Long-Term Customer Relationships Are More Than Economic Transactions

As I mention over and over in this blog, relationships are at the core of how old companies operate. These companies truly believe they cannot maintain their success for a long period of time without the cooperation of their business partners.Today's focus is the relationship these firms build with their customers. The relationships the old companies build with their customers from generation to generation has a significant effect on the firm's ability to weather difficult times as well as to learn and adapt over time. The old companies understand that they are part of a large, interdependent system. This holistic view of their role in the value exchange leads the old firms to see their relationship with customers as something more than mere transactions or the trading of goods and services for financial gain. When customers become trusted business partners, both parties are willing to share information and do favors for each other that don't necessarily have any readily apparent financial gain attached. This willingness to share information, technologies, and ideas becomes a two-way street, resulting in mutual learning and mutual success. (I often describe this phenomenon in terms of Peter Senge's "Learning Organization.")

This longevity factor of the long-term relationships with customers applies across industries. When I first started researching 100 year old companies, I thought there was a preponderance of retail organizations and it made sense that building good customer relations was an important factor in ensuring repeat business. But after building a representative data base of 100 year old companies, I discovered that the retail industry isn't represented at a higher rate than in the general business population and even manufacturing companies scored extremely high on issues of building long-term customer relationships. It may seem obvious that old companies are more likely to emphasize their corporate history, culture, and product "story" when working with customers. But it goes beyond the selling: the old companies were significantly more likely than younger firms to make every effort to see that their products were used in the best way. This involvement in how customers utilize the company's offering is what leads to learning opportunities for future changes and improvements. Thus the old companies are able to survive upheavals in their industry, advances in technology, and other environmental and social changes that leave their competitors behind. (When I attended IBM's 100th anniversary celebration as a guest speaker, I sat in the back of the room for the opening keynote address. As one of IBM's corporate leaders talked about the company culture that enabled them to survive for the last century, one item mentioned was their long-term relationships with customers that led to mutual learning. Without any prompting - or knowledge of who I was and what I did - the gentleman next to me leaned over and said "Our company has been an IBM customer for 80 years and I can tell you what she's saying is absolutely true. They work with us all the time on problems we have and help us find ways to address them.")

So what are the behaviors that the old companies engage in that help them build these long-term relationships with customers? Here are just a few of the old company behaviors that were significantly different from those of younger companies:

• They work hard to gain an understanding of their key customers and their needs
• They respond quickly to customer complaints and see customer service as an important opportunity to talk with customers (not just to fix the immediate problem)
• They build long relationships with customers through after-sales services
• They make every effort to ensure their products are used in the best/correct way and provide customers with useful information that will help their learning
• They make a point of learning from their customers, but also collect information on customer and market needs in ways other than direct contact with current customers
• They work hard at satisfying and retaining existing customers, but also work at developing new customers for the future

By viewing their relationship with customers as something more than mere economic transactions or simply the exchange of goods and services for financial gain, old companies have built a supportive network with their customers that reaps great benefits in the long run and has helped ensure not only  survival, but success, for over a century.