W7 Analysis Assignment

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Principles of Marketing 4.0

Jeff Tanner and Mary Anne Raymond

©FlatWorld 2018

PUBLISHED BY:

FLATWORLD

NO PART OF THIS WORK MAY BE USED, MODIFIED, OR REPRODUCED IN ANY FORM BY ANY MEANS EXCEPT AS EXPRESSLY PERMITTED UNDER THE LICENSING AGREEMENT.

©FlatWorld 2018

CHAPTER 13

PROFESSIONAL SELLING

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LEARNING OBJECTIVES

Recognize the role professional selling plays in society and in firms’ marketing strategies.

Identify the different types of sales positions.

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WHAT SALESPEOPLE DO

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CREATE VALUE FOR THEIR FIRMS’ CUSTOMERS

MANAGE RELATIONSHIPS

RELAY CUSTOMER AND MARKET INFORMATION BACK TO THEIR ORGANIZATIONS

SALESPEOPLE’S RESPONSIBILITIES

The salesperson has a fiduciary responsibility to the company and an ethical responsibility to the buyer.

At times, however, the two responsibilities conflict with one another.

For example, what should a salesperson do if the product meets only most of a buyer’s needs, while a competitor’s product is a perfect fit?

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CREATING VALUE

Salespeople sell—that’s the bulk of the value they deliver to their employers.

Salespeople aren’t appropriate channels for companies in all situations.

Salespeople can be the best channel to reach customers in situations requiring:

Adaptation

Customer education

Other value-adding activities

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MANAGING RELATIONSHIPS

Sales representatives have to decide which accounts they have the best shot at winning and which are the most lucrative.

Salespeople recognize that business is not about making friends, but about making and retaining customers.

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GETTING INFORMATION

Salespeople are boundary spanners: they operate outside the boundaries of the firm and in the field.

Salespeople interact directly with customers and, in so doing, gather a great deal of useful information about their needs.

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TYPES OF SALES POSITIONS

Using activities as a basis, there are four basic types of salespeople: missionary salespeople, trade salespeople, prospectors, and account managers.

In some discussions, you’ll hear that there are three types:

Order getters

Order takers

Sales support

The four we describe in this book are all types of order getters; that is, they actively seek to make sales by calling on customers.

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MISSIONARY SALESPEOPLE

A missionary salesperson calls on people who make decisions about products but don’t actually buy them.

While they call on individuals, the relationship is business-to-business.

There are salespeople who also work with “market influencers.”

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TRADE SALESPEOPLE

SOMEONE WHO CALLS ON RETAILERS AND HELPS THEM DISPLAY, ADVERTISE, AND SELL PRODUCTS TO CONSUMERS

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PROSPECTORS

Prospectors often knock on a lot of doors and make a lot of phone calls, which is called cold calling.

SALESPERSON WHOSE PRIMARY FUNCTION IS TO FIND PROSPECTS, OR POTENTIAL CUSTOMERS

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ACCOUNT MANAGERS

Account managers also have to identify lead users.

Account managers work closely with these lead users and build relationships across both their companies so that the two organizations can innovate together.

RESPONSIBLE FOR ONGOING BUSINESS WITH A CUSTOMER WHO USES A PRODUCT

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OTHER TYPES

Order takers and sales support do not actively solicit business.

Order takers include:

Retail sales clerks

Salespeople who sell for distributors of products like plumbing supplies or electrical products who sell to plumbers and electricians

Sales support work with salespeople to help make a sale and to take care of the customer after the sale.

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KEY TAKEAWAYS

Salespeople act as representatives for other people, including employees who work in other parts of their companies.

Salespeople create value for their customers, manage relationships, and gather information for their firms.

There are four types of salespeople:

Missionary salespeople

Trade salespeople

Prospectors

Account managers

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LEARNING OBJECTIVES

Understand the types of selling relationships that firms seek.

Be able to select the selling strategy needed to achieve the desired customer relationship.

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CUSTOMER RELATIONSHIPS

Serving one large customer can often be more profitable than serving several smaller customers.

Marketers also want stronger relationships with customers who are innovative, such as lead users.

Salespeople are tasked with maintaining relationships with market influencers who are not their customers.

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TYPES OF SALES RELATIONSHIPS

Transactional relationships: each sale is a separate exchange and the two parties have little or no interest in maintaining an ongoing relationship.

Functional relationships: limited, ongoing relationships that develop when a buyer continues to purchase a product from a seller out of habit, as long as her needs are met.

Affiliative selling relationships: more likely to occur when the buyer needs a significant amount of expertise from the seller and trust is an issue.

Strategic Partnership: buyer and seller commit time and money to expand “the pie” for both parties.

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THE RELATIONSHIP CONTINUUM

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SELLING STRATEGIES

Script-based or canned selling: Salespeople memorize and deliver sales pitches verbatim.

Needs-satisfaction selling: asking questions to identify a buyer’s problems and needs, and then tailoring a sales pitch to satisfy those needs.

Consultative selling: the seller uses special expertise to solve a complex problem in order to create a somewhat customized solution.

Strategic-partner selling: both parties invest resources and share their expertise with each other to create solutions that jointly grow one another’s businesses.

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CHOOSING THE RIGHT SALES STRATEGY

The sales-strategy types and relationship types discussed don’t always perfectly match up.

Different strategies might be more appropriate at different times.

The appropriateness of each method depends on how the buyer wants to buy, and what information the buyer needs to make a good decision.

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THE TYPICAL SALES PROCESS

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PRE-APPROACH AND PLANNING

A salesperson may use a variety of resources to find the right person to call:

Google

Financial databases (Standard & Poor’s)

Internal data

Such extensive pre-call planning doesn’t always happen, although a lot can be accomplished through judicious use of web-based resources.

In this stage, the salesperson is attempting to convince the buyer to spend time exploring the possibility of a purchase.

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NEEDS IDENTIFICATION

In complex situations, many questions are asked.

These questions will follow the SPIN outline or something similar.

Highly complex situations may require that questions be asked of many people in the buying organization.

In simpler situations, needs may not vary so a canned presentation can be used. Then, instead of identifying needs, needs are simply listed as solutions are described.

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PRESENTATION

Shows how the offering satisfies the needs identified earlier.

One approach to presenting solutions uses statements called FEBAs.

FEBA stands for feature, evidence, benefit, and agreement.

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OBJECTIONS

Concerns or reasons not to buy raised by the prospect, and can occur at any time.

A prospect may object in the approach, for example, saying there isn’t enough time available for a sales call or nothing is needed right now.

Or, during the presentation, a buyer may not like a particular feature.

Salespeople should probe to find out if the objection represents a misunderstanding or a hidden need.

When all the objections are resolved to the buyer’s satisfaction, the salesperson should ask for the sale (close).

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CLOSING

A request for a decision or commitment from the buyer.

There are different types of closes. Some of these include:

Direct request

Minor point

Summary

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KEY TAKEAWAYS

Some buyers and sellers are more interested in building strong relationships with one another than others.

The four types of relationships between buyers and sellers are transactional, functional, affiliative, and strategic. The four basic sales strategies salespeople use are script-based selling, needs-satisfaction selling, consultative selling, and strategic-partner selling.

Different strategies can be used with in different types of relationships. For example, the same questioning techniques used in needs-satisfaction selling might be used in relationships characterized by consultative selling and strategic-partner selling.

The sales process used to sell products is generally the same regardless of the selling strategy used. However, the strategy chosen will depend on the stage the seller is focusing on. For example, if the problem is a new one that requires a customized solution, the salesperson and buyer are likely to spend more time in the needs identification stage. Consequently, a needs-satisfaction strategy or consultation strategy is likely to be used.

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LEARNING OBJECTIVES

Describe the sales cycle.

Understand the selling metrics that salespeople use.

Understand the selling metrics that sales managers and executives use.

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THE SALES CYCLE

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THE SALES CYCLE

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LEADS

Contact information about someone who might be interested in the salesperson’s product

SUSPECTS

A person or organization that has an interest in an offering, but it is too early to tell what or if they are going to buy.

PROSPECTS

Someone with the budget, authority, need, and time (BANT) to make a purchase and will buy such a product of the type the salesperson is selling soon.

CUSTOMER

The person decided to buy the salesperson’s product and became a customer.

METRICS USED BY SALESPEOPLE

The key metric that salespeople are evaluated upon is the revenues they generate.

Conversion ratios: measure how good a salesperson is at moving customers from one stage in the selling cycle to the next.

Activity goals: number of sales calls of each type a representative has to be make in a certain period of time.

Win-loss analysis: an “after the battle” review of how well a salesperson performed given the opportunities she faced.

A bonus is paid at the end of a period of time based on the total amount sold, while a commission is typically thought of as a payment for each sale.

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ACTIVITIES AND CONVERSIONS DRIVING SALES

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METRICS USED BY SALES MANAGERS

Sales managers are interested in the same metrics as the salesperson, plus others.

Sales managers look at other measures such as:

Market share

Sales by product

Sales by customer type

Sales per salesperson

Time is yet another element that sales managers look at.

Customer satisfaction is another important metric.

KEY TAKEAWAYS

The sales cycle is a basic unit of measurement indicating how long it takes to close a sale. Salespeople examine their performance at each stage of the sales cycle in order to identify specific areas for improvement.

A salesperson who shortens the cycle is able to generate more revenue with the same amount of effort. Salespeople also track their conversion ratios to identify which stages of the sales cycle they need to work on.

Sales executives track the same metrics as individual salespeople but at the aggregate level. If many salespeople are struggling with one stage of the sales cycle, for example, then additional training or marketing may be needed, or a new strategy is necessary.

Sales executives also look at their firm’s sales relative to their forecasts in order to spot possible trends. A firm’s sales trends affect many of the other decisions the company’s executives have to make, including manufacturing and output decisions. Sales managers also have to manage their company’s selling costs. Sales managers are often responsible for a firm’s sales and its profit levels.

LEARNING OBJECTIVES

Compare and contrast common ethical challenges facing salespeople and sales managers.

Describe steps companies take to ensure ethical sales activities.

ETHICAL ISSUES FOR SALESPEOPLE

Many of the most common situations you could face as a salesperson involve issues such as:

A customer asks for information about one of their competitors, who happens to be one of your customers.

Deciding how much to spend on holiday season gifts for your customers.

A buyer asks for something special, which you could easily provide, but aren’t supposed to give away.

Deciding to play golf on a nice day, since no one knows if you are actually at work or not.

COMPANY SAFEGUARDS

The first step is to develop policies, based on the company’s mission and values. Good ethical policies:

List appropriate and inappropriate behaviors

Describe the underlying principle

A good second step is to train all salespeople and sales managers on the policy for several reasons:

To secure greater support and application of the policy.

Should a salesperson engage in an unethical or illegal activity, the company is protected.

The company must also enforce the policy and have procedures in place that make enforcement possible.

Codes of ethics, policies, and procedures affect all employees. They are not created just because of salespeople.

KEY TAKEAWAYS

Salespeople are, for the most part, caring, ethical professionals. They do face unique ethical challenges because of their job, including how to handle unethical requests from customers and making sure that they know and follow all company policies for interacting with customers.

American salespeople have the added constraint that what’s illegal in the United States is illegal for them in other countries because of the Foreign Corrupt Practices Act, even if the behavior in question is acceptable to those countries’ laws and practices.

Sales managers have all the usual management concerns, such as fair hiring practices. According to the Federal Sentencing Guidelines, managers also have to develop policies and practices that codify ethical behaviors, train salespeople on the ethics policies, and ensure that the policies are followed. In addition, sales managers have to be aware of laws such as the Universal Commercial Code and others that govern sales transactions.

LEARNING OBJECTIVES

Identify the ways in which the marketing function supports the sales function.

Describe how the sales group of a company can support its marketing efforts.

MARKETING SHORTENS THE SALES CYCLE

A company’s marketing activities include:

Creating advertising and promotional campaigns

Participating in trade shows

Preparing collateral (printed or digital material salespeople use to support their message).

Lead management: the process of identifying and qualifying leads in order to grow new business.

Closed-loop lead management systems: information systems that are able to track leads all the way from the point at which the marketer identifies them to when they are closed.

CLOSED-LOOP MANAGEMENT

MARKETING IMPROVES CONVERSION RATIOS

Lead Scoring: a process by which marketing personnel rate the leads to indicate whether a lead is hot (ready to buy now), warm (going to buy soon), or cold (interested but no immediate plans to buy).

Marketing personnel can also improve salespeople’s conversions by providing materials that help buyers make good decisions.

WHAT SALES DOES FOR MARKETING

Salespeople talk to customers every day. They are the “eyes and ears” of their companies and know what customers want.

Salespeople communicate market feedback. They are responsible for voicing their customers’ ideas and concerns to other members of the organization.

Salespeople monitor the competition. They also track the actions of their competitors, what customers buy, and enter the information into their firms’ CRM systems.

KEY TAKEAWAYS

Marketing personnel support a firm’s sales force by shortening the sales cycle and improving conversions. The sales cycle is shortened whenever a marketing activity or marketing communication either eliminates a prospect’s need to take a step in the sales cycle or speeds up the stages in the cycle. Marketing managers also create printed and digital materials called collateral designed to help persuade buyers.

Lead management and lead scoring are two other ways in which marketing professionals help their firm’s salespeople. If a closed-loop lead management is used, marketing managers can determine what tactics and messages works best and make sound marketing investments.

In turn, salespeople support marketing personnel by communicating their customers’ needs and ideas back to them. Salespeople are also the first to spot the actions of competing firms, including which companies and products are the strongest competitors. The marketing department then uses the information to create better marketing messages, sales strategies, offerings, or a combination of the three.

LEARNING OBJECTIVES

Identify the primary types of outsourcing salespeople.

Characterize the strengths and weaknesses of outsourcing sales groups.

TYPES OF OURSOURCED SALESPEOPLE

Companies can outsource all or part of the sales cycle.

Independent agents: salespeople who are not employees of the company.

They set their own hours.

They determine their own activities.

They are paid on a straight commission basis.

Independent agents often sell competing products.

Manufacturer’s representatives: agents that sell a manufacturer’s product.

They don’t sell competing products.

ADVANTAGES AND DISADVANTAGES OF OUTSOURCING

KEY TAKEAWAYS

Outsourcing the sales function can be done through distributors, independent agents, and manufacturers’ representatives, as well as other types of sales organizations. The entire sales cycle can be outsourced or only parts of it. Outsourcing can cost less and requires less investment than a company-employed sales force. Moreover, independent agents, distributors, and manufacturers’ representatives often have established relationships that make it easier for a company to enter and penetrate new markets.

Outsourcing the sales function(s) means that a company will lose some control over its sales activities. To counteract that loss of control, companies try to devise attractive compensation schemes, as well as effective marketing strategies for the independent sales organizations and people with whom they work. Companies also hire sales managers to manage the relationships with the outsourced sales staff.