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Relationship capital is what’s generated when you put down your jargon filled customer service manual and talk to your customers like they are people. You talk the talk and walk the walk.
Companies are valued based on profit, assets and liabilities with some goodwill consideration given to other factors, like none contracted and informal business relationships. But in the newly social online world are these criteria still enough? I’m not so sure.
What is relationship capital?
The growth of social media has given customers real power, and a voice. Poor customer service can lead to a negative Tweet or Facebook post that can snowball to cause long lasting damage to a company’s reputation.
For businesses who don’t truly value customers this development will come as bad news, but for others this digital rebirthing of the customer came as a glowing opportunity and has, in my view, ushered in a new criteria into the valuation process, something I term ‘relationship capital’.
For example, Mr Smith buys a tent from Loving Outdoors. Rather than go through the transaction in a purely matter-of-fact way, we spend a bit of time getting to know Mr Smith (without being invasive).
We might ask him what drew him to the tent he has purchased and where he is likely to use it; he has taken the time to look us up so it follows that we should show a similar interest in him.
We might even keep in touch with Mr Smith to see how he is getting on with things. Mr Smith likes this: he likes that we talk to him using real words about real subjects rather than in regurgitated salesman jargon, he likes that we’re interested and he likes that we are human beings capable of understanding his own personal needs.
So why should we care how Mr Smith feels after dealing with us? We’ve got his money and as a business that’s all we’re interested in, right? Well, no, money on its own is useless - it sounds like a glib point to make but it’s something often forgotten in business.
What really improves our lives is not fast cars and huge houses with en-suite bathrooms and luxurious shag-pile carpets, but our ongoing relationships with people.
Businesses thrive on good relationships
It’s on this philosophy that the idea of ‘relationship capital’ is predicated. Businesses, like people, thrive on good relationships and, like people, don’t appreciate being treated as a money generating mule-horse expected to carry on regardless of conditions.
Just as man cannot live on bread alone, nor can businesses, you can’t just pump it full of money like some kind of awful capitalist Foie gras, you must nurture your business with the thing it loves best, namely, relationships.
Relationship capital in action
So, where does Mr Smith fit in all of this? Well, after speaking to us he decided to take the dog for a walk in the park where he meets Mrs Jones, a woman he knows from church (i.e. a woman he has a relationship with) whereupon Mrs Jones asks Mr Smith what he’s been doing.
“Oh not much, but I'm planning to go away this weekend” he answers. “Sounds lovely. Anywhere nice?” asks Mrs Jones. “The Lakes - I’ve just bought a tent” Mr Smith replies. “Brilliant! Where did you get it from?” asks the inquisitive Mrs Jones. “From a company called Loving Outdoors, they were ever so nice”. “Oh I’ll have to look them up”. And then they go their respective ways.
What might at first appear to be innocuous chit-chat is in fact relationship capital in action. Although the company balance sheet will show little immediate sign for this exchange having taken place, the relationship gained in Mrs Jones makes the world incrementally more Loving Outdoors friendly and thus, a more nurturing environment for us to exist in.
As Mrs Jones mentions us to her friends and family this nurturing effect is multiplied exponentially. As word of Loving Outdoors passes from mouth-to-mouth the extra nourishment starts to work its way through the metabolism of our business helping it grow and slowly, ever so slowly, positive effects start to show, all because we were friendly to Mr Smith.
Isn’t this just good customer service and word of mouth?
Yes, but it is customer service delivered with emotion and integrity; something that cannot be learnt in a training room.
Service delivered on an emotional level, a relationship capital level, comes naturally when you are doing what you love. It’s comes from an insatiable desire to make a difference even if you are not making money.
But let me assure you that we make money here, but that is not our primary focus and never has, it is more a by-product resulting from our ongoing friendship with Mr Smith and now Mrs Jones.
So, remember the online world is characterised as a place of open community and sharing, an online transaction becomes an experience to be shared.
In this dawning e-social age, the future lies with companies who can be a friendly face in the crowded and anonymous online market place. Putting a face to a name is the essence of relationship capital.