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Why improving a business relationship means having to talk about the relationship
February 17, 2022
Earlier this week, we celebrated Valentine’s Day and sales of garage-forecourt roses and boxes of chocolates temporarily soared. It’s curious how identikit and rather unimaginative gifts are almost universally considered essential to the optimal functioning of a personal relationship, but there may be an argument that simply acknowledging the relationship itself has some form of positive impact.
When it comes to business relationships, we believe this to be equally true. Even a simple checklist on the back on an envelope can trigger a conversation about the relationship between teams, identification of problems and an opportunity to address them. At Aprais, we have credible evidence that this is the case.
New figures, mined from Aprais’ global database of more than 24,000 evaluations over 20 years, confirm that a disciplined evaluation of supplier performance results in performance improvement. And these improvements are clearly evident within just 18 months – which is arguably still well within the so-called ‘honeymoon’ stage.
Relationship management is no longer simply a 'nice to have'.
In fact in its 2021 Global SRM Report, procurement and supply chain consultancy State of Flux identified that: "Relationship management was the most effective tool in mitigating the situation caused by Covid-19," and that in 75% of the leaders in supplier relationship management gathered systematic, 360 degree feedback to assess the health of key supplier relationships.
Furthermore, the Association of National Advertisers concluded in its report The Business Case For Relationship Management: "The benefits of a relationship management program align with components of a valued business partner relationship, specifically better communication, better work, and improved ROI, as well as greater efficiency and speed."
In short, then, to improve a relationship you need to talk about the relationship. Within a personal relationship, add some wine to the flowers and chocolates and no doubt the words will begin flowing. For business relationships our data indicates that a disciplined evaluation of supplier performance improves team performance.
Aprais data shows that over the past ten years, the average client rating of agency performance has risen from 73% in 2011 to 78% in 2021. There was a corresponding increase in the scores agencies gave to their marketer clients.
Given that evaluated relationships improve over time, it follows that newer relationships will pull down the average whilst more established ones lift the scores.
When we look at how evaluations impact on performance over the course of ten evaluations – usually conducted every six months - we can see that client and agency evaluations of one another’s performance improves progressively.
When we drill down into functional attributes (which relate to specific areas of business ) and behaviors (common to all) of client-agency teams we can see this improvement exists in all areas.
That scores increase over time becomes more impressive considered in the context of our fast-turnaround, ‘hire em fire em’ industry.
A consistent and transparent measurement process, then, along with constructive action planning of which more below, provides a strong foundation for ongoing relationship improvement.
In our experience, an evaluation system that builds stronger business relationships will have several key qualities.
Evaluations need to be relevant, which sounds obvious, but questionnaires must accurately reflect the responsibilities and scope of work for participants at local, regional and global level. In short, a one-size-fits-all questionnaire standardized for the organisation won’t cut it. We advise anonymizing the participants’ input so as to encourage open and honest feedback of their individual experience within the relationship.
The process also needs to be efficient, and easy for both the participants completing surveys, and the administrators managing the system at the back end. Technology can, of course, massively streamline this process and particularly the collection and presentation of data. That said, we advise allowing for both quantitative and qualitative feedback, the latter adds insight and is vital even if it can’t be nicely displayed in a bar chart or scale. It’s helpful if evaluations are presented in a way that tracks scores, and therefore improvements, over a period of time.
Once the evaluation is completed, results should be shared with all parties in a fair and impartial way. Action plans should be developed by all parties after each evaluation round, and put into place before the next evaluation. Although annual evaluations are popular, we advocate six-monthly evaluations to catch issues before they become bigger problems, and address them within a budget year.
It’s asking too much of evaluations to say they’re all that’s needed to boost a business relationship but, much like those flowers and chocolates, they undoubtedly help a great deal. They encourage the attention of all parties to focus on the relationship in question, and ask questions which require reflection and consideration. And they ultimately point the way towards improvement by drawing on the experience and opinions those with the most expert knowledge of the relationship - the participants themselves.