Recently, Austin made the initial investment in a Client Feedback Tool. This is a tool designed to monitor a client’s perception of the quality of your services and results, especially as you reach project milestones. A critical benefit to this process is that it engages the team in measuring perceptions as they move through a project, instead of waiting until the end. “Postmortems that discover how you could have saved the patient are never an optimal exercise.”
During the orientation to this tool, we discussed the theory of relationship equity. The theory of Relationship Equity centers on the idea that people generally believe that for a healthy relationship to exist, there has to be fairness between the parties. Simple enough, right? The complexity comes in when people have different perceptions of what is fair.
For example, John prides himself on his organizational and time management skills, and never leaves the office until he answers all of his emails. Mary, his client, who is at the jobsite, expects responses to her inquiries about the project throughout the day, and is frustrated when she has to wait all day to get a response to an issue. The job is going very well – on time, on budget, good quality – but the client is not happy.
Now go back to the start of a project. Congratulations, you have been awarded this project. You have shown the client that you are the best value competitor to execute this project. Your winning sales efforts created a greater bank account of relationship equity than your competitors were able to create. Now, what will you do with that equity?
For the purpose of discussion, let’s put a number to it. Let’s say at the contract signing, we have equity valued at 50. It is highly unlikely that at the end of the job, the equity will be unchanged. In John and Mary’s case, Mary expects the project to be completed on time, on budget and with good quality. That is what the 50 is based on. John’s inability to meet Mary’s expectations of responsiveness debits the account. Mary is not expecting perfection. She considers herself to be reasonable, but John is not meeting her needs for response time.
Perhaps at a certain point, Mary’s frustration causes the equity to decrease to 45. It sits there for a while until an issue happens on the project one morning that needs John’s attention. By the end of the day when John gets to it, time and money is wasted. Equity is now at 40 and decreasing.
The likelihood of a repeat assignment from Mary, or even a referral, is dependent on whether the equity is higher or lower at the end of the project. Where is it going to wind up if John continues to think he’s doing a great job, but fails to increase his relationship equity?
So the key, as is the key to all relationships, is that deposits need to be made into the relationship account to build its value. Most importantly, the deposits MUST have value in the eyes of the client. If John nicely documents monthly reports with lots of color pictures that Mary doesn’t even look at, it is of no value to her and adds no equity.
So, how do we know what is valuable to a client? Simple – we ask. Regularly and follow-up. We make sure we are addressing the subjective expectations, as well as the objective ones. We listen, we care and we follow through. It’s a great formula for success. I look forward to adding relationship equity to our continuous improvement initiatives this year. Think about how much we can learn.
“If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.”
“Thank your customer for complaining and mean it. Most will never bother to complain. They’ll just walk away.”
“Instead of selling to your customers, help them buy.”