Friday, December 23, 2005

Relationship Capital Management Software and CRM

The term “Relationship Capital Management” has traditionally applied to the development and management of clients and prospects of an organization. Customer Relationship Management (CRM) systems have been in place for a number of years, originally designed to increase customer loyalty and thus allow for better opportunity and account management. However, these systems do not allow for identifying and managing all potential relationships within the company ecosystem that may affect an organization: customers, prospects, competitors, partners, influencers, media, human capital (or talent), and other third parties.

Traditionally, the focus of CRM initiatives has been on driving down costs and creating richer customer data. As organizations gear up again to drive top-line growth, the need for CRM solutions to focus on customer intelligence and account development increases.

Where relationship capital management has potential to increase the utility of CRM / SFA solutions: by improving sales effectiveness, via identification of broader range of contacts that may affect the sales process; and consequently, the identification of best practice strategies & processes to develop high value customers and market segments. For example:

  • Extend the reach of customer care solutions by incorporating more comprehensive business development intelligence gathering; especially important in the development of vertical - specific applications (for the services industry, for example)
  • Broaden the network of contacts beyond just prospects, and make inclusive partners, competitors, and other third parties
  • Utilize customer intelligence to provide insights into prospect and customer – specific value propositions and appropriate communication strategies

Coming up: some strategies to fully leverage a relationship capital management system....

Read more!

Wednesday, December 21, 2005

The Advent of Relationship Ecosystems

Is the tech world moving away from a hierarchial partner relationship model, to a networked relationship system? In discussions with both start up software firms and the larger ISVs, I have seen the evolution of partnerships and alliances moving from '1 - 1' partnerships to 'Many - Many' relationships.....

(this is not "Manny being Manny" as they say in in Manny Ramirez, slugger for the BoSox)

Certainly SAP has stepped out in front with the relationship ecosystem concept: "Industry Value Network" refers to the SAP / partner ecosystem designed for complete and integrated solutions into specific vertical markets. How is a industry value network different than a ISV partner program?

Core areas include:

- Strategic Alliances with key platform & technology vendors
- Niche and vertical specific vendors fill in core white spaces
- Go to Market strategy is completely aligned
- Most importantly, there are inter relationships developed among partners, so that the partner ecosystem in networked and not hierarchial

Obviously, the challenges of developing and managing such an ecosystem are higher in the initial recruitment and developmental phases, and do require a more global and inter-networked management model. For smaller ISVs, the key is to identify those specific white spaces in the business solution and what specific tier 'n' partners to develop, and not worry about obtaining a direct relationship with the 'gorilla' . Read more!

Tuesday, November 22, 2005

Not all relationships are created equal, LinkedIn....

Have been using LinkedIn a fair amount for the past few weeks; more for ISV and market research projects; as opposed to checking out how popular I am...

(and don't you think that many of us use LinkedIn to measure our popularity? I mean, how many contacts / relationships can one normal person actually maintain? 100? 200?)

Anyway, one area of concern is the inability to selectively share your contact list with members in your network. Which leads me to the title of this post:

Not all relationships are created equal.

I want to share my list of relationships with select contacts, but not all of them. Like many of us who have succumbed to the ego blast of building a big network, I have a whole bunch of people who are linked to me, but are not necessarily people that I know very well, and are not ones that I am open to having my own network list of contacts exposed to.

So, where is my control of this list? There are a bunch of contacts I would like to allow access to my network, but I want to do that on an 'as needed' basis.

So LinkedIn: let's get some more control of our networks, ok? Read more!

Friday, November 18, 2005

Relationships as 'Assets'

On a broad level, relationships are about identifying & articulating common values & goals; allowing for requisite time and 'event' sharing to building trust, and allowing that relationship to evolve over time. Translating this to a business advantage: you can lower sales costs, shorten your sales cycle, and increase partner and channel effectiveness, by building trusted relationships. This follows a basic premise in developing a growth (and exit) strategy: You can't do it alone; you need an ecosystem of relationships (i.e. partners, advisors, potential employees, strategic clients) to acheive your goals.

Mark Granovetter (Stanford University) developed a concept called “The Strength of Weak Ties”: individuals can maintain a finite number of ‘strong’ ties or relationships, but they also have a much larger network of weaker ties with other contacts. In a large organization, the number of weak relationships identified can be substantial, and can yield significant insights into customers, sales, and market trends. These ‘weak’ relationships may include those that are associated with external contacts, such as prospects, influencers, and partners; but also may include internal relationships: a sales person relationship with product manager, or an internal recruiter’s relationship with an employee, for examples.

The organization that can identify and manage these strong and weak relationships may realize those relationships as assets, and leverage them in a way that increase sales and revenues. Therefore, from a revenue perspective, fully leveraging relationship assets over time may also increase company valuation as well. Read more!

Thursday, November 10, 2005

Market Research Dilemma: Everybody wants to talk to End Users and Buyers....

I have been working on some market research / validation projects for software firms in the past few months, and it apparent that many software companies are really searching to find that all elusive, all knowing, all seeing.....(sorry, this sounds like "The Amazing Carnak" routine)....

Well, you catch my drift: we all want to interview the perfect end users & buyers who can provide the perfect insights that drive product strategy, sales models employed, pricing / value, and brand awareness. All of us; meaning 20,000 give or take software firms. That's a lot of phone call / email campaigns, all hitting the same group of buyers. To wit:

  • End users in general (i.e. 'C' level executives: CIO, CTO) get pinged constantly with a barrage of calls and emails from software vendors
  • You may have the best technology / team / organization / investors, but at the end of the day, you are asking for a big favor to get their precious time and feedback
  • If you don't do your homework and target the proper end user / buyer, and understand their immediate and near future needs, you may end up causing a negative impression, which is obviously much harder to rectify as you push forward with product launches

So, how do you increase the "signal to noise" ratio of your market research efforts?

  • Friends & Family: what relationships can you leverage within your own organization (i.e. management team, advisors, partners, board members, consultants) to get some traction with end users, and even 'pilot' your pitch with friendly contacts
  • Leverage the expertise and client breadth of SIs: you can leverage a SIs expertise and client base in their target markets; essentially getting a portfolio view of business requirements. Plus, there may be interest in understanding how your solution / product may add value to their service offerings
  • Build Relationships with select End Users, so that you can get referrals: use the viral approach to build out relationships with key end users, and earn their trust so that you can access and leverage their network of relationships with peers, who can serve as contacts as well

It goes without saying that a little market research on the target accounts themselves (market focus, product lines, partners, competitors, and recent key events that affect their performance: quarterly earnings, client wins / losses, regulatory / political events, etc) position you much better, once you get engaged in a dialogue.

Give yourself enough time to gather data: which means you probably can't get a thorough campaign done in a couple of weeks; it will take 2+ months to get in touch with enough contacts to incorporate significant feedback into your customer and 'go to market' strategy.

Read more!

Tuesday, November 08, 2005

The Primary Components of Technology Relationship Building

Many software firms are driven by leaders and entrepreneurs with strong technical expertise, but perhaps not as much expertise or desire in building & leveraging the necessary relationships to drive growth. Viewed collectively, these relationships may encompass:

  • Business Development: acquiring key strategic accounts for alpha tests and beta deployments; also acquiring 'lighthouse' or strategic accounts that will provide early referenceability

  • Building the Talent Ecosystem: identifying and developing those individuals who will bring insights, more brand awareness, additional referrals, and management expertise to ensure growth. Talent includes: advisors, customer councils, board members, members of the management team, and key consultants (interim executives, for example)

  • Alliances / ISV Development: identifying, developing, negotiating with, and enabling key partners to sell solutions / products in the marketplace. Given the abundance of software firms, the consolidation of the major ISVs, and the desire of most corporate accounts to streamline vendor selection towards integrated business solutions, it is imperative that software start ups fully leverage indirect sales models to promote growth

  • International Growth: same as the bullets above, but focusing on select international markets (APAC, EMEA). Relationships required include: talent, technology partners, sales partners

  • Strategic Growth: those relationships required to position a company for acquisition or merger, or to identify those companies / technologies appropriate for acquisition. This relationship category aligns closely with building strategic alliances (above); identifying and building relationships with key technology partners that may result in an M&A event necessary to ensure continued growth, and allow for a successful exit for investors

Each of these relationship 'building blocks' have their own methodology and attributes (which I will cover in subsequent blog posts), but viewed collectively, this framework allows executives in technology firms to visualize the set of optimized & leveraged resources (internal and external) necessary to acheive key growth milestones.

Read more!

Saturday, November 05, 2005

What is Relationship Biz?

This is my first post on the Relationship Biz web log. The term "Relationship Biz" refers to all activities that encompass building relationships to drive growth; in this case, for software technology companies. I have also referred to the term "Relationship Ecosystem" as well: this involves the development of inter-relationships among partners in a given ecosystem, as well as the relationships developed between the software company and its partners.

More on this later.... Read more!