In Chapter 4 we discussed the Relationship Management Strategy development process. The focus of the organization was established and success for Strategic Relationship Management was defined. In Chapter 5 we narrowed the strategic objectives to focus areas by exploring relationship segmentation. In Chapter 8 the term Return-on-Relationship (RoR) was introduced as a measure to quantify the benefits of relationship management.

Success can have different perspectives depending on the objectives defined. To enable alignment and focus across the organization, it is critical to define what success means before investing valuable time and resources in relationship management. Ideally the definition of success is somewhat more than “strengthening our relationship”; it ought to be quantified in the form of Key Performance Indicators (kpis). Once strategic objectives are quantified, management is able to monitor progress and therefore manage investments in relationship management. In this chapter we will look more closely at performance in the context of Strategic Relationship Management.

Performance management models

Different performance management models are available to the Manager of the Network to monitor the results of investments. Some of these models have a more financial bias. Another trade-off between the models is the degree to which they drive behavioral change in the organization. Key models are plotted in Figure 9.1.1, and we can conclude that the Balanced Scorecard is a practical tool for the Manager of the Network to steer behavior on the basis of both financial and non-financial indicators.

Management accounting is a performance management model applied in most organizations by the financial discipline. Budgets are made available to departments, expenses are administered, and periodically costs versus the available budgets are reported. This level of performance management has a strong financial bias and tends to have limited impact on relationship behavioral change in the organization other than making people cost conscious.

Activity-based management (ABM)

Activity-based management allocates different cost components (including overhead costs) of the organization to activities or to relationships. It helps the organization get a better understanding of the costs required to develop and maintain a relationship.