Four Stages of Development, Four Phases of Connection – Building Strong Relationships
When Good Relationships Go Bad
Customer relationships in general have been discussed innumerable times in the last 2 decades. But still some companies are more successful in managing their relationships. In this article I would be talking about the Customer Relationships with the perspective of Information Technology.
In this period of recession when every company be it in manufacturing, financial services, retail etc is talking of cost cutting, lay-offs then how are our Information technology Companies faring. Their pricing is under immense pressure, new orders are drying up. In these tough times the relationships are all the more important between customer and its IT partner. Since IT companies should also elevate themselves to a partner status and help its client to survive in this tough business environment by helping them to optimize their operations and reducing their costs.
The strength of a relationship is based upon the degree to which the parties wish to connect with each other, and applies to both financial and non-financial transactions. The strength of the relationship migrates through four phases of connection, primarily during the emerging stage of development:
- Formation – getting to know each other
- Divergence – differing opinions, disagreement, and doubt
- Convergence – reconcilement, acceptance, and agreement
- Association – performing collaboratively or cooperatively
However the relationship can migrate to back to the divergence phase at any time.
Parties can be:
- External suppliers and customers
- Individuals within the enterprise with an internal supplier and customer relationship
- In some other relationship where they have to work together, either external or internal to the enterprise
If either of the parties or both are enterprises, the connection is always between individuals. Two individuals within the same enterprise can connect differently. Differentiators include willingness to help, or going beyond the call of duty.
Relationships between non-competitors are either collaborative or cooperative. In both cases, there is a common purpose or value. In collaborative relationships, the parties are dependent upon each other; in cooperative relationships, the parties are independent.
Team members should have collaborative relationships because they are dependent upon each other. Organizational units within enterprises should have collaborative relationships because the individuals within them should be working towards a common purpose – the mission and vision. However, in highly political environments where stated and enacted values differ, relationships tend to be competitive as individuals fight for position and status.
A general contractor/subcontractor relationship is collaborative because both parties have a common purpose – project completion on budget and schedule. The relationship between a retail enterprise and its customers is cooperative. The retailer wants or needs to sell products and/or services and the customer wants or needs to purchase them. Hence, there is a common purpose. However, unless any other form of relationship exists, the retailer and the customer are independent.
In financial transactions, a supplier offers a product and/or service that a customer wants or needs with a certain level of expectation. A financial transaction is an offer of an item in exchange for cash or credit (or barter). The price is the exchange value offered by the seller; quality is the value perceived by the customer. When offered and perceived value equal approximately, the relationship is likely to be sustainable over time. When perceived value is higher than offered, the customer has an advantage, but the relationship may not be sustainable over time because value is being given away. When perceived value is lower than offered, the supplier has a price advantage. However, unless the supplier can further differentiate, the customer may believe that they are being taken advantage of. The customer may be able to get better quality or lower price elsewhere, and thus the relationship may not be sustainable.
Relationships often exist within certain tolerance levels for quality and price, and service levels can be differentiators. In general, lifestyle enterprises differentiate on the basis of service because owners are willing to make the extra effort to exceed customer expectations personally with no additional labor cost.
Customers will often test suppliers with “teaser” transactions before a major financial outlay occurs, and before a supplier is recommended to others. However, “word of mouth” referral is the best way to start a relationship
Resource Author Francisco Rodriguez H.
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