Quick test: name the key relationships that are the most important to the success of your business.
If I ask a CEO this question, and the answer is along the lines of, “oh, our top five largest customers,” or, “we have a lot of key relationships,” then I know the CEO is failing at a top priority: managing key relationships.
Actually, “managing” isn’t the right word. The CEO has to OWN these relationships. If you delegate your relationship with a key customer to your head of sales, what happens to the relationship if you have to upgrade that employee? In a cash flow emergency, do you want to be stuck on hold, or do you want to be on a first-name basis with the president of your bank?
Below, you’ll find a cheat sheet I use to help clients who aren’t in command of their key relationships start connecting with the people who will be instrumental on the journey from good enough to great. From knowing what key relationships in business are to taking a look at the things that make a relationship great, you’ll find the information you need to build strong business relationships.
What Are Key Relationships?
When it comes to being a CEO or business leader, you’re going to form business relationships with a wide range of people, such as clients, business partners, and investors. But of these types of relationships, which are considered key relationships in business? Key relationships in business are those built on trust, communication, and loyalty, as these qualities can help a CEO or business leader improve business relations to build a strong company with a competitive advantage.
Why Are Key Relationships Important?
Key relationships in business are important for a variety of reasons. As with any connection between two people or parties, a strong relationship can bring advantages and benefits to both sides. Some reasons why building strong business relationships are important include:
- Attracting new customers: Your customers are the backbone of your business. By taking time to connect with them and build a relationship, you can grow your customer base and bring in more revenue.
- Improving retention rates: Once you’ve built a relationship with your customers, it’s important to foster it and ensure customers are satisfied. Doing so can help improve customer retention rates.
- Creating new business opportunities: Forming strong relationships with business partners and other industry leaders is a great way to open the door to new business opportunities that can help you expand or tap into a new customer base or audience.
- Enhancing communication skills: One of the top leadership challenges is communication. Building business relationships requires constant interactions with employees, customers, business partners, and investors. The more relationships you create, the more you’ll improve your communication skills, which can boost confidence and improve your negotiating skills.
- Developing investment opportunities: Funding is essential when it comes to running a business, but receiving funding is often easier said than done. By taking the time to build key relationships with investors and financial institutions, you’ll have a larger pool of connections willing to provide funding.
- Increasing productivity: Your employees are the ones keeping your business running, which is why creating strong relationships with your staff is essential. A healthy relationship between you and your employees can help create a positive working environment that can increase productivity and employee morale.
Top 7 Key Relationships in Business
What are some of the key relationships in business? Below, you’ll find a list of seven business relationships that are crucial to the success of your company, keys to a good relationship, and why you should take the time to ensure the needs of these relationships are met.
1. Your Banker, Creditors, and Stakeholders
CEO Coaching’s Michael Maas was in trouble.
Michael was running a company that was doing about $175 million in revenue. But after a plan for international expansion imploded, the company’s scattershot activities and lack of vision led to a crippling $10 million loss.
Michael was staring down bankruptcy. But luckily, Michael and his partner had cultivated key relationships with their stakeholders and their banker. This gave them the luxury of being open and honest about their situation. The banker was supportive and helped Michael’s company as it transitioned to a new COO who was a turnaround expert. Eventually, Michael doubled the business and sold it for $100 million.
Michael’s example shows just how important bankers, creditors, and stakeholders are to your company. By having strong business relationships with those who can provide financial relief when you need it, whether it’s a loan for a new brick-and-mortar location or the rollout of a new product or service, you’ll be able to keep your business up and running.
2. Your Key Vendors
Here’s a scenario that’s a lot more common than you might think:
As the holiday sales crunch looms, a company waits for a supply order … that never comes.
Why? The vendor found another customer willing to pay a higher premium due to holiday demand.
As a result, the company is unable to fulfill an order to a key customer at the most critical sales period of the year.
How’s that for Merry Christmas?
This is what can happen when vendors see your company as just another name and set of numbers on a spreadsheet. This is what can happen when someone working three floors down from you is managing POs without giving any thought to the person in charge of fulfilling them.
The better your relationship becomes with key vendors, the more reliable they will be, and the better the pricing and terms you can negotiate. But if you go above and beyond to really get close to your vendors, they might share with you what your top competitors are doing or new industry trends. They might invite you to test new products before they release them to others, or maybe even give you exclusivity for a period of time in a territory or product.
3. Your Key Customers
Who are the high-volume, high-margin customers that really matter to your company? Who’s growing? Is there an opportunity for your business to grow with them?
For our client TaskUs, their key customers include Uber and several other high-profile firms.
For our client Rich Balot, who had more than a hundred retail Verizon stores, the key relationship was with Verizon Wireless. We encouraged Rich to get to know senior staff, all the way up to the C-suite, which helped Rich make some meaningful arrangements that enabled him to scale up to more than $1 billion in revenue.
However, don’t neglect the smaller fish in your pond. Some of your customers may only do 10% of their total business with you. How can you bring that up to 50%, 75%, or more?
And don’t confuse your sales team’s account-managing responsibilities with YOUR relationship-owning responsibilities. Salespeople have a habit of leaving and taking your business with them. Key customer relationships should be with you, not with the people who work for you.
4. Key Government Administrators and Politicians
This will be particularly crucial for some industries. Who are the people who might have some say over issues that are important to you? Who are the regulators who could make or break your business?
If you’re a small business on the way to BIG, think local. The mayor of your small town, the clerk in charge of permits and zoning at city hall – you won’t realize how important these people can be to the success of your business until you need them.
Government administrators and politicians are some of the key relationships in business you should always continue to strengthen. These are the people who can create legislation or laws that directly affect your company, which is why knowing regulators on a deeper level can help your business operate smoothly without legislative roadblocks.
5. Key Future Relationships
What’s coming next in your industry? Who will be the key players? Can you get in early on the next wave of innovation? Taking the time to read the best CEO books, attend networking events or workshops, or receive executive coaching services are great ways to stay up-to-date on industry trends while having the opportunity to meet new people and form relationships.
It’s also important to think about your customer base. Nurturing your relationships with key customers is good; hanging the very survival of your business on one or two big purchasers is not. What’s a customer demographic you’re missing? Are you so focused on what you’re selling right now that you’re not thinking about what you have to sell tomorrow?
These are just some of the questions you should ask yourself as a CEO or business owner. Looking ahead is a great way to be proactive and think about future business relationships you can build that can help take your company to the next level.
6. Lawyers
Starting and running a business involves a wide range of legal issues, which can be hard to navigate as a sole business owner or CEO with other important matters to take care of. One of the most important key relationships in business is one with a lawyer or legal counsel.
For example, what if you’re looking to expand into a new state? A lawyer can help you navigate that state’s employment laws and labor laws to ensure you remain compliant. Or, what if Congress passes a new tax law that directly impacts your payroll? A lawyer can provide the information you need to ensure your payroll administrative processes are legal. These are just some of the many scenarios you can find yourself in as a CEO, which is why cultivating a strong relationship with a business lawyer is a must.
7. Employees
As stated, your employees are those who help keep your business running. If you don’t form strong relationships with your staff, they might not believe in the goals and mission of your business, which can directly impact its success.
One of the keys to a good relationship is respect. As CEO, take time to create a strong company culture built on trust, communication, loyalty, transparency, and kindness. Employees who have a CEO who believes in and respects them will be more dedicated to your company, helping you achieve your vision. Strong relationships with your employees can also help attract top talent, which can put you ahead of your competition.
Put in the time.
Rich Balot took an active interest in Verizon’s brass by texting them on their birthdays and anniversaries, attending sporting events together, and using every opportunity to meet in person to build quality personal relationships.
When I was running Platinum Capital, I jogged through Central Park with the managing director of Bear Stearns. I visited top people at GMAC and Citibank every quarter. I set up joint ventures with real estate firms to whom I wanted to get closer.
Don’t book half-hour meetings with key clients. Instead, some things that make a relationship great include:
- Taking them out to lunch
- Scheduling a round of golf
- Inviting their families to your kid’s birthday party
- Finding them at industry conferences and grabbing a cup of coffee between events
- Talking
- Connecting
- Swapping CEO war stories
These are just some of the key things for a relationship that can make a difference. By taking the time to build genuine relationships that aren’t strictly work-related, you’ll be able to earn respect and show an interest in a person’s life outside of work. With these key tips on how to make a relationship great, you’ll be able to grow these key relationships while they’ll help you grow your business BIG.
Curious to learn more about CEO coaching? Contact us to Make Big Happen.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average revenue CAGR of 31% (2.6X the U.S. average) and an average EBITDA CAGR of 52.3% (more than 5X the U.S. average).
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