Is relationship selling obsolete in todays steel industry? This was a question posed to several executives among both steel producers and steel distributors. Their responses bear witness to an ever changing steel industry.
Historical Perspective
Let us begin by understanding the meaning of the term relationship selling. Historically the steel industry thrived on cultivating long-term relationships with its customers. Steel is a highly specialized commodity where responsiveness, reliability, and quality are critical factors for consumers. Building trust and understanding each customer’s unique needs is critical. When done well it translates into customer satisfaction, loyalty, and higher profit margins. In these situations it was commonplace to have strong social relationships to cement these programs. Sales, marketing, and technical people visited each other’s plants, intimately understanding each other’s manufacturing processes. A sales person became part of the family and fabric of their clients. Attending each other’s key social events like weddings, funerals, sporting events were common practice.
While the acquisition cost of customers can be long and expensive it creates a climate where it insulates the seller creating a competitive advantage. The barriers to entry in capital intensive steel industry sectors add to the challenges from new entrants. Further, the reputation and successful histories built using relationship selling strategies make customers reluctant to change, particularly in the more quality oriented product arenas.
Key Challenges To Relationship Selling
Market Volatility: Highly cyclical economic cycles make it difficult to sustain relationships which are strained by changing demand and price fluctuations. Global competition to all participants adds one more element of pricing pressure to both the sellers and buyers.
Workforce Challenges: Attracting and retaining skilled workers especially as their predecessors age and retire will impact both manufacturing and customer service.
Adapting to technological changes: The digital age has accelerated at an unprecedented pace over the last few years. Key sales relationships have been replaced by digital tools, not people, providing quality descriptions, order placement, order status, delivery certifications etc. Modern management information systems often limit human interaction, which at its core was the foundation of relationship selling. As AI technologies improve this will only further expand the need to be vigilant that these tools do not replace relationship selling but instead help facilitate it.
Is Relationship Selling Obsolete
The simple answer is no. However, the historical practices have changed. Video conferencing has replaced personal visits in many circumstances. There is less personal social interaction between salesperson and customer often restricted by company policies and practices on both ends of the spectrum. Modern communication have moved from phone calls, which often were used to discuss many common issues not directly related to business. Now most communications avoid personal issues and are conducted by text, and email focusing more on business.
The elements of trust and respect are still critical parts of the relationship selling equation. Two stories related to this subject were shared with us during our discussions.
The first was about a salesman for a steel distributor in New England calling on a client in Vermont. After visiting with them for more than 15 years the salesperson was told by the Purchasing Director “he was starting to feel comfortable with both him and his company”. This story demonstrates how building trust is a long, difficult and winding road but patience and persistence are rewarded.
The second tale described a mill salesman in the deep South. When the VP of Purchasing introduced the salesman to the President of the company he commented that “this dog can hunt”. It was a way to communicate the respect for the salesman’s selling knowledge of his clients as well as his persistence in chasing and valuing their business.
Conclusion
The methods and means have changed but the practice of relationship selling is very much alive. It is a CRITICAL element to establishing relations, keeping customers and promoting the long term best interests of all parties. Companies must be careful not to migrate to too many technological solutions that they forget the keys to their historical success. Businesses must continue to invest heavily into account management where dedicated industry teams are tasked with understanding the unique requirements of their most important markets and clients. Corporations must work collaboratively to solve problems and promote the quality, service, and trust which relationship selling demands of its practitioners.
By subscribing you agree to our Terms of Use, our Privacy Policy and our Information collection notice
