Relationships Are Dead; Long Live Relationships
In an era of electronic auctions, are traditional, face-to-face client relationships becoming extinct? By some measures, they are. The most important assault on client relationships is being fueled by the Internet and software technology. Markets that once lacked transparency and required a high degree of client interaction—auditing, debt underwriting, and specialized industrial parts, for example—are now automated, efficient, and increasingly utilize Web-based auction methods. Business to business transactions on the Web have reached a $150 billion annual clip, and some companies, such as Cisco, now report that over 90% of their orders are booked through the Internet. If you’re a salesman, or an audit partner with a Big Five firm, you clearly have to find new ways to add value. A second trend that undermines traditional relationships is the growing purchasing acumen of major corporations, and the corresponding separation of buyer from user (healthcare is a good example of this—physicians’ incomes have been decreasing at the rate of one percent a year). Annual contracts once taken for granted—whether you’re a law firm or an advertising agency—must now be vigorously contested.
These trends are forcing service professionals and business-to-business marketers alike to reevaluate and reinvent their business models, resulting in major structural changes in markets as diverse as management consulting and automotive spare parts. The result is that traditional client relationships based on the personal delivery of expertise and information are indeed going to wane.
Countervailing forces are also creating new types relationships. Just as the Internet is disintermediating traditional roles, it is also creating wider access to clients. Many Web sites—guru.com and freeagents.com, for example—serve as clearinghouses for all kinds of independent professionals, although these sites also market the benefits of lower costs to their corporate clients. A more important trend is the growing complexity of decision-making for business professionals, and the increasingly numerous and outlandish claims of potential suppliers. Clients need sage, trusted, and impartial advisors more than ever in today’s over-hyped markets.
Opportunities for new and different types of client relationships are thus presenting themselves, but many professionals will need to develop very different skills and strategies in order to take advantage of them. As the personal delivery of plain-vanilla expertise becomes commoditized and replaced by Web- and software-based alternatives, I believe that business professionals have two viable options to avoid becoming obsolete in the New Economy. They can develop into what I call deep generalists who are client advisors, or, alternatively, branded experts.
The role of client advisor is a time-honored one, but unfortunately many professionals have lost sight of what it means to be a broad-based, objective advisor. They perceive themselves as experts who should provide answers, do great analysis, carefully control the client relationship (as recommended by most books on selling), and specialize more and more during their careers. They provide information and expertise. Client advisors who are deep generalists, in contrast, offer insight. They become educators and navigators to their clients—trusted guides, as Virgil was for Dante through nine circles of Hell in The Divine Comedy. They ask great questions, bring big picture thinking to the table, develop depth and breadth, and collaborate with their clients. Reginald Jones, the former CEO of General Electric, comments that “Narrow specialists are rarely able to fulfill this role of broad-gauge advisor. That’s why I’ve always found Peter Drucker so effective.” An extraordinary advisor cannot possibly be replaced by the click of a mouse; he is an invaluable resource to clients.
A second option for professionals is to become a branded expert, an über-expert who becomes renowned in a particular area. In contrast to the extraordinary advisor, who adds breadth to his core expertise, the branded expert focuses single-mindedly on his area of specialization. He extensively leverages distribution media, moving from the in-person delivery of expertise to publishing, broadcast media, tape and video, expert software, and the Web. He publishes or perishes. The branded expert neither needs nor has time for deep, advisory relationships, but rather tries to disseminate his expertise as widely as possible to a broad audience. For obvious reasons, this option is feasible for only a relatively small percentage of professionals.
Warren Bennis, C. K. Prahalad, and Henry Kissinger are extraordinary advisors. Tom Peters, Tony Robbins, and Dale Carnegie are branded experts. Think of Alan Dershowitz—the client advocate—versus Barry Scheck—the DNA man. There is some overlap between these two roles—both can add great value to clients, and both must engage in continual personal renewal and reinvention. The developmental paths and ongoing strategies required to succeed at each, however, are quite different.
During the English Industrial Revolution, millions of craftsmen were displaced by factory automation and cheap labor. I view today’s knowledge workers as a bit like the craftsmen of the 19th century. Just as the content of the Wall Street Journal has been stripped away from its original paper medium and offered electronically to readers, the expertise and knowledge offered by sophisticated professionals is being separated from their physical person and offered to clients through a variety of digital media. Individuals today, in short, face the same strategic turning point that corporations are confronting as they decide their Internet strategy. In our robust economy, however, the strong demand for knowledge workers is breeding complacency about personal and professional development at the very moment when adaptation is needed.
Personal relationships based on trust and mutual respect will continue to form the foundation for many business transactions, but the way professionals add value in those relationships has to change. Those who truly stand out will become either broad-based advisors to selected clients or branded experts who distribute their expertise across a variety of traditional and new media. Those who do nothing will find clients bypassing them in favor of simpler, faster, and often free digital resources that never sleep. Relationships are dead; long live relationships.
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Andrew Sobel is a leading authority on client relationships and the skills
and strategies required to earn enduring client loyalty. He is a consultant
and educator to major services firms worldwide. Andrew is the author of the
business bestsellers Clients for Life (Simon & Schuster) and Making Rain (John Wiley & Sons). He can be reached at email@example.com (Tel: 505.982.0211).
Copyright by Andrew Sobel. This newsletter is available for reprint but only with the permission of the author.