The Supplier Equation

To continue the previous relationship analogy….why do relationships form?  There are a variety of reasons….but it usually boils down to the mutual benefits received from being in one.

Social Exchange Theory suggests that in order for a relationship to be sustainable, the rewards of a relationship must be greater than (or at least equal to) the investment made in maintaining it.

Often in a personal situation, comfort sets in an it’s not until someone comes in and shows us this equation is no longer balanced that we do something about it (certain match-making websites make this easy).

In a working relationship sense, the issues aren’t that much different.   Let’s call it The Supplier Equation

People/Businesses are in relationships with many suppliers.  They probably formed them because at the time the supplier showed them that they could provide, in broad forms, one, some or all of the following core benefits:

          Save them money
          Make them money
          Save them time
          Provide them convenience
          Provide them security
          Provide them status

However, it is often that these benefits are only discussed and scrutinised at the outset of a relationship.  Like a personal relationship, things can steam along nicely until something causes the client to review their position. 

What disrupts this relationship then?  Well, in essence, three possible scenarios (amongst others):

1.      The client has a regular process to review the relationship (eg tender or RFP) forcing the re-assessment of this social exchange equation
2.      The client comes to their own realisation that the equation is unbalanced and acts on it
3.      A competitor shows the client that their offering provides a better result than their current offering

How do you stop this?  Quite simply; regularly review the difference between the investment in a relationship and benefits of the relationship – from your clients perspective.  And act on the results.  And, tell your client you’re doing it (in most situations you’ll need to have a chat with them anyway to review their position/thoughts).

People, businesses and everything changes – it is crucial to ensure your relationship is adjusted to be meaningful to a client today, not yesterday, as this is the clients perspective should they review it.

As a sales person attracting new business – it is your task to get a client to re-assess their Supplier Equation.  To unbalance this equation.

As a relationship manager, it is yours to continually review it.


  1. Have/Do you regularly reviewed your clients Supplier Equation – from THEIR perspective?

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