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    Chapter 5 Chapter 5 Presentation Transcript

    • Part Three: Analyzing Customers and Markets Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Business-to-Business (B2B) Sales and Customer Relationship Management Chapter 5 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
    • Understanding B2B Purchasing Decisions
      • Personal relationship skills
      • Highly skilled sales force
      • Constant support from other functional groups, especially sales managers
      • Information technology system that’s easy to use and gives accurate and near-real-time information
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Buyer Decision-Making Process Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Problem Recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase Evaluation
    • Organizational Buying Situations Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Straight Re-Buy
      • Buying firm moves directly from need recognition (Step 1) to ordering (Step 5)
      Modified Re-Buy
      • Purchase of a product or service that is currently being bought, but buyer is considering different vendors or product changes
      New Buy
      • Occurs when a complex or expensive product is purchased for the first time
    • The Buy-Grid Framework: Participation in the Buying Stages of the B2B Buying Process Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Buying Stages New Buy Modified Re-Buy Straight Re-Buy 1. Recognize problem Yes Perhaps No 2. Determine product characteristics Yes Perhaps No 3. Determine product specifications Yes Yes Yes 4. Search for suppliers Yes Perhaps No 5. Evaluate proposals Yes Perhaps No 6. Select supplier Yes Perhaps No 7. Specify quantity needed Yes Yes Yes 8. Review the supplier/product performance Yes Yes Yes
    • Understanding the Buyer’s Criteria
      • A multi-attribute matrix is used to evaluate vendors by assigning an importance weight to categories like price, product conformance, delivery time, and manufacturing capacity
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Attribute Weight Vendor A Vendor B Quality .5 9 = 4.5 7 = 3.5 Delivery .3 8 = 2.4 9 = 2.7 Customer Service .2 10 = 2.0 8 = 1.6 Totals 1.0 8.9 7.8
    • Buying Center, or Group, Purchases: Roles of the Decision-Making Unit
      • Initiator: starts the purchase process by recognizing a need
      • Decision maker: person/committee that makes the final decision
      • Purchaser: any person who actually buys the product
      • Controller may approve or set budget for purchase
      • Influencers: individuals who affect the decision maker’s final choice through recommendations about which vendors to include or which products will best meet needs
      • Users: their jobs require that they implement and evaluate what was purchased
      • Gatekeepers: control information
        • Screens and filters
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Self-Assessment Library
      • Go to http://www.prenhall.com/sal/
        • Access code came with your book
      • Click the following
        • Assessments
          • II. Working with Others
            • A. Communication Skills
              • 2. How Good Are My Listening Skills?
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • B2B Customer Relationship Management (“CRM”) Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Customer Relationship Management
      • Identifying and grouping customers in order to develop an appropriate relationship strategy
      • So the organization can acquire, retain, and grow the business
    • Technology in Sales Management
      • Technology can help ensure a firm’s sales are profitable
      • Programs analyze orders for profitability as they are placed
      • Companies are dropping losing product lines and unprofitable customers
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Data Mining
      • Companies data mine information collected in CRM databases
        • Purchase dates, incentives offered the customer, product/services purchased, selling price, the buyer’s position in the organization, number of rep visits between buys, and samples and promotional materials requested
        • Allows identification of important relationships or “connections” that might not be readily apparent
        • Can conduct competitive analyses that result in higher sales revenues, lower order entry errors, and increased acquisition of new customers
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Customer-Centric Sellers
      • CRM technology helps firms become more market- or customer-oriented
      • Firms practice a market orientation when business processes and functions are aligned to maximize effectiveness in the marketplace
      • A market-oriented selling firm places the buyer at the center of all of the strategic decisions
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • The Nature of B2B Relationships Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Integrative Relationships
      • Significant relationship where selling firm becomes the buyer’s key supplier
      • Buyers and sellers trust one another and cooperate to reduce costs and advance their mutual goals
      Facilitative Relationships
      • Trust and cooperation between buyers and sellers is better and can create value for both parties
      Transactional Relationships
      • Buyer-seller relationship can be “adversarial” when either party views the situation from a purely economic [$$] perspective
    • Differences in Key Variables Based on Stage of Relationship Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Relationship Transactional Facilitative Integrative Trust Little trust Increasing trust Broad trust Communication Buyer-seller “bow tie” A few depts begin communicating Direct communication between all depts Value “ Win-Lose” Buyer: lower prices Seller: lower costs “ Win-Win” for both Commitment Little expectations beyond current contract Growing commitment by buyer & seller Long-term expectations of partnership Feedback Little expectation of feedback Growing acceptance of feedback Honest feedback expected and sought Sales programs Little opportunity to cross-or up-sell May switch to inside salesperson Expansive opportunity to cross- or up-sell Profits Little concern for supplier profits More concern Acknowledgement that supplier must make reasonable profit Competitive advantage Little other than current buy Growing competitive advantage Customized offering
    • Global Sales Management: Forming Business Relationships in Other Cultures
      • In many cultures around the world, it takes years to form a relationship with a person one does not know
      • In Japan, for example, the process of forming relationships requires a significant amount of effort “proving” to your Japanese customers that you can be trusted to provide them with the products or services they need to keep their businesses running
        • Socializing (going out for karaoke, dining, talk, etc.) allows the Japanese to see the “character” of the gaijin (foreigner)
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Customer Lifetime Value (CLV) Strategies
      • Customer lifetime value: profitability of partnering with a buyer for an extended period of time
      • The 3 criteria to compute CLV (future customer profitability)
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Probability of future purchases 1 Future marketing costs 2 Future contribution margins 3
    • Computing CLV Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Planning Sales Strategy Based on CLV Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Low % of Purchase Share High % of Purchase Share High Lifetime Earning Value Frequent sales force visits Monthly visits Direct mail/telemarketing Optimal contact: biweekly High potential customer value Constant sales force interaction Weekly visits Direct mail/telemarketing Optimal contact: weekly Highest customer value Low Lifetime Earning Value Extended sales force visits Yearly intervals Direct mail/telemarketing Optimal contact: quarterly Low value customer Infrequent sales force visits 6-month intervals Direct mail/telemarketing Optimal contact: bimonthly Low potential customer value
    • The Stages of B2B Customer Relationship Management Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Up-sell / cross-sell to existing customers 1 Manage customer relationships to earn higher profits 2 Offer customized solutions to most profitable buyers 3
    • Inspiring Your Team Members to Build Business Relationships
      • According to a recent Sales & Marketing Management ® article:
        • B2B salespersons are becoming strategic advisors
          • Point of differentiation is ability to form successful relationships
        • How can sales managers inspire their sales team to form genuine relationships?
        • Sales managers must help salespersons make “REAL” connections
          • R elease the outcome
            • The end result does not define the salesperson
            • Best to focus on what is learned during the sales process
          • E motions
            • Connect emotionally to the buyer’s reason to purchase
            • Important to express empathy
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Inspiring Your Team Members (continued)
        • A ccountability
          • Easy to identify a goal; harder to commit to achieving
          • Sales manager should set goals and communicate their progress
          • Discuss importance of accountability with team members
        • L ikeable
          • Inspire team members to see themselves from buyer’s perspective – assess their behaviors
          • Get team members to think positively and congratulate themselves for expanding their comfort zones
        • First and most important step in building relationships must come from within!
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Maximizing the Buyer’s Value Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Benefits Costs Functional Benefits + Emotional Benefits Monetary Costs + Time Costs + Energy Costs + Psychic Costs = Value… Increase value by Increasing benefits 1 Decreasing costs 2 Both 3
    • Risk and the Organizational Buyer
      • Easiest and least expensive way to reduce risk is by sharing information
        • CRM system provides common information within the sales organization that can improve the probability of higher customer service levels
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Why Business Relationships End
      • Partner is too complacent
      • Goals no longer a match
      • Cultures have diverged
      • 1 or both parties have behaved irresponsibly
      • Etc.
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Discussion Questions
      • How can a sales manager minimize the loss of a valued customer?
      • Should the sales manager intervene or should the assigned salesperson try to salvage the relationship?
      • What influence does trust have on customer dissatisfaction?
      • How does a company instill trust in the relationship strategies?
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Sales Manager’s Workshop: Adjusting the Territory Sizes within a Sales District
      • You are sales manager for a district with 5 sales reps assigned to geographic territories
      • Some territories are growing
        • Several reps don’t have time to properly call on new customers while serving old
      • Other territories are stagnant
      • Adjust the sizes of the territories, using appropriate criteria
        • Using Applicor data, compare sales revenue, potential, number of accounts per territory to analyze current workload for each territory
        • Recommend appropriate changes
      Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5-
    • Business-to-Business (B2B) Sales and Customer Relationship Management Chapter 5 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 5- Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.