The Covid-19 crisis has hit companies hard all over the world. The simultaneous collapse of supply and demand presents an unprecedented challenge. Interestingly though, some companies can at least partly maintain supply chains and sales channels, whereas others struggle to do so. Of course, the impact of this crisis on your supply chain or sales first and foremost depends on your industry and geographical location. But especially for small and medium-sized businesses, there seems to be an additional attribute that determines your business’ resilience in this crisis: well-established relationships.
What is a well-established relationship?
To look at resilient business relationships, let’s focus on the following components of relationships: Transparency, respect, reliability and a shared history and future.
TRANSPARENCY
In times of scarce resources and limited supply, your vendors might have to prioritize customers because they might not be able to serve everyone. Developing a relationship of transparency with your vendors will help you navigate those situations; your vendor is more likely to share the criteria by which he decides which orders or assignments to fulfill. Also, hearing your vendors’ projections of the future will be valuable information.
On the other side, transparency with your clients and customers about your offers, your pricing and the state of your business was crucial in building trust. Especially in crises, you want to communicate transparently with your key clients to demonstrate what you still can deliver, what you can’t deliver, and what role your clients’ business plays in getting through the crisis.
RESPECT
Treating your vendors with respect will increase the chances that they are at your side during the crisis. This includes the way you and your employees interact with the vendor’s representatives, but also whether or not you have left some margin for the vendor during negotiations. Also, showing an understanding of hardships that the vendor might have encountered and that affected your business will add to your relationship.
If you treated your clients with respect over the years, both in terms of your business-interactions and personally, it increases your chances of being treated with respect during the crisis.
RELIABILITY
Have you proven to be a reliable partner? Great. In extraordinary circumstances, past reliability is essential for your vendors to decide whether and to which extent to do business with you. Just think about payment: In crisis mode, the vendor must trust you that you will pay.
The same goes for clients: If you have gone the extra mile not to let your clients down before, chances are that they will give back and support you during a crisis.
A SHARED HISTORY AND FUTURE
Of course, it plays a role whether you have worked with the vendor for 1 month or 10 years. But I think even more important will be projections about your future business relationship: If your supplier believes that it will be a mutually beneficial relationship, they are much more likely to support you during times of crisis.
The shared history and future might be the most critical component on the sales side of your business. In the B2B space, a long-lasting history has most likely led your clients to adapt their operations to your products or services in one way or another: A manufacturing company uses a specific component and has customized other components to do so, a service-based business has customized parts of their internal processes around a certain software. In a B2C setting, this tendency of getting used to a product or service is more psychological but has the same strong effect: The cost of switching is high.
Especially in a crisis, the shared future is even more powerful. In the end, it boils down to the question: Do your clients and customers want you to be around once the crisis passes? In a B2C setting, this could be the hair salon you still want to see after the crisis, so you buy products in their online shop to support them. Or the restaurant you still want to have dinner at, so you order take-out to help them through difficult times. For B2B, the vocabulary is different, but the point is the same: Are you a strategic supplier for your customers? Do they need you to accomplish their goals after the crisis?
Your business’ relationships aren’t the solution to all problems. If your vendor is going out of business, no relationship in the world can heal that. If your clients cut all purchases in your field of business, then relationships will not be able to do much. But all things being equal, healthy and trustful business relationships are a competitive advantage, especially during crisis times.
How does technology play into all this?
Technology and tech companies have played an interesting role in this crisis so far. On the one hand, using technology instead of smaller vendors will decrease the intensity of relationships; take using accounting software compared to the neighbourhood tax accountant. You could assume that relying heavily on technology would have been a problem in this crisis because you don’t build strong relationships.
On the other hand, in this crisis that limits us in our freedom to meet people, technology has proven to be a vital component of the economy and operations of small and large businesses alike. Additionally, the subscription-based business models of many modern technology companies gave them enough leeway to offer services at reduced prices or free of charge during the crisis. And I’d argue they also see this as an excellent opportunity to build relationships with potential customers.
The point here is not to not use technology but to build strong personal relationships wherever possible.
What you can do now
Going through a crisis together builds robust relationships. If you don’t have the best relationships with your vendors or customers, now is a great time to start creating them.
- If you can, support your important vendors by keeping purchases going. Even if they’re really small purchases, the message this sends is big.
- Be transparent with your vendors if you can’t support, talk regularly and let them know your planning – even if your plans might change, this transparency will add to your relationship.
- Be there for your clients and help them if you can. Take cuts in sales if your clients can’t pay full prices, but a sale with a discount is better than no sale at all – or a client that’s out of business a few months later.
- If you need help, ask for it. You might have customers that are willing to help, but they maybe need a little nudge. And clients that have helped you during a crisis will have a strong connection with your business.
Treating your business partners with respect, being transparent and reliable and trying to build long term relationships – what sounds like advice your grandmother could have given you, proves to be highly valuable in the crisis. It seems like, after all, business is still people solving problems for people.
As always, please let me know your thoughts in the comments section.
Best
Benjamin