ch04 - account relationship management

Part II

SALES FORCE ACTIVITIES

Part II

SALES FORCE ACTIVITIES

Chapter 4:Chapter 4:

Account Account Relationship Relationship ManagementManagement

The Key Aspects of The Key Aspects of Business-to-Business Business-to-Business

RelationshipsRelationships

AccountAccountPurchasingPurchasing

ProcessProcess

AccountAccountPurchasingPurchasing

ProcessProcess

Figure 4-1:Figure 4-1: Account Relationship Management Concepts Account Relationship Management Concepts

The The BuyingBuyingCenterCenter

The The BuyingBuyingCenterCenter

BuildingBuildingAccountAccount


BuildingBuildingAccountAccount


AccountAccountRelationshipRelationship

BindersBinders

AccountAccountRelationshipRelationship

BindersBinders

Account Relationship Account Relationship Management ConceptsManagement Concepts

(1) The Purchasing (1) The Purchasing ProcessProcess

ImplementationImplementationand Evaluationand Evaluation

ImplementationImplementationand Evaluationand Evaluation

Value Added Role of Sales Force:Value Added Role of Sales Force:

Figure 4-2:Figure 4-2: The Typical Purchasing ProcessThe Typical Purchasing Process

PurchasePurchaseDecisionDecisionPurchasePurchaseDecisionDecision

Evaluation Evaluation of Optionsof OptionsEvaluation Evaluation of Optionsof Options

RecognitionRecognitionof Needsof Needs

RecognitionRecognitionof Needsof Needs

Help customersrecognize a needor problem and to define them in a new or differentway.

Identify options, provide superior solutions and approaches and help overcome obstacles to acquisition

Make the purchasing process convenient, hassle-free and inexpensive.

Support the purchase decision by showing customers how to install and use the product, replenish, and evaluate value.

Evidence from the real Evidence from the real world regarding account world regarding account

purchasingpurchasing

(% of respondents)

PURCHASING - Survey PURCHASING - Survey ResultsResults

YesYes55%55%

9%9%N.A.N.A.NoNo

16%16%

YesYes84%84%

NoNo36%36%

(% of respondents)

Do you track Do you track supplier supplier

performance?performance?

Do you track Do you track supplier supplier

performance?performance?Do you single Do you single

out certain out certain suppliers as suppliers as “preferred”?“preferred”?

Do you single Do you single out certain out certain suppliers as suppliers as “preferred”?“preferred”?


YesYes51%51%

9%9%N.A.N.A.

NoNo40%40%

(% of respondents)

Do you have Do you have multiple tiersmultiple tiersfor ranking for ranking suppliers?suppliers?

Do you have Do you have multiple tiersmultiple tiersfor ranking for ranking suppliers?suppliers?

YesYes77%77%

NoNo23%23%


(% of respondents)

Have any Have any suppliers suppliers

attained and attained and lost top-level lost top-level

status?status?

Have any Have any suppliers suppliers

attained and attained and lost top-level lost top-level

status?status?

0 5 10 15 20 25 30

Traits of Top-Performing SuppliersTraits of Top-Performing Suppliers(% of respondents)


<5%

5%

7%

8%

12%

14%

28%

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . Others

. . . . . . . . . . . . . . . . . . . . . . . . . . . . Good

Management

. . . . . . . . . . . . . . . . . . . Good

Response/Flexibility

. . . . . . . . . . . . . . . . . . . . ISO 9000

Certification

. . . . . . . . . . . . . . . . . . . . . . . .

. Service

. . . . . . . . . . . . . . . On-Time

Delivery

Quality

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . Others

. . . . . . . . . . . . . . . . . . . . . . . . . . . . Good

Management

. . . . . . . . . . . . . . . . . . . Good

Response/Flexibility

. . . . . . . . . . . . . . . . . . . . ISO 9000

Certification

. . . . . . . . . . . . . . . . . . . . . . . .

. Service

. . . . . . . . . . . . . . . On-Time

Delivery

Quality

TierTier Type of Type of SupplierSupplier

Nature of the RelationshipNature of the Relationship

1 In Traditional “arms length” relationship, usually established at an individual level over time. Standardized, non-strategic, products for which there are may qualified suppliers.

2 Preferred Relationship centers on suppliers’ products and services, but there is a high level of familiarity and trust between the supplier and the customer.

3 Extended The relationship typically involves a breadth of products and services and usually crosses numerous sites. Usually involves several collaborative processes – product design, inventory management, sales force training, etc. Supplier is viewed best in class.

4 Partner Supplier is viewed as key to the customer’s ongoing competitive position. The business relationship is rarely challenged and is treated as exclusive along some dimension, critical along other dimensions, and , in general, special.

Figure 4-3:Figure 4-3:

Tiering of SuppliersTiering of Suppliers

Some important points Some important points regarding the saleregarding the sale

Determine the Determine the Decision-Making ProcessDecision-Making Process Nothing is more important to driving an

accurate selling strategy than understanding your client’s decision-making process.

Project teams typically have a well-defined evaluation process, but not a well-defined decision-making process.

In the law of algebraic democracy, some people’s votes count more than others.

– Know who gets a straw vote and who gets a real one.

Determine the Determine the Decision-Making ProcessDecision-Making Process A salesperson must understand how a decision

will be reached even more clearly than the client does.

You must also understand the approval process once you’ve been chosen.

Analyze each stakeholder based on pain, preference, power, and the part he or she plays in the decision-making process.

Don’t resort to price or discounts to create a sense of urgency.

– In negotiation, power lies in alternatives, weakness in deadlines.

(2) The Buying (2) The Buying CenterCenter

Buying Center MembersBuying Center Members

MARKETING When a purchasing decision has an effect on the marketability of a firm’s product, such as altering the product’s materials, packaging, or price.

MANUFACTURING

Manufacturing is responsible for determining the feasibility and economic considerations of producing end products.

RESEARCH AND DEVELOPMENT

Is involved in the initial development of products and processes and set broad specifications for component and materials criteria, minimum end-product performance standards, and occasionally manufacturing techniques.

GENERAL MANAGEMENT

Top management is likely to be involved when the purchase situation is unusual for the firm or when the decision is likely to have major consequences on the firm’s operation.

PURCHASING Purchasing agents are specialists who have negotiation expertise, knowledge of buying products, and close working relationships with suppliers. They tend to become most involved in the purchasing situation in the later stages of a “new buy” situation. Are generally the dominant decision makers in repetitive buying situations.

Economic Buying Economic Buying InfluenceInfluence

ROLE: Asks “Why”Gives final approval

CHARACTERISTICS: Access to moneyCan release moneyVeto power

FOCUS: Total organizationBottom lineThe Future

User Buying InfluenceUser Buying Influence

ROLE: To decide on how a purchase will affect jobperformance

CHARACTERISTICS: Implementation orientedUse or supervise use of

product or service

FOCUS: Tactical, not strategicThe job to be performed

Technical Buying Technical Buying InfluenceInfluenceROLE: To eliminate alternatives

To recommend

CHARACTERISTICS: Focuses on quantifiableaspects of product andservice

GatekeeperCan only say “no,”

not “yes”

FOCUS: Product specificationsAsks “What,” not “Why”

AdvocateAdvocate

ROLE: Helps guide the sale

CHARACTERISTICS: May be inside or outside of the buying

organizationFurnishes and interprets information

FOCUS: Your success

AdvocateAdvocate::Why Your “Winning” is a Personal Why Your “Winning” is a Personal “Win”“Win”PERSONAL Wants you to win because they know

you, they like you, and they’d like to see you be successful.

PROFESSIONAL Wins by doing their job better, achieving their goals, and helping their companies meet objectives.

RECOGNITION Wins by receiving recognition from their own organization.

NEGATIVE Really wants someone else to lose.

AdvocateAdvocate::Ways in Which an Advocate can Ways in Which an Advocate can HelpHelp Recommend selling strategies.

Build a groundswell of interest.

Refer you to other advocates.

Review your presentation.

Gain access to decision-makers.

(3) Building Account (3) Building Account Relationships Relationships

RelationshiRelationship Stagep Stage DescriptionDescription Key Selling ObjectivesKey Selling Objectives

AWARENESS Recognition that a supplier may be able to satisfy an important need.

Gain customer’s attention Demonstrate how the

product/service can satisfy a need

EXPLORATION

A tentative, initial trial with limited commitments by both parities. This trail period may go on for an extended period of time.

Gain initial acceptance. Build a successful relationship.

EXPANSION Expanding the rewards for each

party in the relationship

Get to know customers and their businesses better.

Expand ways to help the customer.

COMMITMENT The commitment by both the buyer and seller to an exclusive relationship

Interaction at levels between the buyer’s and seller’s organizations.

Early supplier involvement in development process.

Long-term focus to the relationship.

DISSOLUTION Total disengagement from the relationship. This may occur at any point in the relationship.

Look for warning signals. Attempt to reinitiate the

relationship.

Figure 4-4:Figure 4-4: Stages in a Buyer-Seller Stages in a Buyer-Seller RelationshipRelationship

Business Expansion QuestionsBusiness Expansion QuestionsEXISTING USE

What limits current operations? What makes them more difficult than they need

to be? Which of these are most important? What do managers see as their worst problems?

POSSIBLE NEEDS

What do managers need to make their operations better?

What do they want to make their life easier and more pleasant?

POSSIBLE SOLUTIONS

What does the client think might be possible? Which do they favor?

POSSIBLENEW USES

What new operations do they believe might be possible?

Which do they favor?

DECISION CRITERIA

In supporting any solution, what would the business and personal criteria be?

ConsiderationsConsiderationsWhen Choosing a PartnerWhen Choosing a Partner

POTENTIALFOR IMPACT

Is there some real value for both parties that can come out of partnering that could not be achieved from a traditional supplier relationship?

COMMON VALUES

Is there sufficient commonality of values? In particular, it is important that both companies be ethical and look at quality and the quality process similarly.

GOOD ENVIRONMENT FOR PARTNERING

How does each party look upon the partnership long-term relationship versus profit on the sale, future oriented or present? Are there frequent interaction and transactions between the two companies?

CONSISTENCY WITH SUPPLIER’S GOALS

Is a partnering relationship with this customer consistent with our own product and market strategy, and with our overall direction as a company?

Dissolution Stage: Warning Dissolution Stage: Warning SignalsSignals

Missing information Uncertainty about information Uncontacted buying influence Customer personnel new to the job Reorganization

(4) Account (4) Account Relationship BindersRelationship Binders

Account RelationshipsAccount Relationships

Relationship EnhancersRelationship Enhancers

Creating Value:Acceptable conduct and performance

Meeting Expectations:Measures of performance levels

Building Trust:Importance of trust

High

Customer

Value

Low

Figure 4-5:Figure 4-5: Customer Value Creation in the Purchasing ProcessCustomer Value Creation in the Purchasing Process

Customer Value CreationCustomer Value Creationin the Purchasing in the Purchasing ProcessProcess

Recognitionof Needs

Evaluation of Alternatives

Purchase

Decision

Implementation

and Evaluation

Accuracy of Accuracy of Salespeople’sSalespeople’sCustomer Perceptions Customer Perceptions Measures of Performance LevelsMeasures of Performance Levels Number of sales calls per year Advance notice on price change (days) Average lead time for custom products (days) Acceptable delay for custom products (days) Acceptable delay for stock items (days) Minimum acceptable fill rate for stock items

(%) Hold inventory for project delays (days) Premium for emergency order (%)

ResultsResults Salespeople’s estimates of expected performance

levels are not very accurate (average of 50% error).

The performance of individual salespeople was directly related to the accuracy of their estimates.

Telemarketers were more accurate in their estimates of performance expectations than outside salespeople.

Salesperson age and industry experience level were inversely related to performance expectation accuracy.

The amount of sales training a salesperson received was directly related to their estimate accuracy.

Accuracy of Accuracy of Salespeople’sSalespeople’sCustomer Perceptions Customer Perceptions

Research has established that trust facilitates cooperation. A recent experiment demonstrated that when a seller was expected to be more trustworthy, there was also a higher level of buyer-seller cooperation.¹

Once a salesperson has gained customer trust, the role of the salesperson changes to less emphasis on sales and more on service.²

Once trust is gained, the customer:– Becomes more cooperative;– Becomes more receptive to suggestions;– Allows more time for sales presentations;– Allows more access to other people in the organization; and– Informs the salesperson about future buying needs.²

¹Paul Schurr and Julie Ozanne (1985), “Influences on Exchange Processes: Buyers’ Perceptions of a Seller’s Trustworthiness and Bargaining Toughness,” Journal of Consumer Research,11 (March), 939-953.²John Swan and Frederick Trawick,Jr. (1987), “Building Customer Trust in the IndustrialSalesperson: Process and Outcomes,” Advances in Business Marketing, 2, 81-113.

The Importance of TrustThe Importance of Trust Selected Research FindingsSelected Research Findings

Trust Trust Earning Earning ComponentsComponents Sample QuestionsSample Questions

LIKEABLE “The manufacturers’ rep is an individual who people enjoy knowing.”

COMPETENT “The manufacturers’ rep knows what he/she is talking about.”

DEPENDABLE “The manufacturers’ rep is very dependable.”

CUSTOMER ORIENTED

“The manufacturers’ rep puts the buyer’s interest ahead of his/her own.”

HONEST “The manufacturers’ rep is one of the most honest persons in the business.”

Earning Buyer TrustEarning Buyer TrustWhat is Most Important?What is Most Important?

Source: Hawes, Mast & Swan (1989) JPS&SM: 193 Salespeople; 173 Purchasing Agents

Account RelationshipsAccount Relationships

Relationship Enhancers Earning Buyers Relationship Enhancers Earning Buyers TrustTrustTrust Earning Trust Earning ComponentsComponents Sales PeopleSales People BuyersBuyers

LIKEABLE 5 5

COMPETENT 2 2

DEPENDABLE 1 1

CUSTOMER ORIENTED 3 3

HONEST 4 4

ch04 - account relationship management

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