After the Sale Building Long Term

PartnershipsChapter 13Chapter 13

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Important Questions Important Questions AnsweredAnswered

How important is service after the sale?

How should salespeople stay in contact with customers?

Which sales strategies stimulate repeat sales and new business in current accounts?

Which techniques are important to use when handling complaints?

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THE VALUE OF CUSTOMERSTHE VALUE OF CUSTOMERS Many people believe the emphasis in selling is on

getting the initial sale. For most salespeople, however, sales increases from one year to the next are due to increasing the revenue from existing accounts, not from getting new accounts. Salespeople gain a competitive advantage by maintaining strong relationships with their customers. Eventually, when buying decisions need to be made, those customers look to people they know. Customers are, of course, the primary revenue source for companies. Many people do not fully understand the value of a customer. Customers are also worth more in terms of revenue than some salespeople recognize. (contd.)

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THE VALUE OF THE VALUE OF CUSTOMERSCUSTOMERS Successfully retaining customers is important to all Successfully retaining customers is important to all

companies. One study reported that 65 percent of companies. One study reported that 65 percent of the average company's business comes from the average company's business comes from current, satisfied customers. Another study found current, satisfied customers. Another study found the cost of acquiring a new customer to be five the cost of acquiring a new customer to be five times the cost of properly servicing a current times the cost of properly servicing a current customer and retaining that customer's business. customer and retaining that customer's business. Yet another study indicated that overall, customers Yet another study indicated that overall, customers are less satisfied than ever, so apparently many are less satisfied than ever, so apparently many companies have failed to recognize the importance companies have failed to recognize the importance of customer satisfaction. Those industries that are of customer satisfaction. Those industries that are losing customers as rapidly as they are finding new losing customers as rapidly as they are finding new ones, now recognize the value of retaining ones, now recognize the value of retaining customers. customers.

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Stages of Partnerships

Commitment

Dissolution

•Limited Relationships•Failure to monitor Competitors or industry•Complacency

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EXPLORATIONEXPLORATION In the exploration stage, the relationship is In the exploration stage, the relationship is

defined through the development of defined through the development of expectations for each party. The buyer tests the expectations for each party. The buyer tests the seller's product, how the seller responds to seller's product, how the seller responds to requests, and other similar actions after the requests, and other similar actions after the initial sale is made. A small percentage of the initial sale is made. A small percentage of the buyer's business is given to minimize the risk buyer's business is given to minimize the risk in case the vendor cannot perform. When the in case the vendor cannot perform. When the vendor performs well, trust is developed, as is a vendor performs well, trust is developed, as is a personal relationship. An unfavorable initial personal relationship. An unfavorable initial experience with the product or with the experience with the product or with the company may be extremely difficult to company may be extremely difficult to overcome. overcome.

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Activities of Exploration Activities of Exploration Stage Stage

► SET THE RIGHT EXPECTATIONSSET THE RIGHT EXPECTATIONS

► MONITOR ORDER PROCESSINGMONITOR ORDER PROCESSING

► ENSURE PROPER INITIAL USE OF THE ENSURE PROPER INITIAL USE OF THE PRODUCT OR SERVICEPRODUCT OR SERVICE

► FOLLOW UPFOLLOW UP

► MAKE PERSONAL VISITSMAKE PERSONAL VISITS

► HANDLE CUSTOMER COMPLAINTSHANDLE CUSTOMER COMPLAINTS

► ACHIEVE CUSTOMER SATISFACTIONACHIEVE CUSTOMER SATISFACTION

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SET THE RIGHT SET THE RIGHT EXPECTATIONSEXPECTATIONS The best way to begin a relationship is for each The best way to begin a relationship is for each

party to be aware of what the other expects. To party to be aware of what the other expects. To a large degree, customers base their a large degree, customers base their expectations on sales presentations. expectations on sales presentations. Salespeople should make sure customers have Salespeople should make sure customers have reasonable expectations of product reasonable expectations of product performance. If the salesperson exaggerates performance. If the salesperson exaggerates the capabilities of the product or the company, the capabilities of the product or the company, the customer will be disappointed. Avoiding the customer will be disappointed. Avoiding complaints by setting proper expectations is complaints by setting proper expectations is best. Long-term relationships are begun by best. Long-term relationships are begun by making an honest presentation of the product's making an honest presentation of the product's capabilities and eliminating any capabilities and eliminating any misconceptions before the order is placed.misconceptions before the order is placed.

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MONITOR ORDER MONITOR ORDER PROCESSINGPROCESSING Although many people may work on an order

before it is shipped, the salesperson is ultimately responsible, at least in the eyes of the customer, for seeing that the product is shipped when promised. Salespeople should keep track of impending orders and inform buyers when the paperwork is delayed in the customer's plant. Orders placed directly with a salesperson should be transmitted to the factory immediately. Also, progress on orders in process should be closely monitored. If problems arise in filling the order, the customer should be informed promptly; on the other hand, if the order can be filled sooner than promised. Monitoring order processing is Monitoring order processing is critical to developing a partnershipcritical to developing a partnership

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ENSURE PROPER INITIAL ENSURE PROPER INITIAL USE OF THE PRODUCT OR USE OF THE PRODUCT OR

SERVICESERVICE Customer dissatisfaction can occur just

after delivery of a new product, especially, if the product is technical or requires special installation. Customers unfamiliar with the product may have problems installing or using it. They may even damage the product through improper use. Many salespeople visit new customers right after initial deliveries to ensure the correct use of the product. In this way they can also help the customer realize the full potential benefits of the product. It is still the salesperson's responsibility, however, to make sure that the customer service department takes proper care of each new customer.

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FOLLOW UPFOLLOW UP The first follow up a salesperson should do after The first follow up a salesperson should do after

the sale is a call to say thank you and to check the sale is a call to say thank you and to check to see that the product is working to see that the product is working appropriately. Some salespeople use specialty appropriately. Some salespeople use specialty advertising, or gifts imprinted with their advertising, or gifts imprinted with their company's name, to say thanks. But company's name, to say thanks. But salespeople should also follow up regularly salespeople should also follow up regularly with their accounts to stay in touch with any with their accounts to stay in touch with any changing needs or possible problems. In fact, changing needs or possible problems. In fact, failing to follow up is a major complaint that failing to follow up is a major complaint that buyers have about salespeople. Regular follow buyers have about salespeople. Regular follow up can be accomplished viaup can be accomplished via

► Make personal visitMake personal visit► TelephoneTelephone► MailMail

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MAKE PERSONAL VISITSMAKE PERSONAL VISITS Personal visits can be the most expensive

form of follow-up because of the time it takes to travel and because the sales call will last longer than one conducted through other means. A personal visit, though, can be extremely productive because the salesperson can check on inventories or the performance of the machine or other aspects that can be accomplished only at the customer's site. Plus, a customer may be more likely to disclose more information, such as a minor complaint or compliment, in a personal setting than over the phone. Regular personal visits can also build trust, a key component needed to move the relationship forward.

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TELEPHONETELEPHONE

Between personal visits, it is often a good idea to make contact via telephone. A salesperson can make 12 or more such calls within an hour, efficiently checking on his or her clients. Telephone calls are two-way communication, giving the customer an opportunity to voice any concerns.

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MAILMAIL Many companies provide form letters or thank-

you cards to encourage their salespeople to follow up on new sales. E-mail is also becoming a common form of customer contact, with customers appreciating the opportunity to choose when to read and respond to the salesperson's contact. Although the objective may be to create a functional relation ship rather than a strategic partnership, such follow-up is still necessary to remind the customer that you are the salesperson with whom they want to do business.

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HANDLE CUSTOMER HANDLE CUSTOMER COMPLAINTSCOMPLAINTS

Handling complaints is critical to developing goodwill and maintaining partnerships. Complaints can occur at any time in the partnering process, not just during the exploration stage. Handling complaints properly is always important, but perhaps even more so in the early stages of a partnership. Attempts to establish partnerships often collapse because of shortsightedness in handling customer complaints. Some firms spend thousands of dollars on advertising but make the mistake of insulting customers who attempt to secure a satisfactory adjustment.

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Reasons For DissatisfactionReasons For Dissatisfaction

Customers can be disappointed for any Customers can be disappointed for any of the following reasonsof the following reasons

► The producer performs poorlyThe producer performs poorly► It is being used improperlyIt is being used improperly► The terms of the sales contract were The terms of the sales contract were

not met.not met.

Although salespeople usually cannot Although salespeople usually cannot change the product or terms, they can change the product or terms, they can affect these sources of complaints.affect these sources of complaints.

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Techniques for responding to complaints

► ENCOURAGE BUYERES TO TELL ENCOURAGE BUYERES TO TELL

THEIR STORYTHEIR STORY

► DETERMINE THE FACTSDETERMINE THE FACTS

► OFFER A SOLUTIONOFFER A SOLUTION

► FOLLOW THROUGH WITH ACTIONFOLLOW THROUGH WITH ACTION

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ENCOURAGE BUYERES TO ENCOURAGE BUYERES TO TELL THEIR STORYTELL THEIR STORY

Customers need to tell their stories without interruption. Customers want a sympathetic Customers want a sympathetic reaction to their problems, whether real or reaction to their problems, whether real or imagined. They want their feelings to be imagined. They want their feelings to be acknowledged, their business to be recognized acknowledged, their business to be recognized as important, and their grievances handled in as important, and their grievances handled in a friendly manner. Good salespeople show a friendly manner. Good salespeople show they are happy the grievance has been they are happy the grievance has been brought to their attention. The salesperson brought to their attention. The salesperson may express regret for any inconvenience. may express regret for any inconvenience. Agreeing with the customer as far as possible Agreeing with the customer as far as possible gets the process off to the right start.gets the process off to the right start.

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DETERMINE THE FACTSDETERMINE THE FACTS

Whenever possible, the salesperson should examine, in the presence of the customer, the product claimed to be defective. Encouraging the customer to pinpoint the exact problem is a good idea. The purpose of getting the facts is to determine the cause of the problem so that the proper solution can be provided. Experienced salespeople soon learn that products may appear defective when actually nothing is wrong with them. On the other hand, salespeople should not assume product or service failure is always the user's fault. They need an open mind to search for the facts in each case.

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OFFER A SOLUTIONOFFER A SOLUTION The next step is to offer a solution. At this

time the company representative describes the process by which the company will resolve the complaint, and the rep should then gain agreement that the proposed solution is satisfactory. Company policies vary, but many assign the responsibility for settling claims to the salesperson. Other companies require the salesperson to investigate claims recommend a settlement to the home office. Whatever the company policy, the customer desires quick action and fair treatment and wants to know the reasons for the action.

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Possible Settlements► Replace the product without cost to the

customer.► Replace the product and charge the customer

for labor or transportation costs only.► Replace the product and share all costs with

the customer.► Replace the product but require the customer

to pay part of the cost of the new product.► Instruct the customer on how to proceed with

a claim against a third party.► Send the product to the factory for a decision.

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FOLLOW THROUGH WITH FOLLOW THROUGH WITH ACTIONACTION

The salesperson who has authority only to recommend an adjustment must take care to report the facts of the case promptly and accurately to the home or branch office. The salesperson has the responsibility to act as a buffer between the customer and the company. After the claim is filed, contact must be maintained with the customer to see that the customer secures the promised settlement. The salesperson also has a responsibility to educate the customer to forestall future claims. After a settlement to the customer's satisfaction is a fine time to make some suggestions.

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ACHIEVE CUSTOMER ACHIEVE CUSTOMER SATISFACTIONSATISFACTION

Salespeople should continuously monitor customers' levels of satisfaction and perceptions of product performance because customer satisfaction is the most important reason for reordering at this stage in the relationship. When the customer is satisfied, an opportunity for further business exists. Complaints and dissatisfaction can occur at any time during the relationship, but handling complaints well during the exploration stage is one way to prove that the salesperson is committed to keeping the customer's business

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EXPANSIONEXPANSION

The next phase of the buyer-seller The next phase of the buyer-seller relationship is expansion. When a relationship is expansion. When a salesperson does a good job of salesperson does a good job of identifying and satisfying needs and identifying and satisfying needs and the beginnings of a partnership are in the beginnings of a partnership are in place, the opportunity is ripe for place, the opportunity is ripe for additional sales. additional sales.

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Activities of Exploration Activities of Exploration Stage Stage

The ways to maximize the selling opportunity are

► generating repeat orders

► Upgrading

► Full-line selling

► Cross selling

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GENERATING REPEAT GENERATING REPEAT ORDERSORDERS

In some situations the most appropriate strategy is to generate repeat orders Several methods can be used to improve the likelihood of reorders.

► BE PRESENT AT BUYING TIME► HELP TO SERVICE THE PRODUCT► PROVIDE EXPERT GUIDANCE► PROVIDE SPECIAL ASSISTANCE

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BE PRESENT AT BUYING TIME

One important method of ensuring reorders is to know how often and when the company makes decisions. Buyers do not always have regular buying cycles, which can make it difficult for salespeople to be present at buying time. In these situations the seller still wants to be present in the buyer's mind. Two items that can help keep the seller present are catalogs and specialty advertising items.

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HELP TO SERVICE THE PRODUCT Most products need periodic maintenance and

repair, and some mechanical and electronic products require routine adjustments. Such service requirements offer salespeople a chance to show buyers that the seller's interest did not end with the delivery of the product. Salespeople should be able to make minor adjustments or take care of minor repairs. If they cannot put the product back into working order, they must notify the proper company representative. They should then check to see that the repairs have been completed in a timely manner and to the customer's complete satisfaction.

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PROVIDE EXPERT PROVIDE EXPERT GUIDANCEGUIDANCE

An industrial buyer or purchasing agent may need help in choosing a proper grade of oil or in selecting a suitable floor cleaner. A buyer for a retail store may want help developing sales promotion ideas. Whether the buyer needs help in advertising, selling, or managing, good salespeople are prepared to offer worth while suggestions or services. When you use your industry expertise to solve problems or develop opportunities for your clients that do not involve the sale of your product, you add value to the relationship, which can ultimately help you expand your business within the account.

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PROVIDE SPECIAL PROVIDE SPECIAL ASSISTANCEASSISTANCE

Salespeople are in a unique position to offer many types of assistance to the buyer. Providing special assistance is one hallmark of excellence in selling. Good relationships are built faster and made more solid by the sales person who does a little something extra for a customer, performing services over and above his or her normal responsibilities

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UPGRADING Upgrading, also called up-selling, is

convincing the customer to use a higher quality product or a newer product. The salesperson seeks the upgrade because the new or better product serves the needs of the buyer more effectively than the old product did. Upgrading is crucial to companies. When upgrading, it is a good idea to emphasize during the needs identification phase that the initial decision was a good one. Now, however, needs or technology have changed, and the newer product fits the customer's requirements better. Otherwise, the buyer may believe that the seller is trying to take advantage of the relationship to foist off a higher-priced product.

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FULL-LINE SELLINGFULL-LINE SELLING

Full-line selling is selling the entire line of associated products. The emphasis in full-line selling is on helping the buyer realize the synergy of owning or carrying all of the products in that line.

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CROSS-SELLINGCROSS-SELLING Cross-selling is similar to full-line

selling except the additional products sold are not directly associated with the initial products. Cross-selling involves leveraging the relationship with a buyer to identify needs for additional products. Again, trust in the selling organization and the salesper son already exist; therefore, the sale should not be as difficult as it would be with a new customer, provided the needs exist.

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Tips for Effective Cross-Selling

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COMMITMENTCOMMITMENT When the buyer-seller relationship has When the buyer-seller relationship has

reached the commitment stage, there is a reached the commitment stage, there is a stated or implied pledge to continue the stated or implied pledge to continue the relationship. Formally, this pledge may begin relationship. Formally, this pledge may begin with the seller becoming a preferred supplier, with the seller becoming a preferred supplier, which is a greater level of commitment. which is a greater level of commitment. Although preferred-supplier status may mean Although preferred-supplier status may mean different things in different companies, in different things in different companies, in general it means that the supplier is assured general it means that the supplier is assured of a large percentage of the buyer's business of a large percentage of the buyer's business and will get the first opportunity to earn new and will get the first opportunity to earn new business.business.

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SECURING COMMITMENT TO A PARTNERSHIP

When firms reach the commitment stage, elements in addition to trust become important. Trust may be operationalzed in the form of shared risk. Along with the dimensions of trust such as competence and dependability and honesty (or ethics), there must be commitment to the partnership from the entire supplying organization, a culture that fits with the buyer's organizational culture, and channels of communication so open that the seller and buyer appear to be part of the same company.

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COMMITMENT MUST BE COMMITMENT MUST BE COMPLETECOMPLETE

Commitment to the relationship should permeate both organizations, from top management to the secretary who answers the phone. This level of commitment means devoting the resources necessary to satisfy the customer's needs, even anticipating needs before the buyer does. Senior Senior management must be convinced of the benefits of management must be convinced of the benefits of partnering with a specific account and be willing partnering with a specific account and be willing to allow the salesperson to direct the resources to allow the salesperson to direct the resources necessary to sustain the partnershipnecessary to sustain the partnership Commitment also requires that all employees be empowered to handle the needs of the customer.

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COMMUNICATIONCOMMUNICATION

In the commitment phase of a partnership, the seller must take a proactive communication stance. This approach means actively seeking opportunities to communicate at times other than when the salesperson has something to sell or the customer has a problem to resolve. Partners are usually the first to learn of each other's new products, many times even co-developing those products. Salespeople should also encourage direct communication among similar functional areas.

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CORPORATE CULTURECORPORATE CULTURE Corporate culture is the values and beliefs held by

senior management. A company's culture shapes the attitudes and actions of employees and influences the development of policies and programs. A single salesperson will nor change a company's corporate culture to secure a partnership with a buyer, but the salesperson must identify the type of culture both organizations hold and make an assessment of fit. Although a perfect match is not necessary, the sales person must be ready to demonstrate that there is a fit. Though not attempting to change a company's culture, the salesperson who seeks a partnering relationship seeks change for both.

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THE SALES PERSON AS THE SALES PERSON AS CHANGE AGENTCHANGE AGENT

To achieve increasing revenue in an account over time, the salesperson acts as a change agent, or a cause of change in the organization. Each sale may involve some type of change, perhaps a change from a competitive product or simply a new version of the old one. Partnering, though, often requires changes in both the buying and selling organizations. Change is not easy, even when it is obviously beneficial.

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Change and ResistanceChange and Resistance

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CHAMPIONSCHAMPIONS Champions, also called advocates or

internal salespeople, work for the buying firm in the areas most affected by the proposed change and work with the salesperson to make the proposal successful. These champions can build momentum for the proposal by selling in arenas or during times that are off limits to the salesperson. It is also important to recognize that one change is the change in status from preferred supplier to strategic partner. Salespeople can help potential champions by providing them with all of the knowledge they will need.

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POSITIONING THE POSITIONING THE CHANGECHANGE

Positioning the change is similar to positioning a product in mass marketing. In this case, the salesperson examines the specific needs and wants of the various constituencies in the account to position the change for the greatest likelihood of success. Because salespeople are highly proactive in finding areas for improvement (or change) in their partners' organizations, positioning a change may determine who is involved in the decision.

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DETERMINING THE DETERMINING THE NECESSARY RESOURCESNECESSARY RESOURCES

The customer's needs may be beyond the salesperson's expertise. The salesperson must assess the situation and determine what resources are needed to secure the buyer's commitment. Not only allocation of personnel is enough, salespeople must manage other resources as well, such as travel and entertainment budgets or sample supplies.

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DEVELOPING A TIME-DEVELOPING A TIME-BASED STRATEGYBASED STRATEGY

The salesperson must determine a strategy The salesperson must determine a strategy for the proposed change and set that strategy for the proposed change and set that strategy against a time line. This action accomplishes against a time line. This action accomplishes several objectives. First, the strategy is an several objectives. First, the strategy is an outline of planned sales calls, with primary outline of planned sales calls, with primary and minimum call objectives determined for and minimum call objectives determined for each call. Second, the time line provides the each call. Second, the time line provides the salesperson with estimates of when each call salesperson with estimates of when each call should occur. Of course, objectives and should occur. Of course, objectives and planned times will change depending on the planned times will change depending on the results of each call, but this type of planning results of each call, but this type of planning is necessary to provide the salesperson with is necessary to provide the salesperson with guidance for each call, determine when guidance for each call, determine when resources are to be used, and make sure each resources are to be used, and make sure each call contributes to the visionary objective.call contributes to the visionary objective.

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Time Line for Strategy

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CAUSES OF DISSOLUTIONCAUSES OF DISSOLUTION Too often salespeople believe that once a customer Too often salespeople believe that once a customer

has committed to a partnership less work is needed has committed to a partnership less work is needed to maintain that relationship. That belief, however, to maintain that relationship. That belief, however, is untrue. One study found that 55 percent of all is untrue. One study found that 55 percent of all strategic partnerships dissolve within 3 to 5 years, strategic partnerships dissolve within 3 to 5 years, and the rest have a further life expectancy of only and the rest have a further life expectancy of only 3.5 years. Salespeople who subscribe to the belief 3.5 years. Salespeople who subscribe to the belief that partnerships require less work fall victim to that partnerships require less work fall victim to one or more common problems. The final stage for one or more common problems. The final stage for partnerships is dissolution, or breakup, but this partnerships is dissolution, or breakup, but this stage can occur at any point, not just after stage can occur at any point, not just after commitment. Several potential problems, including commitment. Several potential problems, including main taining few personal relationships, failing to main taining few personal relationships, failing to monitor competitor actions or the industry, and monitor competitor actions or the industry, and falling into complacency, can lead to dissolution.falling into complacency, can lead to dissolution.

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LIMITED PERSONAL LIMITED PERSONAL RELATIONSHIPSRELATIONSHIPS

Salespeople tend to call on buyers they like; it is natural to want to spend time with friends. The result is that relationships are cultivated with only a few individuals in the account. Unfortunately for such salespeople, buyers may leave the organization, transfer to an unrelated area, or simply not participate in some decisions. Truly effective salespeople attempt to develop multiple relationships within an account. One benefit of multiple relationships is that different champions can be selected for each proposal.

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FAILING TO MONITOR FAILING TO MONITOR COMPETITOR ACTIONSCOMPETITOR ACTIONS

No matter how strong the partnership is, competition will want a piece of the business. Accounts are most vulnerable when a personnel change occurs, when technology changes, or when major directional changes occur, such as a company starting a new division or entering a new market. Monitoring competitor action can be as simple as checking the visitor's log to see who has dropped by or keeping up with competitor actions and asking buyers for their opinions. Monitoring competition also means thinking about the benefits competitors offer, what their products do, and what their selling strategies are?

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FAILING TO MONITOR THE FAILING TO MONITOR THE INDUSTRYINDUSTRY

Similar to failing to monitor competition is a failure to monitor the industry in which either the salesperson or the customer operates. Salespeople often assume that the responsibility of monitoring the industry lies with someone else, either higher-ups in their own company or with the customer. But salespeople who fail to monitor both industries stand to miss opportunities that change creates. How does the professional salesperson monitor the industry? By reading trade magazines and by attending trade shows and conferences.

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FALLING INTO FALLING INTO COMPLACENCYCOMPLACENCY Perhaps the most common thief of good

accounts is complacency. In sales terms, complacency is assuming that the business is yours and will always be yours. It is failing to continue to work as hard to keep the business as you did initially to earn the business..

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How To avoid complacencyHow To avoid complacency► Do I understand each individual's personal Do I understand each individual's personal

characteristics? Do I have these characteristics? Do I have these characteristics in my computer file on each characteristics in my computer file on each account?account?

► Do I maintain a written or computerized Do I maintain a written or computerized record of promises made?record of promises made?

► Do I follow up on every customer request Do I follow up on every customer request promptly, no matter how insignificant it promptly, no matter how insignificant it may seem?may seem?

► Do I follow up on deliveries, make sure Do I follow up on deliveries, make sure initial experiences are positive, and ensure initial experiences are positive, and ensure that all paperwork is done correctly and that all paperwork is done correctly and quickly?quickly?

► . Have I recently found something new . Have I recently found something new that I can do better than the competition? that I can do better than the competition?

End of Chapter End of Chapter 1313

Thank youThank you