Loyalty Alliance Style

You want loyalty from your customers, employees, and suppliers. Every imaginable supplier, B2B and B2C, is desperately looking for customer loyalty too. But what about those that want the last ounce of advantage on both the sell side and also the buy side? Do you know who I talking about?

See It with Your Own Eyes

I’ll never forget an experience I had while visiting an ice manufacturing plant in Southern California. I was visiting the plant in preparation for a multi-day marketing workshop I was to conduct at that industry’s annual convention. I wanted to get a feel for the industry first hand.

I set up an appointment to visit the plant but the owner was out. So, his second in command gave me a factory tour. Over the course of the tour, and to my amazement, my guide was bemoaning what he considered poor loyalty from their customers—stating that many would buy from another company if his drivers were late with deliveries. I listened intently and empathetically to him. Toward the end of the tour he was showing me the ice bagging machinery so I asked my guide about his company’s bag supplier. Holy cow! This guy’s facial expression turned sheepish. He then told me, “We like to play one supplier against another for the best possible price.” Excuse me!

What’s In Your DNA?

Apparently supplier loyalty was not in the DNA of this particular ice manufacturer. However, they expected loyalty from their customers. Is it just me? Or, can you see the cosmic humor in this situation? This organization wanted it both ways. It’s kind of like the folks that regularly shop at Wal-Mart and then complain that all the American jobs are being sent overseas. Duh!

Looking at a 180 degree difference in business philosophy is Universal Electrical Contractors in Flint, Michigan. President, Gene Dennis, successfully shifted his buying from several electrical distributors to giving Graybar an exclusive agreement. A decade later the alliance is still going strong and highly profitable for both.

What’s a Business Leader to Do?

1. If you want loyalty from your customers, practice the concept of loyalty in your dealings with suppliers.

2. If you discover that adversary relationships are in your organizational DNA, put new policies into place to mitigate the situation.

3. If you want collaborative DNA at the core of your organization, review how your key people are being compensated.

4. Reward the behavior you want repeated—meaning, do not reward the procurement department only for squeezing an additional dime out of your suppliers. Rather, build strategic sourcing relationships.

Now the Getting Gets Good

After you do a major overhaul in the area of supplier alliance development, you can use your newly found strategic sourcing understanding to develop better relationships with your customers. This is also a great time to review your employee partnering policies. Trust me on this; you do want your employees to have an emotional ownership in the success of your business. In difficult economic times—sure, everyone is looking for a deal. But, when you and I have a vested interest in our relationship, we’ll bend over backwards to help one another. That is the basis for real customer, and seller, loyalty. It’s never too late to start building the new era of loyal relationships.

Conflict Management in Alliance Development

There will always be conflict in strategic alliance development--it is inevitable. During this time of conflict you can take one of two positions. The first and frequently employed position is that of having your heels dug in. You believe you are right and that's it! The second position, and more difficult to employ, is where you care enough about your partner and the success of the alliance to understand what is motivating their behavior. Needless to say, my recommendation is the second.

Think Back

Just to make a point, I’d like you to think back to the last argument you had with your spouse, parent, child, a friend or in a business situation. Do you see yourself in the argument? Now, I ask you which position did you take?“ The first,” you say? I thought so. If you had taken the position of trying to understand the other’s position, there most likely would not have been an argument. We humans are not perfect. As such, we sometimes we fall into our stuff. At these times we are not the best people we could be. But, it is the person who recognizes that they are in their stuff and makes a new behavior decision that makes a good partner.

You might be thinking, “Thanks for the info, Ed, but why do I have to always be the person who makes the change, the person who makes it works? Why can’t it be the other guy once in a while?” My answer to you is simply that you are the one who figured it out first. Get out of your stuff and, as Nike says, JUST DO IT^®.Listed below are some additional tactics to help you resolve conflict.

• Evaluate your, and your partner’s, conflict management styles. Understanding each other is a great start.

• Identify and plan strategies to deal with non-productive behaviors before they crop up.

• Give positive feedback as often as possible so the relationship does not take on a negative tone through only fire fighting interactions.

• Confront problem situations at once rather than waiting for the situation to escalate.

• Invite comments from all stakeholders early in every project, especially your alliance partners.

• Consider using humor and maybe even humility in certain situations.

• Encourage dissent at a time and place that serves all involved.

• Review the value of the alliance relationship. Determine how much your circles of interest overlap. Ask if winning this battle will get you closer to an OSR, or further away from it.

• When you hear something you don’t like, repeat it back in an informational way. See if the message you received was the same as it was intended. Misunderstanding is the root of much conflict.

• Know your buttons and don’t allow them to be pushed. You have control in this area.

• Completely listen to what the other guy has to say before you open your mouth. Remember the adage, Listen twice before speaking once. That’s why God gave you two ears and only one mouth.

• Remember the principle of saving face. In some societies, it is a matter of life or death. Fortunately, or unfortunately, depending on how you look at it, this is not usually the situation in North America.

• Keep your ego in check. Be clear on the difference between high self-esteem and high ego. One serves and one does not. Need I say more?

• Appoint a devil’s advocate and allow them to be involved in projects from the start, all the way through completion. Their job is to be a pain in the neck. It’s not that they are just picking on a certain person or position. This keeps people from taking a dissenting opinion personally.

• Keep the consequences of your decisions in mind.

• Value the opinion of others. Focus on the clarity of the water, not the spring from which it flows.

I understand that building Outrageously Successful Relationships can be difficult at times. My best advise for you: Know the value of your relationships. Know where you want the relationships to go and stay on course. Accept that quality Partnering just takes time and effort. Accept that there isn’t any magic--just dedicated implementation.