How to Succeed in Relationship Marketing

by Mark Rawlins

In some circles you need to be prepared to make a quick escape to even think software people might now something about relationships -- but hear me out. Over the past two decades, I have worked with several companies with more than 200,000 distributors. The largest had over 2,000,000 distributors. What does it mean for a company to maintain a "relationship" with that many people? What is an appropriate relationship to have? Does relationship marketing mean sending out birthday cards every year? These questions become more and more difficult as a company gets distributor counts in the 6 and 7 digits. Every sales leader faces the same issue as soon as they have more distributors in their organization than they personally know.

The type of relationship a company or sales leader has with distributors they don't know personally is debatable. The fact that they need a computer to maintain any kind of relationship with that number of people is almost unquestioned. The critically important question is what kind of a relationship? The wrong kind of relationship, say a phony friendship, is worse than no relationship at all.

I think it is important to note that computers don't have relationships with people, as far as I know computers don't even have relationships with each other. People have relationships with people, period end of story. If companies forget, it can have disastrous results. In an article in Harvard Business Review, the authors give an excellent example of what can happen when people forget. In one case a man purchased some presents from a catalogue for the physicians who cared for his mother when she was hospitalized for an emergency medical condition. The following year on the anniversary of that date the presents were ordered the companies "relationship marketing software" dutifully sent him a letter if he would like to purchase another gift. Of course he did not want to be reminded of that horrible time. He called the company to explain and ask that he not be "reminded" again. You guessed it; the next year he got another letter. (Fourner & Dobscha)

So what does work? In my experience the companies that do an effective job of relationship marketing keep the following 3 things in mind.

1. Companies are successful when relationship marketing is an integral part of their company's strategy, not just an afterthought.

Relationship marketing flows from a communication strategy and a communication strategy flows from their companies overall value. Ok what does that mean? Let's start with value. What is your company selling? How does it sell it? What services do you offer your customers and distributors? What is the value your company adds to the process besides delivering product. In Paul Zane Pilzer's excellent book "The next Trillion" he discusses the two keys in the sales process: physical distribution and intellectual distribution. Physical distribution is simply getting product into consumer's hands. Intellectual distribution requires teaching potential customers what the product does and how it can help them. In my mind intellectual distribution can be summarized as:

1. Motivating consumers to use a product,
2. Educating consumers on the value of a product,
3. Training consumers on the use of a product,
4. Supporting consumers in their continued use of the product.

Virtually every network Marketing Company that has experienced long term success is built on a product line and company strategy that requires Intellectual distribution. It is important that everyone clearly understands what their Intellectual distribution strategy is. Consumers must plainly know the reason they ought to do business with you. Communicate your Value.

Now--a company can think about a relationship marketing strategy.

2. Remember that friendship and relationship marketing are different things and both are important.

Deep and lifetime friendships are formed in this industry, friendships are different than relationship marketing. If a companies relationship marketing efforts never push beyond the companies founders friends, then they are unable to develop new leaders and the companies growth will stall and ultimately decline as some of the original sales leaders retire.

One of the services my company provides to our clients is data analysis. Over the years as some of our clients growth has stalled we have been ask to analyze their data to see if we can figure out why. It is quite interesting because what we almost always find is that a Sales leader is able to generate a certain amount of sales, and that number is a range. There is an upper limit to the range. Almost always, when you go back to the beginning to the growth period, the company was actively trying to find and build new sales leaders. During that period of growth, for whatever reason, they quit trying to identify and build new sales leaders. Obviously growth then declines. One of the smartest company presidents, I ever knew, told me that several times a year he asked his head of sales "who are next years new sales leaders".

Developing relationships has to somehow be managed. Knowing who the potential key sales leaders are and developing a relationship with them is crucial. The leader in turn will make key decisions about relationship building.

3. Have a different relationship marketing strategy for each type of distributor.

Unlike most distribution methods, we don't have one type of customer. Depending on whether you are a direct sales company or MLM, there may be up to 5 major types of "distributors" who all signed the same application, I call them:

5 Types of Distributors

1. Consumer -- people who are only interested in buying your product
2. Product Evangelist -- People who not only love your product but tell people about it but do not have the time or want accept the responsibility of servicing a customer
3. Sales Person -- People who actually take care of the customers and product evangelist's day in and day out.
4. Sales Leader -- They recruit and train the salespeople, hold the meetings, conference calls.
5. Dream Builder -- They are the motivators and educators. A company defines a strategy, but in this industry it is typically the dream builders that give it life.

These 5 types may have to be modified to fit your company, but it is important to determine the types and the needs of each distributor type. Connect with people where they are.

I have learned a great deal over the years by watching numbers and connecting those to how people choose and develop relationships. I realize now that business relationships must be grounded in the companies and distributors communication strategy that is based on the value added. Adapting to individuals requires information. I found that companies that express the company value to distributors based on distributors needs.

Fournier, S., Dobscha, S. & Mick, D.G. (1998). Preventing the premature death of relationship marketing. Harvard Business Review 76(1). 42.
Pilzer, P.Z. "The Next Trillion" www.thenextrilllion.com