KEEP YOUR RELATIONSHIP CAPITAL ROBUST
By: Sharon Berman,
Published: Los Angeles Business Journal
How to Build, Leverage and Replenish the Account
These days, many businesspeople constantly have one eye focused on the stock market. They know exactly how much is in their brokerage account at all times. That’s fine, but there is another kind of valuable capital many of them overlook – their relationship capital.
One dictionary definition of capital is “money and other property of a corporation or other enterprise used in transacting its business.” Clearly, property such as machinery and real estate falls into this category – but relationship capital, although not as tangible, does as well.
Relationship capital is the network you have built up in your business over the years. It includes the goodwill you’ve created based on your reputation and the reputation of your enterprise. Your relationship capital is found among your current and prospective customers and clients, and your vendors and referral sources.
Take Control of Your Capital
How do you build and leverage relationship capital? First, you need to take control of it. Although relationship capital may not show up on your balance sheet, corralling it in one place so you can put it to maximum use is every bit as important as getting a handle on your stock investments.
Yes, you have a variety of referral sources, loyal customers, reliable suppliers, and so forth. But do you have a handle on all of them? Are they all captured in one place – namely, a computer database? Just as your checking account should balance, your relationship database should be clean and current, too.
Has your relationship account grown stale? Have you reached out beyond your current boundaries, or have you become complacent? It’s great to have a core set of customers or clients who bring you business or make referrals. But you never know when your best customers’ business needs may change, or when they may move on in their careers and accept other positions. That’s why you should always actively nurture new relationships.
Relationships are built on knowing about people and their businesses. It’s important for you to capture information about them both on personal and professional levels. Of course, you ought to know what their business needs are, what kind of customers or clients they’re looking for and what their best referral sources are. But it also can benefit you enormously to know whether they enjoy going to the theatre, playing golf or coaching their child’s soccer team. Gather and store that kind of information as well.
To build relationship capital, you must consistently remind people who you are and what you stand for. This can be accomplished on several levels. On a broad level, it can be achieved through direct mail pieces or broadcast e-mail messages. (Make sure to collect e-mail addresses for your relationship database.)
You can also employ a powerful media relations tactic: Keep in front of your markets by providing the media a reason to talk with you, e.g., positioning yourself as an expert spokesperson, or by contributing articles about your area of expertise. If you succeed at gaining media attention, mail article reprints to your business contacts, since many of them will have missed seeing the originals. Also, be sure to post the articles on your web site.
For your closest circle of business relationships, you’ll want to employ more personal tactics, such as making phone calls on a regular basis or taking people out to lunch or dinner from time to time.
Don’t Overdraw Your Account
You may think such efforts are unnecessary, believing that the people with whom you have developed business relationships already are familiar with you and your operation. For most of us, that may be true when it comes to the circle of our closest contacts, clients and customers. However, if you want to expand the circle, you must consistently stay in front of your audience.
Frequently, relationship capital is built and maintained on a two-way exchange – whether through referrals or sales. Of course, some professionals are not in a position to easily exchange one-for-one. For example, accountants are wellpositioned to make referrals to insurance professionals, but it’s difficult for insurance professionals to reciprocate, since the referral pattern usually doesn’t flow in that direction.
While the ideal way to leverage your relationship capital is by providing referrals that result in business, there are other things you can do to reciprocate. It may be introducing a client to one of your contacts who might be useful for the client to know. Or giving a client theatre tickets, or treating him or her to a few rounds of golf. Or recommending someone for the board of an organization you’re involved with, which might open up new business vistas to that individual.
The bottom line: You should never be overdrawn on your fund of relationship capital. You should never tap out your resources without replenishing the account. Some professionals replenish their account by creating their own networking venues – such as inviting a group of people to lunch or an after-work gathering.
You may feel that relationship capital isn’t important to you because you’re not a “rainmaker.” Your role is not to bring in business, but rather to take care of it once it does comes in. Because you have an in-house position, you reason, there’s no need for your relationship capital to be robust. Understand, however, that your business situation may change rapidly, and relationship capital takes time to build. If you should ever need such capital right way, you could be left high and dry.
So take stock of your relationship account. If the passbook is dusty or you’re overdrawn, it’s time to move into action to build the account back up. Get out your Palm Pilot and start making calls!
Sharon Berman is principal of Berbay Marketing & PR, a marketing consultancy that orchestrates and directs marketing programs for companies and professional services firms. She can be reached at Berman@Berbay.com.