Relationship Selling

RELATIONSHIP SELLINGGroup 7

Sales Management - Relationship Selling

OBJECTIVES Relate to the ideas put forward by the early quality practitioners See that quality now embraces the organization as a whole rather than

being the sole concern of manufacturing Understand how freer world trade is driving companies towards

accepting the need for quality in terms of their relationships with their customers and suppliers

Appreciate the role that is being played by just-in-time manufacturing in bringing about these changes

Understand the notion of reverse marketing and the change it is bringing about in the traditionally accepted roles of the field salesperson

Understand the notion of relationship selling as being the tactical marketing and sales key stemming from the adoption of reverse marketing 1st October 2013


FROM TOTAL QUALITY MANAGEMENT TO CUSTOMER CARE When the buyer moves on does the relationship end?

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Peter Drucker There is only one valid definition of

business: to create customers. It is the customer who determines

the nature of the business. Consequently, any business has

two basic functions:o marketing (customer orientation) o innovation.

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Gummesson ‘Customer focus’ not only

‘compels management to realize the firm’s primary responsibility – to serve the customer’, but also ‘to recognize that customer knowledge is paramount to achieving market orientation’.

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Zineldin The customer, individual or

organization alike, is at the center of the activities of the organization

The implication of being ‘customer oriented’ as the most important part component of relationship marketing and relationship selling.

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Edwards Deming Credited with guiding the Ford Motor Company (USA)

towards a sharp focus on quality, not just in manufacturing but in all of its operations, including selling

Henry Ford - ‘You can have any color that you like as long as it is black’

In the 1970s Deming formulated a mature theory of quality based upon his observations of Japanese manufacturing.

His theory revolved around 14 points of philosophical thinking and he is widely regarded as being the modern quality guru.

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This tactical thinking has now been replaced by the more mature and strategic view of total quality management (TQM) that dominates present-day thinking, not just in manufacturing, but in all areas of company activity.

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General Motors - Saturn Corporation

The Saturn project was pursued at a time when the general feeling was that US manufacturers lacked the ability to make world-class compact cars

Yet after four years on the market, Saturn had succeeded in building from scratch one of the strongest brands from the United States.

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Aaker The success of Saturn was not

due to any key program but due to the decision made creating a relationship between Saturn and the customer and the adoption of team approach for the manufacturing of the product.

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Taeger Early ideas of quality still tend to trigger mental

pictures more related to manufacturing than to the business of selling

The difficulty in measuring the success of the quality process in sales is that, even when the initial phase has passed, there are rarely any positive pointers that can be identified as having been improved as a result of the introduction of TQM as part of the philosophy of selling.

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Gronroos and Gummesson The traditional marketing mix approach is inadequate for

operating in line with the marketing concept appears to be based on the four Ps approach constituting a production-orientated definition of marketing and a reliance, at best, on mass marketing.

Gummesson argues that the marketing mix approach is supplier orientated as opposed to customer orientated he advocates that the 4Ps approach is narrowly limited to functions and is not an integral part of the total management process

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Harwood In order to succeed in their

search for new ways of gaining competitive advantage over rivals, sellers must now engage in building and maintaining long- lasting relationships with their customers.

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Companies are seeking to differentiate their products not only via the actual product by styling, packaging, brand image, quality and price benefits, but more at the level of the augmented product.

Added benefits such as sales support, guarantees and after-sales care that support purchase and consumption experiences are increasingly being provided.

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Stalk, Evans and Schulman Cite the case of Honda’s original

success in motorcycles resulting from the company’s distinctive capability in dealer management.

It trained all its dealers and their staff in these new management systems and supported them with a computerized dealer management information system.

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Walters and Lancaster Offer an alternative view: traditional

value chains begin with the company’s core competencies, whereas evidence suggests that modern value chain analysis reverses this approach and uses customers as its starting point.

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Zineldin IT tools should be used not only ‘to

provide relationship building credibility and opportunities’ but also ‘to enable marketers to keep their fingers on the customers pulse and respond to changing needs’.

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Nissan, the Japanese car manufacturer, saw that its market share was in decline.

It changed its organizational structure and company philosophy to reflect, as its first priority, the concept of customer satisfaction.

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Microsoft realized that the average person had little training or knowledge of computer software or programming.

It replaced technical jargon with easily understandable icons and graphical representations of the tasks to be done.

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Quality-led manufacturing is relevant to companies adopting a market-driven approach to TQM.

This leads to market-led quality that ensures customers perceive quality being built into both the product and the service component of the total product offering1st October 2013

Sales Management - Relationship Selling 1st October 2013


Market-driven TQM and the development of a total product quality for manufacturing and service companies are concepts upon which companies should focus.

As product parity is reached between different product offerings, so companies can gain a competitive advantage by increasing the total service component of their market offerings.

This is more than simply offering an after-sales service – it is a program of total customer care.

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From JIT to Relationship marketing

Relationship marketing absorb the TQM ideas of bringing together quality,marketing and customer service

Marketing activities that are aimed at developing and managing trusting and long-term relationships with larger customers.

A marketing strategy in which a company seeks to build long-term relationships with its customers by providing consistent satisfaction

For example: Starbucks

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Business Process Reengineering Thorough rethinking of

all business processes, job definitions, management systems, organizational structure, work flow, and underlying assumptions and beliefs

JIT technique used for business process reengineering For example: TOYOTA

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Relationship Marketing Relationship marketing focuses on the

long term contacts rather than a single transaction

TQM has become the integration of marketing orientation and production orientation

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Continued… Traditional marketing structures cannot

respond quickly enough to new segments within a market

Developing high-quality products should be a priority to enable companies to remain competitive

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Best Practice Benchmarking Aimed at achieving world class performance Formation of project team from multifunctional

areas such as marketing, production, quality and purchasing

Includes task of obtaining information about the products or companies

Team needs to be given the facility for research on product development and quality.

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Reverse Marketing Occurs where buyers take the initiative

and they source suppliers Example: Wal-Mart's Buyers source suppliers whom they can

retain for a long period of time Criteria looked after are: quality of goods

and reliability of their suppliers1st October 2013


From Relationship Marketing to Relationship Selling

Selling, tactical arm of marketing. Roles of marketing are changing, so are the

roles of selling. Penetration of worldwide market is becoming

increasing difficult. Dispersion of potential customers due to

abundance of channels

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Methods other than mass advertising ought to be given prominence.

Massive increase in competition and increasing choice.

Customers have become more sophisticated and demanding.

Brand loyalty difficult to maintain.1st October 2013


Effectiveness of ATL media diminishing so moving towards BTL media.

“Push” rather than “pull” becoming popular. Customer retention is the major objective. Businesses ought to stay adjacent to their

customers. Very important to know the consumer`s entire

value chain.1st October 2013


One of the tactics – Open Accounting• Complete open access is afforded• Buyer`s and sellers have access to each

other`s accounts.• Mutually agreed upon profit margins can

be set.• Only possible when long-term

relationship exists.

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Sales Management - Relationship Selling 1st October 2013


Tactics of Relationship Selling Customer retention can be achieved by:

1. Having full regards to customer needs2. Working to form long and trustworthy

relationship

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According to Berry: The means of applying the philosophy &

practice of marketing to people who serve external customers so that

1. The best possible people can be employed and retained

2. They will do the best possible work

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1. Traditionally: Buyers stay twice as long in their post when

compared to their seller counterparts.2. Strong new opinion: Under relationship selling circumstances the

time individual salesperson spend in a particular post will move towards that of their purchasing counterparts.

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Buyer SellerMore ‘Sedate’ lifestyle ‘on the road’ lifestyle

Settled Quite hectic

Difficult life if reverse marketing is undertaken

Comparatively simpler life incase of reverse marketing(focus on

long-term goal of customer retention)

Pressure of effective purchase Pressure to sell in terms of reaching sales targets and quotas

in a given period1st October 2013


According to Reichheld and Schefter

Virtuous circle: This approach is placed on the

mechanisms which motivates employees as highly as possible

Training programs enables employees to do their jobs to the best of their abilities

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Qualities of normal salesperson Qualities of relationship salesperson

Communication skillsPersonalityDetermination

DeterminationSelf-motivationResilience & tenacity

IntelligenceMotivation/ self-motivationProduct knowledge

Whilst still important when establishing long-term relationships

Educational backgroundConfidenceAppearance &self disciplineResilience & tenacity

AcceptabilityAttention to detailsGeneral ability to get along with people in long-term basis

Business senseIntegrityAmbition

Able to work together in a team with members of both buyers and sellers team

AcceptabilityEmpathyInitiative

Liking a particular salesperson will positively affect a buyer’s attitude towards the products he suggests

ExperienceAdaptabilityPersuasiveness

PG: 314, Research by Kinniard

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Two Important Aspects of Selling

Information gathering Servicing

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Information Gathering

Company’s Marketing

Information System (MkIS)

Market Researc

h

Strategic Marketing Plans

Company

Internal Accounti

ng System

Market Intellige

nce

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Benefits of Information Gathering for Relationship Selling1. Reducing selling costs achieved through

using information derived from the MkIS. New business response provides information to improve future targeting and, through experience of what works and what does not, improves the productivity of subsequent advertising and sales promotion.

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Contd:2. More sales per customer, achieved through using

customer case histories leading to: Better identification and categorization of customers Better segmentation and targeting Better presentation and relevant offers

3. Superior business forecasting achieved by: Using past performance as a guide to future performance Because the errors in past activities need not be repeated,

efficiency should be subject to continuous improvement (control)

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Servicing Area in which the role of salesperson will become

invaluable Serving customers on a highly individualistic basis Employee retention is essential for profitability

(Reichheld, Mirkey & Hopton) Personal values of ‘achievement’, ‘self-direction’, ‘self-

respect’, & ‘self-accomplishment’ were the key factors of successful salespeople. These social values could enhance the requirement and selection of salespeople. (Swenson & Herche)

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Conclusion Comparison of current trends and future

changes within the selling function. Movement towards relationship selling from

TQM JIT Reverse marketing Sales tactics delivers relationship marketing

strategy to the company and to the customers1st October 2013


Thank You

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Relationship Selling

Sales

Transcript of Relationship Selling