Building Partnering RelationshipsBuilding Partnering Relationships

Chapter 2Chapter 2

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Important Questions Important Questions AnsweredAnswered

What different types of relationships exist What different types of relationships exist between buyers and sellers?between buyers and sellers?

When is each type of relationship appropriate?When is each type of relationship appropriate? What are the characteristics of successful What are the characteristics of successful

partnerships?partnerships? What are the benefits and risks in partnering What are the benefits and risks in partnering

relationships?relationships? How do relationships develop over time?How do relationships develop over time? What are the responsibilities of salespeople in What are the responsibilities of salespeople in

partnerships?partnerships?

““Your challenge as a professional Your challenge as a professional will be to understand the different will be to understand the different types of relationships and how types of relationships and how those relationships can impact those relationships can impact you and your company, whether you and your company, whether positive or negative.”positive or negative.”

~Steve Reel~Steve Reel

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Evolution of Personal Evolution of Personal SellingSelling PastPast

To sell what company produced even To sell what company produced even if it was not what people needed at if it was not what people needed at very high pricesvery high prices

Present (Partnering-oriented)Present (Partnering-oriented)To find solutions and develop a To find solutions and develop a partnership partnership Buyers have needs that are met by:Buyers have needs that are met by:

The productThe product The selling processThe selling process

Buyers buy to also make a profitBuyers buy to also make a profit

The Evolution of The Evolution of Personal SellingPersonal Selling

Relationships and Relationships and SellingSelling

Relationship Relationship marketingmarketing

LoyaltyLoyalty BehavioralBehavioral AttitudinalAttitudinal

Lifetime Lifetime customer customer valuevalue

Behavioral loyalty refers to the purchase of the same product from the same vendor over time.

Attitudinal loyalty is an emotional attachment to a brand, company, or salesperson.

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Relationship MarketingRelationship Marketing Companies’ attempts to develop stronger Companies’ attempts to develop stronger

relationships with their customersrelationships with their customers Relationship marketing is the Relationship marketing is the

creation of customer loyaltycreation of customer loyalty Targets a major customer Targets a major customer

that it wants to sell to now that it wants to sell to now and in the futureand in the future

Establishes a long-term Establishes a long-term collaborative relationshipcollaborative relationship

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Relationship Marketing and the Relationship Marketing and the Sales ForceSales Force 4 basic questions used to define the role of the sales force4 basic questions used to define the role of the sales force

How much selling effort is necessary to gain and hold customers?How much selling effort is necessary to gain and hold customers? Is the sales force the best marketing tool?Is the sales force the best marketing tool? What type of sales activity will be necessary?What type of sales activity will be necessary? Can the firm gain strength relative to its competition with sales Can the firm gain strength relative to its competition with sales

force?force?

Personal selling builds relationships!Personal selling builds relationships! Two main functions of personal selling are toTwo main functions of personal selling are to

Generate revenueGenerate revenue Provide services to satisfy customersProvide services to satisfy customers

Flexible in operationFlexible in operation Focused on prospective customersFocused on prospective customers Results in actual salesResults in actual sales Salespeople implement relationship marketingSalespeople implement relationship marketing

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Levels of Relationship Levels of Relationship MarketingMarketing

Transaction selling: customers are sold Transaction selling: customers are sold to and not contacted againto and not contacted again

Relationship selling: the seller contacts Relationship selling: the seller contacts customers after the purchase to customers after the purchase to determine if they are satisfied and have determine if they are satisfied and have future needsfuture needs

Partnering: the seller works continually Partnering: the seller works continually to improve its customers’ operations, to improve its customers’ operations, sales, and profitssales, and profits

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Dependence Increases as Dependence Increases as Relationships become Relationships become

ImportantImportant

Transactional

High

Low

Relationships

HighLow Dependence

RelationshipPartnership

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Partnering with CustomersPartnering with Customers Encourages both the buyer and seller to share Encourages both the buyer and seller to share

informationinformation Two companies work toward the same objectiveTwo companies work toward the same objective Components of partnering include:Components of partnering include:

Individual excellenceIndividual excellence ImportanceImportance InterdependenceInterdependence InvestmentInvestment InformationInformation IntegrationIntegration InstitutionalizationInstitutionalization IntegrityIntegrity

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Partnering with CustomersPartnering with Customers

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Building Customer Building Customer Relationships Through Relationships Through

ServiceService

Service-oriented salespeople can do Service-oriented salespeople can do Two things to add value to their Two things to add value to their product offerings and to enhance product offerings and to enhance buyer-seller relationshipsbuyer-seller relationships

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Value-Added ActivitiesValue-Added Activities

Salespeople can do a number of Salespeople can do a number of things to add value to their product things to add value to their product offerings and to enhance buyer-seller offerings and to enhance buyer-seller relationships such asrelationships such as seek to simplify order processingseek to simplify order processing help customers become operationally help customers become operationally

efficientefficient assist customers in producing, marketing, assist customers in producing, marketing,

and distributing their products to their and distributing their products to their customerscustomers

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Service DifferentiationService Differentiation

Show how you differ by providing a Show how you differ by providing a higher level of service that other higher level of service that other salespeople by going over and above salespeople by going over and above the “call of duty” to help customers the “call of duty” to help customers like Rolls Royce and Mercedes-Benz like Rolls Royce and Mercedes-Benz do do

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How Do You Spell Service?How Do You Spell Service? S= Satisfaction...make sure that customer are satisfied.S= Satisfaction...make sure that customer are satisfied. E= Expectations...fulfill customer expectations for E= Expectations...fulfill customer expectations for

service.service. R= Responsiveness...solve customer problems promptly.R= Responsiveness...solve customer problems promptly. V= Value...make sure customers perceive that the V= Value...make sure customers perceive that the

service benefits they receive exceed the price they pay.service benefits they receive exceed the price they pay. I= Initiative...seek ways to provide extra services to I= Initiative...seek ways to provide extra services to

customers.customers. C= Concern...show customers that you care about them.C= Concern...show customers that you care about them. E= Enthusiasm...provide customer services eagerly and E= Enthusiasm...provide customer services eagerly and

with a smile.with a smile.

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Relationship Builders Relationship Builders

Treat customers like life-long Treat customers like life-long partners partners

Become a solutions provider Become a solutions provider Deliver more service than you promise Deliver more service than you promise Schedule regular service calls Schedule regular service calls Develop open and honest Develop open and honest

communication communication Use the ‘we can’ approach Use the ‘we can’ approach Take responsibility for mistakes made Take responsibility for mistakes made Be an ally for the customers’ business Be an ally for the customers’ business

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Relationship Breakers Relationship Breakers

Simply wait for the problem to Simply wait for the problem to develop develop

Focus only on making the sale Focus only on making the sale Over-promise and under-deliver Over-promise and under-deliver Wait for your customers to call you Wait for your customers to call you Lie or make exaggerated claims Lie or make exaggerated claims Use the “us versus them” approach Use the “us versus them” approach Blame somebody else Blame somebody else Knock a competitor Knock a competitor Focus on your own personal gain Focus on your own personal gain

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Market ExchangesMarket Exchanges

A transaction between a buyer and a A transaction between a buyer and a seller in which each party is seller in which each party is concerned only about that party’s concerned only about that party’s benefit. The seller is concerned only benefit. The seller is concerned only with making the sale; the buyer with with making the sale; the buyer with getting the product at the lowest getting the product at the lowest possible price. Most business possible price. Most business transactions are market exchanges, transactions are market exchanges, and there are two types:and there are two types: Solo Market ExchangesSolo Market Exchanges Functional RelationshipsFunctional Relationships

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Solo Market ExchangesSolo Market Exchanges

Parties in the transaction do not Parties in the transaction do not plan on doing business together plan on doing business together again, both the buyer and the seller again, both the buyer and the seller pursue their own self-interests.pursue their own self-interests.

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Functional RelationshipsFunctional Relationships

These are long-term market These are long-term market exchanges in which the buyer exchanges in which the buyer purchases out of habit or routine; purchases out of habit or routine; they tend to have the same they tend to have the same orientation as they do in solo market orientation as they do in solo market exchanges, but the previous purchase exchanges, but the previous purchase does influence the next purchase.does influence the next purchase.

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PartnershipsPartnerships

Here both parties are concerned about Here both parties are concerned about each other’s welfare and in developing each other’s welfare and in developing win-win relationships. There are two win-win relationships. There are two types of partnerships:types of partnerships:

Relational partnershipRelational partnership Strategic partnershipStrategic partnership

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Relational partnershipRelational partnership

Both seller and the buyer trust one Both seller and the buyer trust one another and have a close personal another and have a close personal relationship, thus they do not go into relationship, thus they do not go into minor detailsminor details

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Strategic partnershipStrategic partnership

In this type of partnership both In this type of partnership both parties work and develop a long-tem parties work and develop a long-tem relationship and make significant relationship and make significant investment to improve profitability of investment to improve profitability of bothboth

Types of Relationships Types of Relationships Between Buyers and SellersBetween Buyers and Sellers

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Main issueMain issue

Most salespeople are involved in Most salespeople are involved in either market exchanges or functional either market exchanges or functional relationships. Strategic partnerships relationships. Strategic partnerships are rare.are rare.

Foundations of Foundations of Successful RelationshipsSuccessful Relationships

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Characteristics of Successful Characteristics of Successful RelationshipsRelationships

Mutual trust: A belief by both the parties Mutual trust: A belief by both the parties that the other one will fulfil its obligations that the other one will fulfil its obligations in a relationship.in a relationship. Dependability: The buyer’s perception that the Dependability: The buyer’s perception that the

salesperson, and the product and company he or salesperson, and the product and company he or she represents, will live up to promises made, is she represents, will live up to promises made, is not something a salesperson can demonstrate not something a salesperson can demonstrate immediatelyimmediately

Competence: To know what they are talking Competence: To know what they are talking aboutabout

Customer orientation: the degree to which the Customer orientation: the degree to which the salesperson puts the customer’s needs firstsalesperson puts the customer’s needs first

Honesty: truthfulness and sincerityHonesty: truthfulness and sincerity Likeability: behaving in a friendly manner and Likeability: behaving in a friendly manner and

finding a common groundfinding a common ground

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Open communicationOpen communication

Open and honest communication is a Open and honest communication is a key building block for developing key building block for developing successful relationshipssuccessful relationships

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Common goalsCommon goals

Both parties should have common, Both parties should have common, preferably shared, goals to be able to preferably shared, goals to be able to develop a successful relationshipdevelop a successful relationship

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Commitment to mutual Commitment to mutual gaingain

Both parties to work to have a win-win Both parties to work to have a win-win relationshiprelationship

Credible commitments:Credible commitments:Both parties make credible Both parties make credible commitments to, which are tangible commitments to, which are tangible investments in the relationshipinvestments in the relationship

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Organisational supportOrganisational support

Structure and cultureStructure and cultureOrganizational structure & management Organizational structure & management provide necessary support for the salespeople provide necessary support for the salespeople & buyers in a partnering relationship& buyers in a partnering relationship

TrainingTraining

Special training is required to sell effectively Special training is required to sell effectively in a relationship-building environmentin a relationship-building environment

RewardsRewards

Reward systems on both sides of the Reward systems on both sides of the relationship be coordinated to encourage relationship be coordinated to encourage supportive behaviourssupportive behaviours

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Although not all relationships should become Although not all relationships should become partnerships, strategic partnerships do tend partnerships, strategic partnerships do tend to go through several phasesto go through several phases Awareness: salespeople locate & qualify prospects, Awareness: salespeople locate & qualify prospects,

while buyers identify various sources of supplywhile buyers identify various sources of supply Exploration: both buyer & seller search and try Exploration: both buyer & seller search and try

out; they may explore the potential benefits and out; they may explore the potential benefits and costs.costs.

Expansion: supplier has passed enough tests to be Expansion: supplier has passed enough tests to be considered for additional businessconsidered for additional business

Commitment: investments are made in the Commitment: investments are made in the relationship, especially in the form of sharing relationship, especially in the form of sharing proprietary information, plans, goals, and the likeproprietary information, plans, goals, and the like

Dissolution: it can occur any-time because of poor Dissolution: it can occur any-time because of poor performance, clash in culture, change in needs, performance, clash in culture, change in needs, and other factorsand other factors

Phases of Relationship Phases of Relationship DevelopmentDevelopment

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Choosing the right relationshipChoosing the right relationship SizeSize

to make a relationship with the right type of to make a relationship with the right type of customer (big/small depending upon the pros customer (big/small depending upon the pros and cons)and cons)

Access to technologyAccess to technologysome companies often develop innovations, some companies often develop innovations, either in the way they use a product or by either in the way they use a product or by altering a product, that the supplier can copy. altering a product, that the supplier can copy. Astute salespeople can identify such Astute salespeople can identify such companies and develop strategic partnerships companies and develop strategic partnerships that lead to joint development of new products that lead to joint development of new products or technologies, important outcomes or technologies, important outcomes regardless of the size of the accountregardless of the size of the account

Managing Relationships Managing Relationships and Partneringand Partnering

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Partnering relationships are built on Partnering relationships are built on effective communications. To improve effective communications. To improve communications with customers, communications with customers, salespeople are using computers, salespeople are using computers, telecommunications, and videos. telecommunications, and videos. Companies are also creating direct Companies are also creating direct links with customers via technology.links with customers via technology.

Using Technology to Using Technology to Increase EfficiencyIncrease Efficiency

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

Businesses are moving toward Businesses are moving toward partnering strategies.partnering strategies.

Functional relationships and strategic Functional relationships and strategic partnerships are characterized by a partnerships are characterized by a mutual concern of each party for the mutual concern of each party for the long-run welfare of the other party.long-run welfare of the other party.

Mutual trust, open communication, Mutual trust, open communication, common goals, a commitment to common goals, a commitment to mutual gain, and organizational mutual gain, and organizational support are key ingredients in support are key ingredients in successful relationships.successful relationships.

Customers trust salespeople who are Customers trust salespeople who are dependable, capable, and concerned dependable, capable, and concerned about the customer’s welfare.about the customer’s welfare.

SummarySummary

End of Chapter 2End of Chapter 2

Thank youThank you