What Is the Key to Relationship Management?
The key to relationship management, like relationships in general, is communication—and the best communication is clear, concise, and consistent. However, communication in the business world is complicated, particularly when working with multiple parties. We see this challenge play out in partner management, where an organization has to maintain and grow relationships with one or more business partners—each of which has different needs, goals, and timelines. On top of that, ideal communication will look different for each partner, meaning a ‘one-size-fits-all’ communication plan is simply not possible.
The importance of relationship management cannot be overstated—nor can its complexity. To keep up with this challenge, an organization needs not just a plan, but the tools to execute that plan. Read on for some partner relationship management best practices and to learn how the right software makes business relationship management much simpler.
What Is Relationship Management and Why Is It So Important?
“Relationship management” has multiple meanings, even within the context of business. Generally, the two types of relationship management in business are:
- Customer relationship management (CRM)
- Partner relationship management (PRM)
Both CRM and PRM have the same goals: to promote mutual success, increase brand loyalty, and turn associates into advocates for the business. However, the processes for each are vastly different because CRM focuses on one type of relationship (customers), whereas PRM may involve multiple relationship types. For CRM, an organization may implement several tactics—such as marketing, tutorials, and data analysis—but ultimately all of those tactics improve business to consumer (B2C) relationships. But PRM is almost exclusively focused on business to business (B2B) relationships. And when two or more businesses form a relationship, it may take on any number of forms, such as distributors, resellers, affiliates, co-marketers, and so on. Each of those relationships has widely different goals and objectives, and thus requires entirely different relationship strategies.
What Are the Key Aspects of Relationship Management?
For a business, relationship management requires five crucial elements:
- Connection | Strong communication, resource sharing and goal-setting
- Attribution | Understanding where success comes from—and why
- Innovation | Creating relationships that uniquely serve each partner
- Organization | Using a comprehensive system for tracking, reporting, and data storage
- Transparency | Visibility into partner programs for internal and external teams
Applying these five principles requires a plan—but more than that, it requires a means to execute that plan. For PRM specifically, performing all five of these principles is nearly impossible without a comprehensive, connected system to manage it. This is why PRM software exists: to streamline, and even automate many of the processes of relationship management in a way that fits each unique partnership.
Why Is Relationship Management Important in Business?
In short: if a business has no relationships, they have no business at all. All organizations require relationships of some kind, and for businesses that means not just customers but other businesses. Without strong communication, clear goal-setting and a compelling way to show return on investment, neither party will be happy. This is true for customers and business partners alike. If a customer doesn’t develop a relationship with a business, they won’t stay a customer for long. And if a business doesn’t feel a strong reason to associate with a partner, they’ll end that relationship.
How Can I Improve My Relationship Management?
Here are three best practices to start with when improving your relationship management strategies:
- Clearly define your goals. What exactly are you trying to achieve with your partnerships? Be very specific when answering this question, as your response should guide not just who you work with, but how you work with them. For example, if you want to work with a distributor that will give you access to untapped markets in a new geographic region, you will already know more about what businesses to seek out—and what to say when you approach them. Furthermore, make sure you are considering what goals each partner wants to achieve, and how you can help them reach those goals. Partnerships are not about “what’s in it for me?” but instead “what’s in it for everyone?”
- Determine how you will measure success. This is possibly the most important part of relationship management, but it’s also maybe the most challenging part. Businesses often struggle to communicate the ROI of their partnerships, which makes it difficult to sell new partners on building relationships. What’s worse, if a business can’t communicate the value of partnerships to their internal team, partner programs will look like a waste of time and money—especially to a leadership team that’s looking to make budget cuts.
- Make sure you have the right tools for the job. Effective Partner Relationship Management [PRM] requires digital tools that can mold to different partnerships. Businesses don’t usually fall short in relationship management because they don’t know it’s important. Rather, failure happens because the processes are too challenging to manage. Many businesses try to manage partnerships with several disjointed tools, such as spreadsheets, emails, and even written notes. This might be feasible with just one partner, but adding even a second partner to the mix makes things far more complicated. PRM software like Torchlite consolidates everything into one single source of truth; agreement terms, finance tracking, and even resource sharing is all possible in the same place.
If you’re looking for more advice on how to improve your relationship management strategies, Torchlite has the answers. We not only provide a well-crafted PRM software solution but a whole host of resources for businesses seeking to improve their partnerships. And if it’s a PRM solution you need, book a demo with us today and see firsthand how our platform can improve your execution.