When was the last time you spent quality time with your company’s five most key relationships?
Do you even know who your five most important key relationships are? And no, they’re not simply your five largest clients.
What Is a Key Relationship?
A key relationship is any relationship that would cause a great deal of harm to your company if it went away. As the CEO, you must take responsibility for them. This is not something you can delegate.
Several years ago, a client of mine in Canada had the misfortune of failing to get a supply order from a key vendor. As a result, he was unable to deliver to his key customer, Costco. This all happened right before Christmas.
Imagine how you would feel if your vendor failed to deliver, putting you in a mess with your most profitable customer.
When my client called up that vendor and started screaming at him, he learned that the vendor had sold the product to somebody else—at a higher margin. If my client had a deeper relationship with that vendor, I’m confident this would not have happened.
I’ve also learned that the better your relationship becomes with key vendors, the better the pricing and terms you can negotiate.
When was the last time you had a meaningful conversation with one of your key vendors?
How about your banker? We all know bankers want to lend you money when you need it the least. But that’s not a big help when your business is caught in a downturn and you need their financing.
Michael Maas, a coach at CEO Coaching International and the former head of a $300 million entertainment company, said, “One of the things you should do throughout the life of your business is put the time and the effort to develop what I call goodwill relationships. This is a relationship with somebody who, within reason, will help you because they want to see you and your business succeed.”
A goodwill relationship with his banker came in handy when his company got caught in a liquidity crisis.
At the time, Michael’s company was doing about $175 million in revenue. Unfortunately, a botched international expansion and a lack of focus led to a $10 million loss that crippled the firm.
Fortunately, Michael and his partner had cultivated goodwill relationships with their key stakeholders—including their banker—and when the need arose, their banker was supportive.
Within a few years, the business had doubled in size and was sold to a public company for a $100 million valuation.
One of the keys to building goodwill relationships is transparency. In Michael’s case, “Having the transparency to communicate the situation exactly as it is, how difficult the challenges are, how deep the troubles are, and that we were fully committed to doing whatever it takes to get back to good health,” was critical to getting his banker to help in the workout.
Of course, your key customers are another essential relationship you must groom. Who are the most important customers to the company, the ones who really matter? These are your high-volume and high-margin customers that are growing and you have a great opportunity to grow your business with them.
Our client, TaskUs, provides “ridiculously good outsourcing” to companies such as Eventbrite, Hootsuite, and Uber. With more than 6,000 employees and brand name companies as clients, CEO Bryce Maddock spends considerable time deepening his relationship with their key clients.
Along those lines, do you have any customers where you have a small share of wallet but could be doing much more business with? Who should develop those relationships?
Well, your top salespeople will certainly bring in the business and should manage and develop those accounts. However, it falls upon you as the CEO to make sure those relationships are strong and enduring. After all, salespeople have a way of leaving and taking their business down the street to a competitor.
Another client, Rich Balot, built a nationwide chain of Verizon Wireless stores. His key relationship was, of course, with Verizon Wireless. He knew the regional people, but he did not know the senior people at Verizon. I encouraged him to get to know them, all the way up to the C-suite of the entire company.
Due to the key relationships he built, he was able to make some meaningful arrangements with Verizon corporate people that enabled him to scale meaningfully. Whenever a smaller dealer was looking to exit, he was often told about it so he had the opportunity to buy them.
From time to time, he was also able to get some incentives that he might not have obtained had he not been as close with the key players. Those relationships had much to do with his firm’s quick growth and financial performance.
Rich meticulously nurtured his key relationships by taking an active interest in their lives. He texted them on their birthdays and anniversaries, attended sporting events with them, and used every opportunity to meet in person to build quality personal relationships.
And don’t forget, you must be genuine and sincere in building these relationships. Don’t think of this as a “strategy or tactic” to get more business. People will see right through that.
Not So Obvious Key Relationships
Other key relationships you must not overlook include the administrators and politicians and their staffs in the municipal and state or federal government (especially timely in this election year). 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 this is applicable to your business, you, as the CEO, should own these relationships.
It is the responsibility of the CEO to determine which relationships are the most important to the company and how to get closer to those people so those relationships are never lost. Take some time to determine which relationships you need to deepen. Then set about methodically improving those relationships so when you really need them, they’ll be there for you.
About Mark Moses
Mark Moses is the Founding Partner of CEO Coaching International and the Amazon Bestselling author of Make Big Happen. His firm coaches over 130 of the world’s top high-growth entrepreneurs and CEO’s on how to dramatically grow their revenues and profits, implement the most effective strategies, becoming better leaders, grow their people, build accountability systems, and elevate their own performance. Mark has won Ernst & Young’s Entrepreneur of the Year award and the Blue Chip Enterprise award for overcoming adversity. His last company ranked #1 Fastest-Growing Company in Los Angeles as well as #10 on the Inc. 500 of fastest growing private companies in the U.S. He has completed 12 full distance Ironman Triathlons including the Hawaii Ironman World Championship 5 times.