Business Relationship Management (BRM) is defined by the Business Relationship Management Institute, the leading non-profit BRM organization, as “a philosophy, capability, discipline and role to evolve culture, build partnerships, drive value and satisfy purpose.”
In simple terms, it is a business methodology that helps organizations define, understand and support activities involved in receiving and distributing information and services in order to promote positive and productive relationships between the organization and its business partners, such as suppliers, distributors and vendors. Because of this, organizations play the roles of both providers and consumers of information.
As BRM focuses on improving relationships among business partners and maximizing business value, it applies to everyone in the organization no matter their role and function—from the rank-and-file employees to the C-level executives. It can transform business functions, such as legal, finance, HR and IT, into strategic partners which consider each other as peers in proactively shaping business strategy and share ownership for business results. Progressive marketers also bring a methodology to the market that builds brands, creates relationships and raises ROI.
An organization with a mature BRM model will observe that business relationship management supports its strategic development and business research efforts and uses the tools and techniques necessary to implement BRM principles.
The BRM Philosophy and Goals
Business relationship management focuses on developing positive relationships within the organization and with its business partners because BRM believes these relationships will bring value and create a good impact on the organization’s economic value, people and the planet.
With the aid of BRM, the organization can evaluate, leverage and develop high-value relationships among its rank and within its network of business partners. Business relationship management aims to (1) evolve culture, (2) build partnerships, (3) drive value and (4) satisfy purpose, with the ultimate goal of transforming complicated business relationships into an easily understandable transaction value. As these relationships are built on trust, BRM can help solidify rules and expectations, as well as set boundaries, both of which can assist with cross-sale opportunities, contract negotiations and dispute resolutions.
Business relationship management is founded on the following principles:
- Measurement and analysis
BRM’s goals should be identifiable and measurable. This means, the organization should be able to identify business relationships that it is engaged in and be able to measure these relationships’ duration and quantity.
BRM believes every business relationship should have a discrete and quantifiable purpose, which requires the participation of multiple roles.
- Reputation and trust
BRM attempts to model and quantify trust and reputation. Trust is necessary for any business relationship to succeed as it boosts efficiency and facilitates conflict resolution. Lack of or the absence of trust results in the failure of a business relationship. Meanwhile, maintaining a good reputation reduces risk and friction within business processes. Because reputation is built and strengthened over time—through each interaction in every relationship—BRM provides an incentive for good behavior.
Business relationship management aligns with and applies business ethics, legal constraints, social norms and other models of corporate governance to help bolster business relationships. The goal of BRM governance is to achieve cooperation and coordination among the different business stakeholders, both of which rely on contractual and/or relational relationships.
The BRM model also helps organizations set defined boundaries in their business relationships. These boundaries help the organization examine what levels of personal connections are the most effective and if these optimal levels differ by role, type or other attributes. These boundaries should also support good governance practices.
- Exchange and reciprocity
Business relationship management accounts for traditional exchange and reciprocity metrics of business relationships, such as a financial exchange. However, it also takes into consideration exchanges in time, knowledge and reputation.
BRM is implemented as a discipline and through organizational capability and organizational roles.
Business relationship management as an organizational capability encompasses both the visible and behind-the-scenes activities that nurture effective value-producing business relationships within an organization and its business partners. This means anyone working a service provider role must be skilled in BRM core competencies (knowledge, skills and behaviors). The result is a limitless supply of energy that’s necessary to drive value, evolve culture, build partnerships and satisfy purpose.
This refers to how the organization effectively applies knowledge demonstrated through a set of competencies and mindsets. Grounded on research-based foundations, the BRM discipline is effective for many business functions, and internal partners (IT, HR, legal, finance, etc.) and external service providers.
The four core BRM Disciplines are as follows:
- Demand Shaping optimizes business value by stimulating, surfacing and shaping business demand for provider services, products and capabilities. In other words, demand shaping focuses on stimulating higher-value demand while ensuring low-value demand is suppressed, thus ensuring business strategies fully leverage provider capabilities.
- Exploring is an iterative and ongoing process involving the review of new business, technology and industry trends and insights that have the potential to create value for the business. In other words, this discipline helps the organization identify or discover and rationalize demand for initiatives that will become part of its portfolio of products, services and capabilities.
- Servicing involves coordination of resources, management of business partner expectations and integration of activities based on the provider–business partner partnership. This ensures that the provider–business partner engagement will be able to translate demand into effective supply requirements.
- Value harvesting provides insights into the results of business initiatives that result from exploring and servicing engagements. It includes tracking and reviewing performance, identifying ways to increase the value of services and initiatives, and starting a feedback loop that results in continuous improvement cycles.
The business relationship management role is the set of competencies (knowledge, skills and behaviors) that serve as the strategic interface necessary for the productive relationship within the organization and its business partners.
BRM serves three basic roles:
In other words, the BRM role acts as a liaison between the organization (as a whole as well as internal departments or business units functioning as service providers) and its external customers. The BRM facilitates and improves communication and alignment between these two parties to stimulate, surface and shape business demand for an organization’s products and services. It also ensures to recognize, capture and optimize potential business value from those products and services.
BRM and Customer Relationship Management
BRM can trace its roots in customer relationship management (CRM) and employs CRM techniques and disciplines. However, while BRM zooms in on an organization’s relationships with internal business partners, CRM is more focused on external customers. So, BRM focuses on meeting the needs of internal business partners and external service providers, while CRM generally focuses on managing new, existing and future customer relationships.