Chapter 11Building Relationships
Today versus Tomorrow: How Long Is the Long Run?
Who is the real dealmaker: (a) The hit-and-run Hollywood producer who scores a fast profit on a script he options on Tuesday and resells to another studio on Thursday? or (b) The development executive who, instead of turning a fast buck, invests in a writer-director's idea, gathers funding, puts together a crew and stars, negotiates foreign distribution and streaming video rights, and has an option on the writer-director's next two ideas as well? The answer is, both. One is in it for the moment (the deal on the table) while the other is counting on the future (all the deals that may emanate from the deal on the table). Neither is right or wrong. But even if you successfully make several one-time deals, you have to start over each time.
If you pursue deals that have the potential to lead to more deals, your return-on-effort will pay out longer with larger rewards. Studies by Bain & Company, a Boston-based consulting firm, have suggested that a 5 percent increase in customer retention rate could double the profits of a small to midsized business. Bain also found that the average Fortune 500 company could double its revenue growth rate with that same 5 percent increase in customer retention.
If you deal as ...
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