Selling the Invisible: a field Guide to Modern Marketing \(Biz Books to Go\) pdfdrive com

Relationship Accounting
Huge Account Shifts Agencies,” reads the monthly headline in Advertising Age,
and in the second paragraph you often find a revealing quote.
The jilted agency president says he is “shocked.” “We were doing excellent
work at Smith & Smith. The client told us she was happy. This is a total
surprise.”
The president’s surprise is genuine—and so is his problem.
His problem is rooted in the nature of service relationships. Unless a service
provider like Smith & Smith pays careful attention, it always operates at a
deficit. Without knowing it, service providers always owe their clients.
This debt dates from the first day, when Smith & Smith wins the account.
“Winning” implies that Smith & Smith’s people feel they have earned the
business. But as Theodore Levitt has convincingly argued, the client sees it
differently. Smith & Smith has not earned the business; it merely has earned the
right to earn the business. The client has assumed all the risk, and from that,
feels it has done Smith & Smith a favor. The client has bought something that
the agency has not yet delivered. When that something comes, it could be awful,
too expensive, or both.
So Smith & Smith already is operating at a deficit. It owes the client one.
Then Smith & Smith begins delivering services: a storyboard for a TV spot,
for example, along with a bill. The client is not sure what it has received or how
good it is—just as accountant’s and lawyer’s clients do not know if they have
received a good “product” for a fair price. The client only knows that it owes a
lot for something of uncertain value that has not yet produced a return. The
deficit now is two.
Smith & Smith soon increases its deficit again. People make mistakes, and
Jim at Smith & Smith makes one: He fails to call the client back as promptly as
the receptionist promised. Whoever made the mistake—Jim, Jim’s receptionist,
or the client, by mishearing—Smith & Smith’s deficit reaches three.
Now and then, Smith & Smith’s president makes a gesture to the client. He
sends Godiva chocolates at Christmas, for example. But the president cannot
easily overcome the large deficit, because those inevitable mistakes happen
faster than the president can mail chocolates. Most clients will overlook these
mistakes if Smith and Smith has a surplus in its relationship account. But like

---

most service providers, Smith & Smith has a deficit. So the mistakes go in the
debit column.
No one at Smith & Smith realizes how far they are in debt. Service providers
always are the last to know, in part because few people like conflict. So clients
often bury grievances rather than air them. Service providers think that the
silence is golden; they think the lack of complaints means the relationship is
going well. But it is growing worse.
This relationship deficit exists in the parties’ other significant relationships:
their marriages. In both relationships, debts grow without either side knowing.
Then one day a frustrated spouse or a frustrated client announces he has had
enough. The other spouse and the Smith & Smith president are shocked. Neither
person understands the unique accounting in relationships.