The Evolution of Personal Selling

  Production Sales Marketing Partnering

Time Period

Before 1930

1930 to 1960

1960 to 1990

After 1990

 Objective

Marketing Sales Marketing Sales Satisfying Customer Needs

Building Relationship

Orientation Short – term seller needs

Short – term seller needs

Short – term seller needs

Long-term customer and seller need

Role of Salesperson Provider Persuader Problem solver Value creation

  Activities of Salesperson

 Taking orders, delivering goods

 Aggressively convincing buyers to buy products

 Marketing available offering to buyers needs

Creating new alternatives, matching buyers needs with sellers capabilities

 

Sellers profit - is selling price minus cost of goods sold and selling costs. Buyers profit - is the benefit received minus the selling price and costs

and hassles of buying. Buyers profit is increased due to lower costs of shopping, even if the net cost is the same as found in a store.

Partnering-oriented selling is becoming more common as companies make strategic choices about the types of selling best suited to their situation, but recent research indicates that even within partnership, there are times the buyers needs to hear persuasive messages that might be scripted.

Relationship marketing refers to creating the type of relationship that best suits thecustomer’s needs, which may or may not require a partnership.

 

Two Types of Loyalty 1. Behavioral loyalty Refers to the purchase of the same product from the same vendor

over time. Buying out of habit can reduce shopping costs, increasing profit. 2. Attitudinal loyalty is an emotional attachment to a brand, company, or salesperson.  Life customer value - the sum of their purchase over the entire

life.

Successful relationships involve cultivating mutual benefits as the partners learn to trust and depend on each other more and more.

Buyer and salesperson are able to resolve conflicts as they arise , settle differences and compromise when necessary.

Without trust, no loyalty and unhappy customers leave.

Five foundational element of strategic partnership: MUTUAL TRUST,OPEN COMMUNICATION, COMMON GOALS, COMMITMENT TO MUTUAL GAIN, ORGANIZATIONAL SUPPORT

1.) MUTUAL TRUST

most important element in the development of successful , long- term customer relationship.

is a belief by one party that the other party will fulfill its obligation in a relationship.

“ a little trust and confidence go a long way in motivating the supplier to go beyond the single requirements of a contract” – Daniel Fries

When salespeople and buyers trust each other, they are more willing to share relevant ideas, clarify goals and problems, and communicate more efficiently.

Information shared between the parties become increasingly comprehensive, accurate and timely.

Trust is imporatant building block for long-term relationships.

1. Market Exchanges - is a transaction between a buyer and seller in which each party is concerned only about the party’s benefit.

 Two Types of Market Exchanges

1.   Solo exchanges - Buyer and seller pursue their own self-interest.

2. Functional relationship

- Long term market exchanges characterized by behavioral loyalty; the buyer purchases the same product out of habit or routine. The buyer that previously purchase does influence the next purchase.

         

Factors Involve in the Relationship

Solo Exchanges Functional Relationship Relational Partnership

Strategic Partnership

Time Horizon Short term Long term Long term Long term

Concern for the other Party Low Low Medium High

Trust Low Low High High

Investment in the Relationship Low Low Low High

Nature of Relationship Conflict, Bargaining

 Cooperation Accomodation Coordination

Risk in Relationship Low Medium

 High High

Potential Benefits Low Medium High High

2. Partnerships - In partnership both parties are concerned about each other’s welfare and in developing win-win relationships. By working together, both parties benefit because the size of the pie increases.

Two Types of Partnership 

1.Relationship Partnership The buyers and the salesperson have a close personal relationship that allows them to communicate effectively. They create cooperative climate between the salesperson and the customer. Make an open and honest communication takes place.

2.Strategic Partnership are long term business relationship in which the partner organizations make significant investment to improve the profitability of both parties. Partnerships are created for the purpose of uncovering and exploiting joint opportunities.

Market Exchange Selling Goal: Making a Sale Long Term Relationship Selling Goal: Building Trust

Making Contact Initiating the Relationship

Find someone to listen Engage in strategic prospecting and qualifying

Make small talk Gather and study precall information

Ingratiate and build rapport Identify buying influence

Closing the Sale Plan the initial sales call

Deliver a sales pitch to: Demonstrate an understanding of the customer’s needs

Get the prospect attention Identify opportunities to build a relationship

Create interest Illustrate the value of a relationship with the customer

Build desire Developing the Relationship

Get the prospect to take action Select an appropriate offering

Stay alert for closing signals Customize the relationship

Use trial closes Link the solution of the customers needs

Overcome objections Discuss customers concerns

Close early and often Summarize the solution to confirm benefits

Following through Secure commitment

Reestablish contact Enhancing the Relationship

Resell self, company and products Assess customer satisfaction

  Take actions to ensure satisfaction

  Maintain open, two way communication

  Expand collaborative involvement

  Work to add value and enhance mutual opportunities

Successful relationships involve cultivating mutual benefits as the partners learn to trust and depend on each other more and more.

Buyer and salesperson are able to resolve conflicts as they arise , settle differences and compromise when necessary.

Without trust, no loyalty and unhappy customers leave.

MUTUAL TRUST,OPEN COMMUNICATION, COMMON GOALS, COMMITMENT TO MUTUAL GAIN, ORGANIZATIONAL SUPPORT

1.) MUTUAL TRUST

most important element in the development of successful , long- term customer relationship.

is a belief by one party that the other party will fulfill its obligation in a relationship.

“ a little trust and confidence go a long way in motivating the supplier to go beyond the single requirements of a contract” – Daniel Fries

When salespeople and buyers trust each other, they are more willing to share relevant ideas, clarify goals and problems, and communicate more efficiently.

Information shared between the parties become increasingly comprehensive, accurate and timely.

Trust is imporatant building block for long-term relationships.

1.1) DEPENDABILITY

the buyer’s perception that the salesperson, and the product and the company he or she represents, will live up to promise made, is not something a salesperson can demonstrate immediately.

third- party references can be useful in proving dependability, if the salesperson has not yet had an opportunity to prove it personally.

Product demonstration, plant tours and other types of presentations can also illustrate dependabilty.

Product demonstration can show how the product will work, even under difficult condition.Plant tours proves that the company could live up to its promises of on-time delivery.

salesperson’s prior experience and training can also be used to prove dependability (length of experience).

As time goes on and the relationship grows, the buyer assumes dependability.

A reputation for dependability, however, can be quickly lost if the salesperson fails to continue to deliver as promised

salespeople demonstrate competence when they can show that they know what they are talking about.

Knowledge of the customer, the product, the industry and the competiton are all necessary to the success of the salesperson.

Recent research that competence is a key component in developing loyalty.

Product knowledge is the minimum; customers expect salespeople to know everything about their own products and their company

Each saleperson undergoes 90 days of training before going into the field. Once in the field, salespeople undergo an additonal six months of training, including two weeks at the company’s headquarters in Melville, New York

Classroom training corporate Melville, NY

Field training branches throughout US(two mos.)

Classroom training corporate Melville,NY

Field training branches throughout US(three mos.)

Field training assigned to business group (three mos.)

•Introduction to the electronics distribution industry.

• work with active accounts under supervision of field sales managers

• arrow sales system

•Work with active accounts under supervision of sales managers

•Based on demonstrated expertise and company staffing needs, associates are assigned a sales terittory

•Customer and supplier dynamics

•Participate in sales calls with customers and suplliers

• roles and responsibilities

• research account potential and formulate account strategies

• associates continue with training specific to their assigned business groups

• technical product training

• work in arrow facilities of customer’s manufacturing facilities

• intergroup selling strategies

• collaborate with suppliers on strategies for assigned accounts

• associates are eligible for rewards and incentives for meeting or exceeding sales goals

PHASE 1 PHASE 2 PHASE 3

Phase 1 Phase 2 Phase 3

Classroom training corporate Melville, NY

Field training branches throughout US(two mos.)

Classroom training corporate Melville,NY

Field training branches throughout US(three mos.)

Field training assigned to business group (three mos.)

• introduction to arrow electronics inc.

inventory management

• feild visit; touring a customer’s facility

• professional selling skills

• exceeding customer and supplier expectation

•Collaborative selling

• professional development

•Account management

• business savvy – having impact on day 1

•Financial management- creating profitable businesses.

Phase 1 Phase 2 Phase 3

Classroom training corporate Melville, NY

Field training branches throughout US(two mos.)

Classroom training corporate Melville,NY

Field training branches throughout US(three mos.)

Field training assigned to business group (three mos.)

customer service, team building, communication skills

• professional development

• career development and personal learning

•Presentation skills

degree to which the salesperson puts the customer’s needs first

Salespeople who think only of making sales are sales oriented rather than customer oriented.

Stating pros and cons can also be perceived as being customer oriented because understanding the cons also indicates that the salesperson understands the buyer’s needs

Salesperson’s availability and desire to provide service also indicates a customer orientation. For example “ call me anytime for anything that you need” indicates availability and can serve as proof of a customer orientation.

both truthfulness and sincerity

Highly related to dependability (“ we can count on you and your word because you are honest”)

Is also realted to competence.

Salespeople must be willing to admit that they do not know something rather than trying to fake it; buyers consider salespeople who bluff to be dishonest

likability may be the least important component of trust beacause most people can be nice.

Likability refers to behaving in a friendly manner and finding common ground between buyer and seller.

Common ground or interest with all buyers

Likability can also be influenced with personal communication such as birthday cards, handwritten notes, and so forth

Many businesses send holiday cards and gifts to all customers but personal touches make these gestures meaningful.

Honesty affects customer orientation which influences dependability

For example: professional salespeople must also be competent, dependable, honest and customer oriented

open and honest communication is a key building block for developing successful relationship.

Driving each other’s business, their roles in the relationship, each firm’s strategies and any problems that arise over the course of the relationship.

Open communication should lead to stronger relationship

Conflict can occur even in the strongest of the partnerships and how it is handled says more about the relationship than it ir when it happens.

One difference between a relational partnership and a strategic partnership is the lines of communication.

Relational partnership- most communication between the buyer and the selling organization goes through the salesperson.Strategic relationship – more direct communication ties between the buying organization and the selling organization.

cultural difference in communication style can be easily misunderstood and thus hinder open and honest communication.

Japan to say no indirectly are “ it’s very difficult, we’ll think about it and i’m not sure.”

salespeople and customers must have common goals for a successful relationship to be develop.

Shared goals give both members of the relaionship a strong incentives to pool their strengths and abilities.

Partners can focus on exploiting opportunities rather than arguing about who will benefit the most from the relationship

Shared goals also help to sustain the partnership when the expected benefit flows are not realized.

Measurable goals are also very important.

Two organization set joint goals such as sales revenue, on-time delivery, service response time and others

Two organizations can work together to rectify any problems quickly

successful partnership actively work to create win- win realtionship by making commitment to the relationship.

McDonalds is clearly the more powerful of the two companies; but in a partnership , commitment to mutual gainmeans that McDonalds does not take advantage of Bama

One party is always more powerful than the other party; but in a partnership, it does not exercise that the power over the other

Mutual dependence creates a cooperative spirit.

parties make investment in the relationship.

Mutual investment are tangible investments in the relationship by both parties.

Making the hollow statement “ I want to be a partner”.

Involve spending money to improve the products and services sold to the other party.

These investments signal the partner’s commitment to the relationship in the long run.

These actions make the commitment believable. Mutual investments are also called Relationship-Specific assets in other words, these are resources specific to the relationship and cannot be easily transferred to another relationship.

foster good relationship

Boundary spanning employees - employees who cross the organizational boundary and interact with customers or vendors the necessary support

support are training, rewards that support partnering behavior and structure and culture.

A.)Structure and culture – organizational structure provide the necessary support for the salespeople and buyers in a partnering relationship partnership created at headquarters should be recognized and treated as such by local offices and vice versa Without the support of the respective companies, the partnership is destined to fail.The entire firm must have an orientation to building partnership. strategic partnership are characterized by direct, open communication between multiple members of both firms.

B.) training- special training is required to sell effectively in a reletionship-building environment.

salepeople taught how to identify customer needs and work with the customer to achieve better performance.Constantly trains his salespeople in relationship skills, need identification skills and other sales skills.

These opportunities are used to train the rep on how to respond in ways that improve, not damage the relationship.Training is critical in helping salespeople identify ways to make it easier for the customer to do business with them.Training can also support the customer- oriented culture for all boundary- spanning employees. many companies now offer service- oriented training to all customer- facing employees.

Rewards- reward system on both sides of the relationship should be coordinated to ancourage supportive behaviors.

buyers are rewarded for wringing out concessions from the salespeopleSalespeople are rewarded on the basis of sales volume.

Research indicates that compensation strategies can influence salespeople’s customer orientation. he added that as the plan developed, it became clear that how the plan was structured would impact how customers were treated.One challenge is how to reward nonselling employees.The employees are doing what they are being rewarded for, so the problem isn’t necessarily theirs.Creating appropriate reward structures, though, can be difficult.

not all relationship should become partnership.

strategic partnerships tend to go through several phases. these phases are:a) awarenessb)Explorationc)Expansiond)Commitment and sometimese)Dissolution

Middle three stages are most important:

In awareness stage; no transaction has taken place.

Awareness phase salespeople locate and qualify prospects.

Buyers identify various sources of supply.

one important trend is toward supplier relationship management.

Supplier relationship management (SRM)- use of technology and statistics to identify important suppliers and opportunities for cost reduction, greater efficiency and other benefits.

Customers may actively seek partnership for keys areas of the firm’s purchases, which may mean working to develop a strategic partnership with a new vendor.

exploration stage- search and trial phase for both buyer and seller.

Explore the potential benefits and costs of a partnership.

Buyer may make purchases but these are likely in the form of market exchanges because neither side has commited to the relationship.

supplier has passed enough tests to be considered for additional business.

Expansion stage involves efforts by both parties to investigate the benefits of a long-term relationship.

Relationship can still devolve into a functional relationship rather than a strategic partnership

Intention of both parties is to develop the appropriate type of relationship

Both sides begin to probe regarding interest in a partnership; such probing is both internal and external.

Strategic partnership requires credible commitments, so many in the selling organization may need to review the opportunity

Commitment stage- customer and seller have implicity or explicity pledge to continue the relationship for a period of time.

Sharing proprietary information, plans, goals, and the like.

Commitment stage in the relationship involves a promise by both buyer and seller to work together over many transaction, not just the one decision.

occur any time in the relationship process, though it doesn’t necessarily have to occur at all.

Dissolution is the process of terminating the relationship and can occure because of poor performance, clash in culture, change in needs and other factors..

Loss of investments made in the relationship can be significant and have an impact throughout both organizations.

appropriate types of relationship with each customer, strategic partnership may be called for.

Salesperson must determine which relationship type is appropriate for optimizing the customer’s lifetime value.

what makes for a strategic relationship.

At least one factor that influences a salesperson’s choice of relationship is the type of relationship is the type of relationship the customer desires

Customer isn’t willing to make that investment, then another type of relationship is called for.

Some of the factors to considered are:a. size of the accountb. access and images in the marketc. access to technology

JC Penney has a strategic partnership with Levi Strauss.

The thought is that by partnering with large accounts, the accounts invest in the supplier and become locked in.

Economies of scale can often justify lower prices and higher investment.

Size of the accounts, then, is one aspect to consider.

Some cases larger accounts are not necessarily the most profitable.

When the seller’s investment are factored in, smaller accounts provide imporatnt benefits that larger accounts cannot, as we will discuss.

account can provide access to a specific, desired market or can enhance the image of the seller.

Ex. Heineken was shocked to discover that Albert Heijin, the largest

supermarket chain in the Netherlands, placed Heinken beer on stores “mega- losers” list.

Heineken believed it was important to partner with Albert Heijin because working with the leader in the market was critical to Heineken’s image.

lead users because they face and resolve needs months or years ahead of the rest of the market place.

Companies often develop innovation, either in the way they use a product or

by altering a product, that the supplier can copy.

“ Exclusivity makes customers feel special and that leads to loyalty”

Ability to listen to customers and deliver that knowledge back to the company so that better products can be developed.

What leads users provide is more than information; they provide the opportunity to co-create innovations that can then be converted into products such as logistics, that supplier can copy

partnering relationship are built on effective communication

Improve communication with customers

salespeople are using technology more efficiently; creating direct links with customers via technology.

Computer use ranges from providing information during a sales call analyzing a customer’s problem

According to Thomas Bird, president of Gould Inc.’s test and measurement division. “ one of the problems in technical sales is that some salespeople do not exactly convey what the inventor or manufacturer had in mind when the product was designed.”