In September 2001, David Maister, Charles Green and Robert Galford first published their best-selling book, The Trusted Advisor. In it they assert that trustworthiness is a fundamental component in winning new business and retaining clients. Maister et. al. offered an equation - Trustworthiness = (Credibility x Reliability x Intimacy)/Self-Orientation - to help service providers focus on the specific elements necessary to build trust.
In recent times I have begun to question the usefulness of this equation in explaining what underpins long-term business-to-business relationships. Firstly, I think credibility is an important factor with prospects and new clients, but I'd argue that a repeat client with multi-transaction experience is way beyond the credibility stage. Similarly, the client's perception of "self-orientation" is relevant at the early stage of engagement, but I'd argue that a much more important and deeper construct is value for money across all products and services delivered over time. Assessment of fair value is a far more rigorous test than merely a perception of self-orientation.
Another problem I have with the equation is "intimacy". Sharing personal information and engaging at both an intellectual and emotional level is obviously important in building initial trust. But when it comes to long-term relationships this intimacy needs to lead to something more sustainable. One can be intimate and self-disclose more, but if over time the client doesn't like what they see and feel, then this is actually more a negative than a positive. Long-term relationships are largely based on an authentic emotional connection between the parties underpinned by common values and interests. In short, it's about affinity.
Rather that just rewrite the Trust Equation with the dependent variable being "Trustworthiness", I thought a more useful model will be to have " A Trusting Relationship" as the dependent variable. Isn't this really the outcome that we're all seeking?
So here goes...
A Trusting Relationship = (Understanding x Reliability x Value x Affinity) / Complacency
The first thing you'll note is that I've added two new variables to the equation - Understanding and Complacency. Ten years of Beaton Research & Consulting's research into buyer behaviour points to the critical importance of the provider's understanding of the client's needs, business and industry. It is the Number #1 discriminating factor why clients of Australian law and accounting firms choose one firm over another. You might argue that you cannot deliver on the other four variables without understanding the client, and therefore it's superfluous. However, I would counter-argue that the provider's institutional knowledge and understanding of the client in of itself provides a competitive advantage in three distinct ways:
- the insights necessary to pitch, price and win the next major assignment and/or panel reappointment;
- adding a client-perceived switching cost; and
- the ability to anticipate where the firm-client relationship is likely to go over the long-term and to develop proactive strategies in response.
The second new variable is complacency. One of the major reasons why long-term relationships fail is that the parties get bored with each other and start taking everything for granted. Continuously exploring new ways to deliver and create value is central to keeping a long-standing relationship away from hungry, and often very attractive, new players. A client that you have not made contact with in three months is no longer your client, it's someone else's prospect.
The one variable retained from the Maister Trust Equation is reliability. To me this is about delivering on your promises, first time and every time. It's about promises around responsiveness, process and delivery times, as well as promises about problem resolution, outcomes and deliverables. Every bit of research I've seen says that if you don't deliver reliably you can kiss even the deepest relationship goodbye.
It is important to note that one can view the new equation from both the supplier AND the client's perspective, and collectively. A mature relationship will have both parties understanding each other. It will have the supplier delivering reliably and the client paying reliably. Sound relationships should be valuable to the firm and deliver value to the client. Affinity by definition implies mutual respect and liking. And it often takes two to tango and truly innovate.
It's a big call to tear Maister and mates apart. It's even more outlandish to put forward a new model without a strong empirical base. Despite this, the purpose of the Relationship Capital blog is to push the boundary and engender a high-level conversation around what drives the development of critical client relationships in our firms. I welcome your comments, critique (but don't be too harsh) and, if you feel appropriate, your commendation.