategic Business Advisor stage, until they realize a number of crucial things:
1. Exactly how much time and effort it involves.
2. Not all of their clients want this level of attention from them.
3. They are wasting their effort with companies that do not want this level of relationship, or who will not give them the return or the ROI that the effort needs.
This is when you tend to revise down your opinion of the relationship. So having made those important caveats, if you’re not one already, how do you become a trusted advisor?
Perhaps obviously, you need to understand your client’s industry. When you develop an account plan – it’s all about knowledge. Knowing your client’s mind comes from understanding it. Understanding it comes from doing the homework, the research, the interviews.
Before you even start planning, you need to know a lot of things about the client. These include: goals, markets, industry trends, competitors, relative market position, financial performance, merger and acquisitions activity, and the structure of the account itself.
But the real key, to being a Strategic Business Advisor, is if your client invites you to the table when they are doing their annual planning sessions. If you are not invited, then you are not a Strategic Business Advisor to this client. So, don’t waste your time trying to be a Strategic Business Advisor if your client doesn’t believe in them, or more specifically, doesn’t want you to be one.
Want to learn how to move through the five stages? Please contact me through my email below.