Formulation of a Sales Program

Part 1

3 Linking Strategies and the Sales Role in the Era of Customer Relationship Management

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

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FinanceR&D

Mfg

ITHR

Mkg

Sales

CRM CommonCause

Cross-functional meetings

Sales’ adoption of marketing concepts Hire

excellent sales employees

Integrating Sales w/ Other Functions

Source: HR Chally Group (2007) The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.

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Understand key components and goals of CRM

Explain importance of market orientation and how it is fostered

Identify key steps in developing and implementing strategies

Describe role of personal selling in marketing strategy

Outline stages in developing strategic partnership relationships

Discuss actions salespeople can take to ensure long-term buyer-seller relationships

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Customer Relationship Management (CRM)

Comprehensive business model for increasing revenues and profits by focusing on customers

Overarching business philosophy and process tool to facilitate a customer-driven enterprise

Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd

Example of CRM SoftwareSales and Marketing Module

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Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd

Example of CRM SoftwareSupport Helpdesk Module

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Customer Orientationprice

promotion

distribution

product Marketing Mix

Personal selling, sales promotion, advertising, direct marketing, public relations

Marketing ConceptMarket Orientation

Customer Orientation

Customer

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Customer-Centric Cultures

Partnership business model with shared risks and rewards

Selling as customer business consultation

Formalized customer analysis processes and agreements

Proactively educating customers about value chain and cost reduction opportunities

Focus on continuous improvement principles stressing customer satisfaction

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Marketing evolution with characteristics and technology attributes

3.1 Source: Ronald S. Swift, Accelerating Customer Relationships: Using CRM and Relationship Technologies (Upper Saddle River, NJ: Prentice Hall PTR, 2001), p. 38.

Marketing Evolution

1960 1980 2000+1900Mass MarketingEvolved in the early 1900s and dominated marketing management for decades

Target MarketingIn the ‘60s, many firms began to apply the principles of segmentation to different customer groups

One-to-One MarketingTechnology allows firms to customize offerings to individual users

Customer MarketingIn 1980, the focus shifted towards developing customer relationships

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Objectives of CRM

Customer Retention Customer Acquisition Customer Profitability

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Advantages of CRM Reduces advertising costs Increases awareness of customer

needs Tracks effectiveness of promotional

campaigns Competition for customers based on

service, not prices Prevents over-spending on low-value

clients, under-spending on high-value ones

Speeds time to develop and market a product

Improves use of customer channel

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The CRM process cycle

3.2 Source: Ronald S. Swift, Accelerating Customer Relationships: Using CRM and Relationship Technologies (Upper Saddle River, NJ: Prentice Hall PTR, 2001), p. 40.

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3.1 Sales Process Software CRM products - coordinate sales

processes, improve bottom line 2001 – more than 55% CRM products

failed to meet expectations 2007 – approximately 1/3 miss the

mark CRM software

Only as good as established procedures Desktop or hosted server

Package selection Company size Needs Budget

Source: “Making Sense of Sales,” BusinessWeek, Spring 2006, www.businessweek.com.

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10 Critical Questions in CRM

Customers Who are our customers? What do our customers want and expect? What is the value potential of our customers?

The Relationship What kind of relationship do we want to build? How do we foster exchange? How do we work together and share control?

Managerial Decision Making Who are we? How do we organize to move value closer to our

customers? How do we measure and manage our

performance? How do we increase our capacity for change?

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3.2 CRM Failures Often Management’s Fault

Lack of focus No change management

initiative Minimal buy-in Business unit silos Complicated procedures Poor training

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Market Orientation

Successful salespeople think beyond “selling”

Market-driven companies do better market sensing

Market-driven companies develop stronger relationships with customers and channels

Internal partnering a critical component

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Source: George S. Day, “Capabilities of Market-Driven Organizations,” Journal of Marketing 58 (October 1994), pp. 37–52. Reprinted by permission of the AmericanMarketing Association.

Classifying capabilities of market-oriented firms

3.3

Strategy DevelopmentAnswers the most basic questions about an

organization’s reason for

beingFlow from

the company’s

mission, represent

more specifictargetsSpecific,

measurable, and

realistically attainable

Mission

Goals

Objectives

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Soul of Dell

Statement of Dell’s corporate philosophy Who we are, aspire to become Guides actions Basis for “winning culture’

Core elements focus on Customers Dell team Direct relationship

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SBU Strategy How the business will compete in

its industry to achieve sustainable competitive advantage (SCA)

SCA focuses on distinctive competencies

Porter’s Three Generic Strategies: Low Cost Differentiation Niche

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3.3 HP’s New Simple Compaq

HP’s dilemma Compaq losing market share Drop the brand?

HP’s solution Reposition brand for future Message – “Compaq just gets the

job done.” Design

Simple, minimalist Monochromatic, smooth No bells and whistles Very functional

Source: Louise Lee, “Hewlett-Packard’s New, Simple Compaq,” BusinessWeek (August 16, 2007), www.businessweek.com.

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Source: Adapted from William L. Cron and Michael Levy, “Sales Management Performance Evaluation: A Residual Income Perspective,” Journal of Personal Selling &Sales Management 7 (August 1987), pp. 57–66.

Generic business strategies and their implications for the sales force

3.4a

Porter’s TypologyBusiness Strategies Sales Force Implications

Low-cost Supplier Large customers, prospectsSell on priceSignificant order-taking responsibilities

Differentiation Sell non-price benefitsHigh-quality serviceLow price-sensitivity customers

Niche (or focus) Expert in target market operations and opportunitiesNon-price benefits

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Source: Adapted from William L. Cron and Michael Levy, “Sales Management Performance Evaluation: A Residual Income Perspective,” Journal of Personal Selling &Sales Management 7 (August 1987), pp. 57–66.

Generic business strategies and their implications for the sales force

3.4b

Miles & Snow’s TypologyBusiness Strategies Sales Force Implications

Prospector Sales volume growthCustomer penetration and prospecting

Defender Current customer baseLittle prospectingCustomer service, account penetration

Analyzer ServiceProspectingNew applicationsMature product distributionNew product campaign support

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3.5Steps in developingand implementingstrategies

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3.6Types ofrelationships betweenbuyers and sellers

Source: Barton Weitz, Stephen Castleberry, and John Tanner, Selling: Building Partnerships, 6th ed. (New York: Irwin/McGraw-Hill, 2005).

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Personal Selling’s Role in Market Exchanges

Definition - one-shot transactions occurring between a buyer and seller with limited thought of future consideration

Roles of salespeople Create new value Adapt “Make the market” Exit

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Personal Selling’s Role in Functional Relationships

Definition - create a climate of cooperation, with open and honest communication

Roles of salespeople Engender high level of personal

trust in well managed business activities

Provide expertise for competitive advantage

Danger when one party in the relationship leaves

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Personal Selling’s Role in Strategic Partnerships

Definition - long-term relationships where both parties make significant investments

Roles of salespeople Direct communication with

production, production designers, and others

Relationship manager and general manager

Work with clients large enough to make investments worthwhile

Relationship Development

Stage 1Exploration

Stage 2Expansion

Stage 3Commitment

Determine value, build trust, set proper expectations, monitor

Generate repeat sales, full-line selling, cross-selling

Build loyalty, become a preferred supplier, engage in TQM

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Integrated Marketing Communication (IMC)

Integrates personal selling, advertising and other communications options

Advantages of selling in IMC Face-to-face contact More persuasive More demonstrative Customization opportunities

Disadvantages of selling in IMC Limited ability to duplicate More costly

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Factors influencing the role of personal selling in a firm’s IMC strategy3.7

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3.8Illustrative factorsthat influence thedesign of IMCstrategy

Source: Adapted from David W. Cravens and Nigel F. Piercy, Strategic Marketing, 8th ed. (New York: Irwin/McGraw-Hill, 2005), p. 348.

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Customer Feedback Maintaining customer loyalty is

crucial for improving profitability Loyal customers. . .

Tend to concentrate on purchases Provide positive customer referrals May pay premium prices for value they

receive Supplement satisfaction measures

with examinations of customer behavior

Annual retention rate Frequency of purchases Percentage of the customer’s total

purchases captured by the firm

3-37Source: Jeff Thull, “Selling in Era 3: How to Leverage Value to Win—and Keep—Profitable Customers,” The American Salesman, January 2004, p. 12

Era 11950-75

Era 21975-95

Era 31995-

Economy Unlimited expansion

Globalization, more suppliers

Overcapacity

Customer View

Open to ideas, willing to spend

Choices, sophistication

Overwhelmed w/choices, complex problems

Sales Role Persuader, sometimes manipulative

Problem-solver, consultant

Process analyst, project manager

Challenge Customer “wised-up”

Some customers may not know own needs

Create revenue-building solutions beyond customer expertise

Create value to provide customers with competitive advantage

3.4 Leveraging Value in Era 3