Mark Frasco - President
April 2013 – Capital is created and strategically invested by businesses to provide for production of goods and services. Without it, it is impossible to accomplish anything meaningful in our economy. Capital comes in a number of shapes and sizes, but I’d like to discuss one form of capital that doesn’t get much print. It isn’t measured by return on investment, doesn’t hit the balance sheet and is not depleted as you use it – social capital.
Social? Is he going to start talking about blogs and Facebook? No, stay with me. Although elements of the omnipresent social media world come into play, social capital is even bigger and cooler – hard to believe, I know.
What is social capital? It is the trust that is built between networks of people – trusting relationships, that when combined, produce advantages in competitive structures. Social capital and one of its tools, knowledge management, may be the left-jab and right-hook of building a sustainable competitive advantage in your market.
I’m a good guy. I believe in the golden rule. People like me. Some people trust and some don’t – what can I do about it? A lot – building trust is a science, with a little art. Firstly, you can’t build trusting relationships without quality interaction. Interaction quality is determined by a number of variables that need to be managed and nurtured:
- Frequency – It is near impossible to build trusting relationships without an appropriate frequency of interaction. Think about your deepest relationships – they were likely built during a time of frequent interaction. Building social capital on one quality interaction a year is not impossible, but very unlikely.
- Proximity – People in the interaction must have closeness. Technology can help, but with over reliance, becomes a failure point. The emotional attachment that people feel when they see or hear the passion in others is critical to quality interaction. Email is useful, but not sufficient. Don’t be fooled that you can build social capital without the human element – voice tone, hand-shake, eye contact, body language and sincere smile. Laughing in response to something funny is much more meaningful than a well-placed “LOL” or “ha-ha”.
- Interdependence – Shared goals are a critical feature of quality interaction. People who are working toward a common outcome produce better results, while building stronger trust bonds. This can be as easy as reviewing action items or shared commitments to accomplish a task.
- Reciprocity – Quality interaction features give and take between people. There needs to be a balance of power in the relationship. If one party benefits, while the other receives none, it is difficult to build social capital. Ask for what you need and give more than is asked of you.
- Competency – People must know what they’re doing. If either person in the interaction lacks competency, it is difficult for them to build trust. It is tough to fake it – maybe once, but the second time, you are risking being exposed as someone who is not competent, damaging trust.
- Integrity – People must do the right thing and do what they say they’re going to do. Virtue is the cornerstone of building social capital.
Capital idea! In the business-to-business segment, I’ve never known an organization that has produced long-term, sustainable growth without mastering the development and expansion of their social capital. Difficult to measure, it often requires a level of commitment that is largely lacking in our immediate gratification business systems. Our systems are largely responsive to growth results. Social capital is a leading indicator, and even stronger, a prerequisite to business growth success.
- Identify your high-value targets. It is not practical to build social capital with thousands of people. Narrow your list so that you can assure a regular frequency and close proximity with those who you’ve strategically chosen as your future customers.
- Build a customer relationship management system that allows you to gather, organize, analyze and distribute knowledge about high-value targets to your people. Using the system, schedule your interactions and record important preferences that will allow you to customize your solutions, differentiating you and your organization.
- Encourage your salespeople to stop selling and start learning. Aggressive selling techniques reduce the feeling that there is reciprocity and interdependence in the relationship. The more time that is spent learning, the more competent you will become at supplying a winning solution and the more social capital you will build.
- Invest in helping your sales staff to become experts in the markets they serve. Being an expert in your products and services is required, but not enough. Sales staff must build competencies specific to industries they serve, and actually become expert in the businesses of their high-value targets.
Every interaction is a moment of truth for your organization. Put some thought into significantly improving the quality of those interactions and build social capital that will serve you and your team for long-term, business growth success.
To learn more about how you can build buyer trust, please visit Building Buyer Trust (video)