Early Warning Signs for Troubled Relationships

The older I get the more I notice that without breakdowns there are no breakthroughs. It’s a paradox. A burning platform forces us to act. It causes us to reach deep into ourselves and, if we are lucky, find a way through the breakdown to a breakthrough.

Breakdowns make us refocus and redirect. They require us to do things differently. Some breakdowns are sudden and blindside us, but, if the truth be told, most had warning signals that we missed or ignored. Losing an important customer is like that kind of breakdown.

I’ve seen lots of business relationship breakdowns. What I’ve noticed is that those who are willing to learn from these breakdowns end up creating a loyal customer base. Those who don’t learn from such breakdowns do the same thing over and over, wondering why performance is declining.

Fortunately, after almost two decades of research, our company is able to define a distinct pattern of warning signals for deteriorating b2b relationships. The good news is that if you are alert to the early signals, you can take steps to proactively turn the relationship around. The longer the signals are ignored, the more costly and the less likely the recovery.

What are the early-warning signs in b2b relationships?

First, there are recurring problems and frustrations. Repeated product or service quality problems are reported throughout many levels of the organization with little or no improvement. I once worked with a company that had been the market leader for 50 years. After 5 years of repeated product and service quality problems, a small competitor began to nibble away at the market share, first in little bites and then in big binges. Where did this competitor come from? Why didn’t we see them coming? Denial is a power force, particularly when we’ve been successful for a long time.

Second, when these product and service problems persist, customers become increasingly angry. When our products, systems and processes don’t work, we cause our customers extra work. Sometimes we unknowingly embarrass our customers in front of their bosses when we don’t deliver. Sometimes we reinforce the notion that we don’t take our customers’ concerns seriously.

Companies, like the market leader I mentioned earlier, are blindsided when there are inadequate performance measures and tracking systems to log complaint trends account by account. Because there are no account-level measures, it is easy to see valid customer concerns or complaints as recreational complaining. The customers of the market leader had been loyal for a long time and the cost of switching suppliers was high because it required them to retool their plant. The supplier began to view their customers as complainers who had been pampered for too long. Therein lay the problem. The supplier could no longer hear the customers’ genuine business concerns. Like those customers, once one of your critical customers is viewed as a complainer, it will be almost impossible for them to get the level of service needed and expected. Thus, the relationship with your firm begins to erode.

By this point, it is likely someone, maybe a whole department, deep within your customer organization has become your enemy. Typically, it is someone in a middle management whom your company has insulted or treated badly. Rather than going directly to their management to complain, they systematically set out to build a case against your company. They become your VP of Negative Marketing. Every missed deadline, product or service glitch is commented upon and documented.

These enemies are often very angry or difficult to deal with, so most suppliers ignore them. Rather than have a difficult communication, they chose to reduce communication to a minimum, and concentrate on communicating with others who are easier to do business with. This may be the worst mistake you can make. If there were ever a time to over-communicate, this is it. This enemy, left to his/her own devices, will build a case against your company. They will quietly and systematically start an impact study and shop around for a new supplier. They probably will not alert senior management until their case is solid. They know that many of the executives and senior sales personnel have strong personal relationships, and the enemy is now out to win their case. “Why stir up the pot until we have all the facts?” So executive and sales social events continue while the “firm-level relationship” deteriorates.

Once the enemy’s case is solid and they can present a compelling reason to switch, your cost to recover this customer will increase significantly. At this point, one more major service problem will most likely result in your company receiving minimum performance standards and ultimatums. If these are not met, then despite significant costs of change, the customer will move on or even worse, you will fight out your differences in court. We call that death by the billable hour.

What can you do to avoid losing your b2b customers?

It is not my goal to alarm you, but I suggest you take a few minutes to step back and listen to your current customers differently, and act to prevent potential breakdowns. Make certain you are not in denial about the health of your most important relationships. If one or more of your critical business relationships is breaking down, invest in turning it into a breakthrough. Most strong, loyal relationships are built by working together to overcome problems.

How can you detect possible early warning signs of relationships in distress?

1.    Do you notice any of the people within your key customers avoiding you or your company? For example, which people in the customer organization don’t return your messages? Which seem to avoid longer conversations? Which leave your company out of key meetings or fail to give you the most up-to-date information?  Lack of communication and information should be viewed as a potentially serious early warning sign. It is critical for you to better understand on the situation. Listen to these people. Make certain you have not or are not developing an internal enemy. If you have developed an enemy, listen don’t sell. They will stop complaining when they feel their voice has been heard.

2.    How recently have you done an objective, multi-level assessment of the health of the relationship of your critical customers? Business-to-business relationships have multiple levels “scoring” you. Traditional studies typically get responses from only the technical user of your product or service, which makes you more likely to be blindsided— these studies almost always miss the internal enemies. Which companies are not sending back their customer surveys? In the world of customer satisfaction and loyalty, you should assume that no news is bad news.

3.     How robust is your internal measurement and tracking system? Is it built upon the customer expectations or internal efficiency measures alone? Can you get account-by-account measures? What do your customers say about the quality of your measures? Solid performance measures will help your organization listen better and will enable you to proactively identify early warning signs and communicate to resolve them. This will help you turn potential b2b relationship breakdowns into breakthroughs.

© S4 Consulting