Collaborative Versus Competitive
By Lior Arussy
One of the
challenge facing companies today is the trap of finding themselves in
direct competition with their customers, fighting over the customer
budget and its distribution. The
customer and the company both target the same pot of gold and each
fights for its rightful share. Customers
want to spend the least amount for the product or service they seek,
while companies seek to obtain the maximum price, hence, budget share,
for the products or services they sell.
Each intends to retain a majority of the pot and leave the
other with the least amount necessary.
The pot of
gold we are referring to is, of course, the customer’s money.
In the current short-term, adversarial relationship, the
customer is trying to retain most of his money and pay the minimum
price necessary, while the company tries to charge as much as they
can. This competitive
situation locks companies and customers in a zero-sum game with a
no-win resolution. The
success of one side is the failure of the other.
In most cases, both sides lose.
As much as
companies refuse to admit and accept it, this is the nature of their
current customer relationships: a
competitive struggle over price impacting the future level of trust,
already shallow to non-existent.
competitive relationships (the most prevalent type of relationship
between customers and companies), the participants are adversaries - .
Each protecting their own agenda at the expense of the other.
Gain for one side means a loss for the other.
Each side of the relationship has the preconceived notion that
the other side wants to take advantage of them and is compelled to
protect themselves from such an assault.
These types of relationships are not prone to yielding
longevity and commitment. They
are based on a one–time, casual interaction.
No serious investment in the relationship is made, as
repetitive experiences are not anticipated.
And if they are, they are met on both sides with strong
reluctance and with great reservations, ready for battle again.
The Collaborative Relationship: The good news is that there is
another way to treat the relationship:
Rather as a collaborative, versus an adversarial and
competitive, one. In a
collaborative relationship, customers and companies are on the same
side, seeing eye-to-eye on the value provided and price paid.
They do not compete against each other; instead, each side
takes the goodwill steps necessary to forge a stronger level of trust.
Each side volunteers a bit from their stronghold to create a
better relationship. Collaboration
happens when both sides are convinced that the other side is not
hostile, and has their best interest in mind.
company/customer relationships are rare, but very profitable.
They trust that the other side will do their best to delight,
and treat them fairly. They
are willing, rather than reluctant, participants.
They look forward to the current, and future, interactions.
They invest in the relationship expecting many delightful
experiences. There is no
battling over limited budgets and the customer is willing to pay a
premium for the product. The
company, meanwhile, generously provides more quality than expected.
In collaborative relationship, it’s not just about
understanding, but acting on that knowledge.
Mutual investments are made in the relationship.
customer’s interpretation of the commercial relationship is quite
similar to the type of relationships they seek in their personal
recognizing this and acting appropriately will unlock the potential of
a collaborative relationship. Building
this level of trust requires disciplined efforts across multiple
dimensions of the relationship. These
relationships have several dimensions, including:
Selective – Make the customer feel as if they are the
only one you care about. Let
them feel not like one-in-a million, but rather, one-of-a-kind.
Generous – Be generous with your products and
services. This form of
investment demonstrates your serious intentions for a long-term
Trustworthiness – Demonstrate to your customers that
you trust them. Do not try
to protect yourself to the point of insulting their integrity.
Mutual – Think about the relationship as mutual and
allow the customer to contribute to the relationship.
This mutuality should go beyond the money.
Allow insight and feedback to be part of what shapes the
Passionate – Be ready to show passion.
Loyalty is about emotions and you need to reciprocate.
Deliver your experience through passionate people and you can
create an amazing bond.
Privileged – Make the customer feel privileged to be
in this relationship. Let
them feel how special they are in the relationship.
Genuine – Are your experiences genuine or production
line? The customers’ sensors are heightened due to previous
disappointments. Make your
relationships genuine and authentic.
Choice - Give your customer’s choice.
Do not apply a one-size-fits-all or make decisions about what
you think is good for them. Let
them chose what they think is right.
This demonstrates respect and allows you to maximize value.
Interactive – Instead of static experiences, think
dynamically. The more the
customer interacts with your experiences, the more personal they will
allows the customer to highlight their uniqueness and ownership of the
Conversational – Talk to your customers.
As with personal relationships, discussions are core to
understanding and intimacy. Spend
the time and develop dialogue mechanisms to build a true collaborative
relationships like bank accounts.
The more deposits you make, the more withdrawals you will be
allowed. And in this bank,
there is no permission for overdraft, although short-term loans may be
made. Each dimension is a
way to make deposits in the relationship account with the customer.
The more you make, the better your account performs.
relationship, the selectivity dimension is critical.
If everyone is allowed into the relationship, it becomes
diluted and less attractive. The
greater the number of participants, the lower the common denominator
of the participants and the less the relationship can address specific
needs, wishes, and expectations. Often
companies, in the name of market share, develop relationships with
many customers who inherently should not
be their customers. These
are people who will never appreciate the value proposition and will
create constant friction. As
such, they will constantly express this friction in the form of
complaints requiring high maintenance. This high maintenance will come
at the expense of the right customers.
trial conducted by Progressive Insurance illustrates this concept of
Insurance made an offer to automobile drivers for special computer
chips to be inserted into their cars that measure their driving habits
and behaviors. The chip
records how far they go, their speed, and other factors.
Those factors are then used to create a customized insurance
policy based on the driver’s own patterns.
Drivers have a choice of reviewing the chip results and
accepting or declining an insurance policy based on the results.
Although the jury is still out as to whether or not this trial will
become an accepted practice, it clearly brings personalization and
selectiveness to a new level. The
driver is no longer part of a geography or age group, but rather
treated as a completely, unique individual.
selective is about communicating to the customer that they are
different and unique and part of an elite group.
It is about dedicating more resources and attention to fewer
relationships, rather than spreading yourself too thin with a few
useless resources for too many customers.
Any one of
the relationship dimensions above can demonstrate the intention of
collaborative relationships over competitive relationships.
In competitive relationships, companies and customers are
locked into a single dimension of product and money exchange.
Collaborative relationships are far richer as they encompass a
multitude of dimensions like mutuality, interactivity, and
however, the nature of today’s relationships is an important step
toward transforming them into collaborative relationships.
Overcoming denial alone will go along way toward fixing the
relationship and will help put it on the path of longevity and
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