The software industry is always moving at top speeds, consistently innovating new technology, as well as continuing its compounded growth in hardware.
Due to this constant and increasing velocity of change, companies and their software providers tend to experience a revolving door of relationships with providers entering and leaving the market in the blink of an eye- much faster than the business of the companies themselves.
With such a rapid flux of players in the market, how do companies create strong, permanent client partnerships that allow for solutions they wish to implement now, and those they want to evolve with their needs over time?
Typically, software providers fall into two styles of relationships:
1. Vendors: these are the companies that ultimately compete on price.
Vendors are always reactive to the variables within the market and grow only by chasing deals. They end up pricing themselves into a low margin business in order to win for the moment and their products eventually commoditize due to the reactive nature of their approach.
2. Partners: these are the companies that clients call when they experience a problem or need feedback on a potential approach they are considering.
Partners are “on the inside,” earning the respect of their clients over several years of adhered values and support. They are not looking to win in the near present, but in the foreseeable future- sometimes at the expense of now.
Take the example of a good car salesperson; rather than convincing you to buy a car that’s in stock, but unsuitable to your needs, they will point you up the street to the dealer that sells a car that is the right fit. Partners understand their client’s business, directing them to their goals and adding value where necessary- often at their expense, but to the client’s benefit.
In the software industry, during the sales process, these two styles of players can often be very hard to tell apart. It is usually over time and through the relationship that certain differentiating characteristics become clear.
Partners will often have ideas brought to them by clients; these ideas are more like loosely framed product concepts that can be built in a very focused way and then purchased by other clients.
Vendors, on the other hand, tend to have more of a negative connotation attached to them- an existing level of distrust that is off-putting to clients. Without this trust, the dynamics tend to rapidly change for the client.
When a Vendor has a bad relationship with its client, it tends to build fences around its offering (often the client will feel it is being “nickeled and dimed to death”). The moment an opportunity arises for clients to switch, they take it.
From the client’s perspective, if this type of unsatisfactory experience is all they are going to get from their Vendor, they might as well get it for a lower price somewhere else.
Over the years, I’ve learned that the core for a lasting client partnership lies in focusing on the client’s needs- actively engaging with them on their business challenges, and then proactively trying to provide a solution that exceeds their expectations. You need to really understand your client’s overall business, not just what software they use.
There are many articles written about whether you should listen to your clients or tell them what they need – the reality is a mix of both: you need to listen for their needs, often ignoring their specific solutions.
Remember that car salesperson? They knew what their client needed, even if the client was inherently unaware of what that was. They were able to redirect them to the correct path and add insight to the work at hand. Good Partners are able to do the same for their clients.
The best salespeople are not the best because they close the deals in front of them – they continue to have reoccurring success because they are able to engage the repeat buyer.
When you run businesses like we do, the key is not only to gain new clients but also to ensure that they are happy and never want to leave. If you can be more of a Partner rather than a Vendor, you will be able to reduce the attrition of clients and increase the satisfaction of your employees.
How do you manage to sustain ongoing client Partnerships? What methods have you found to be successful (or hurtful) to your company?