Chap 5 Tanner - B2B & CRM

Part Three:
Analyzing Customers and Markets
5-1
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Sales Management: Shaping Future Sales Leaders
Business-to-Business
(B2B) Sales and Customer
Relationship Management
Chapter 5
5-2
Learning Objectives
 Recognize how people make organizational purchasing
decisions
 Describe and explain the three buying situations
 Identify the different roles played by buying center members
 Understand individual forces that influence the B2B buying
process
 Comprehend how buyer-seller relationships are established
and maintained
 Explain success factors that apply to buyer-seller relationships
 Discuss seller performance factors that lead to successful
customer relationships
5-3
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
5-4
The Buyer’s Decision-Making Process
Problem Information Evaluation of Purchase Postpurchase

Recognition Search Alternatives Decision Evaluation
5-5
Organizational Buying Situations
 Occurs when a complex or expensive product is

New Buy purchased for the first time
 Purchase of a product or service that is currently

Modified Re-Buy being bought, but buyer is considering different
vendors or product changes
 Buying firm moves directly from need recognition

Straight Re-Buy (Step 1) to ordering (Step 7)
5-6
The Buy-Grid Framework: Participation in the
Buying Stages of the B2B Buying Process
Buying Stages New Buy Modified Re-Buy Straight Re-Buy

1. Recognize problem Yes Perhaps No
2. Determine product
Yes Perhaps No
characteristics
3. Determine product
Yes Yes Yes
specifications
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
Yes Yes Yes
performance
5-7
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
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
5-8
Buying Center, or Group, Purchases:
Roles of the Decision-Making Unit
 Initiator: starts the  Influencers: individuals
purchase process by who affect the decision
recognizing a need maker’s final choice
through recommendations
 Decision maker: about which vendors to
person/committee that include or which products
makes the final decision will best meet needs
 Purchaser: any person  Users: their jobs require
who actually buys the that they implement and
product evaluate what was
 Controller may approve or purchased
set budget for purchase  Gatekeepers: control
information
 Screens and filters
5-9
Team Selling and Multi-Level Selling
Extended selling team advantages
 Quicker response to buyer questions
 Ability to speak to one’s counterpart who
understands technical language
 Capability to work as a group to offer
multidisciplinary solutions to complex buyer problems
 Challenges
 Coordination, communication, and compensation challenges
 More expensive
5-11
Team Selling and Multi-Level Selling
 Multi-level selling occurs when two or more
people from the selling firm make a sales call to
their functional counterparts at the buying
organization
 Marketing alliances 2+ companies combine
their technologies, unique resources, skills and
products to market total systems
 Value-added reseller (VAR) purchases products
from manufacturers and assembles them into a
system before delivering the package to
specialized customer segments
5-12
B2B Customer Relationship
Management
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
5-14
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
Source: Based on Jaclyne Badal (2006). “A Reality Check for the Sales Staff,” Wall Street Journal,
October 16, B3.
5-15
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
5-16
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
5-17
The Nature of B2B Relationships
 Buyer-seller relationship can be adversarial when

Transactional
either party views the situation from a purely
Relationships economic perspective
Facilitative  Trust and cooperation between buyers and sellers

Relationships is better and can create value for both parties
 Deepest relationship, where selling firm becomes

Integrative the buyer’s sole source supplier
Relationships  Buyers and sellers trust one another and cooperate
to reduce costs and advance their mutual goals
5-18
Differences in Key Variables Based on
Stage of Relationship
Relationship Transactional Facilitative Integrative
Trust Little trust Increasing trust Broad trust
A few depts begin Direct communication

Communication Buyer-seller “bow tie”
communicating between all depts
Buyer: lower prices
Value “Win-Lose” “Win-Win” for both
Seller: lower costs
Little expectations beyond Growing commitment by Long-term expectations of
Commitment
current contract buyer & seller partnership
Little expectation of Growing acceptance of Honest feedback
Feedback
feedback feedback expected and sought
Little opportunity to cross- May switch to inside Expansive opportunity to
Sales programs
or up-sell salesperson cross- or up-sell
Acknowledgement that
Little concern for supplier
Profits More concern supplier must make
profits
reasonable profit
Competitive Little other than current Growing competitive
Customized offering
advantage buy advantage
5-19
Global Sales Management: Forming
Business Relationships in Other Cultures
 In many cultures around the world, it takes years to
Ellesmere Island Severnaya Zemlya
Arctic Ocean Arctic Ocean Franz Josef Land
Arctic Ocean
New Siberian Islands
Greenland (Den.) Svalbard (Nor.)
Banks Island Jan Mayen (Nor.) Novaya Zemlya Wrangel Island
Victoria Island Baffin Island
form a relationship with a person one does not know

U.S.A.
Canada
Iceland
Faroe Is. (Den.) Norway
United Kingdom
Den.
Sweden
Finland
Estonia
Latvia
Lithuania
Russia 60°
Aleutian Islands (USA)
Ireland Neth. Belarus
Germany Poland
Bel.
Island of Newfoundland Czech. Ukraine Kuril Islands
 In Japan, the process of forming a relationship

Slovak.
Aus. Hung. Moldova Kazakhstan
France Switz. Slov. Mongolia
Cro. Yugo.Romania
Bos. Georgia Uzbekistan
Bulgaria
North Atlantic Ocean Italy Mac.
Albania Armenia Azerbaijan
Kyrgyzstan
United States of America Portugal
Spain
Greece Turkey Turkmenistan Tajikistan
N. Korea
S. Korea Japan
North Pacific Ocean Cyp. Leb. Syria North Pacific Ocean
requires a significant amount of effort that involves

Tunisia Afghanistan
Morocco Israel Iraq Iran China
Canary Islands (Sp.) Jordan
Kuwait Pakistan Nepal
Algeria Libya Bhu.
The Bahamas Egypt
Western Sahara (Mor.) Qatar
Mexico Cuba Bang. Taiwan
Hawaiian Islands Saudi U. A. E.
Arabia Myanmar (Burma)
India
proving to your Japanese customers that you can be

Dominican Republic
Oman Laos
U. S. A. Jam.
Mauritania Mali
Belize Haiti Puerto Rico (US) Dominica
Niger Eritrea
Honduras Senegal Sudan Yemen Thailand Philippines
Guatemala Chad Vietnam
The Gambia Burkina Faso
El Salvador Nicaragua Barbados
Djibouti Cambodia
Andaman Islands (India)
Guinea-Bissau Guinea Benin Marshall Islands
trusted to provide them with the products or services

Trinidad and Tobago
Costa Rica Côte D’Ivoire Nigeria Sri Lanka Federated States of Micronesia
Venezuela Guyana Sierra Leone Ethiopia
Panama Suriname C. A. R. Brunei Guam (USA)
Maldives
French Guiana (Fr.) Liberia Cameroon
Ghana Togo Somalia Malaysia
Colombia Eq. Guinea Uganda
Singapore
Gabon Rwanda Kenya Kiribati
Galapagos Islands (Ecuador) Ecuador
they need to keep their businesses running

Sao Tome & Principe Indonesia
Zaire Burundi Papua New Guinea
Solomon Islands
Congo Tanzania Seychelles
Malawi
Peru
Brazil Angola
Zambia Mozambique
Bolivia Madagascar
Namibia Zimbabwe Fiji
French Polynesia (Fr.)
 Socializing (going out at night for karaoke, drinking and talk)

New Caledonia
Botswana
Paraguay Mauritius Indian Ocean
Swaziland
Australia
South Africa
Lesotho
allows the Japanese to see the character of the gaijin

South Pacific Ocean Chile Argentina
Uruguay
South Atlantic Ocean
Tasmania
New Zealand
(foreigner) Falkland Islands (Islas Malvinas) (adm. by UK, claimed by Argentina)
South Georgia (adm. by UK, claimed by Argentina)

Îles Crozet (France)
Source: Based on John B. Ford and Earl D. Honeycutt,

Antarctica
Jr. (1992). “Japanese National Culture as a
Basis for Understanding Japanese Business Practices,” Business Horizons, 35:6, 27–34.
5-20
Customer Lifetime Value (CLV)
Strategies
 Customer lifetime value: profitability of partnering
with a buyer for an extended period of time
 3 criteria to compute CLV (future customer
profitability)
1
Probability of future purchases
2
Future marketing costs
3
Future contribution margins
5-21
Computing CLV
5-22
Planning Sales Strategy Based on CLV
Low % of Purchase Share High % of Purchase Share
Constant sales force
Frequent sales force visits
interaction
Monthly visits
Weekly visits
High Lifetime
Direct mail/telemarketing
Earning Value Direct mail/telemarketing
Optimal contact: biweekly
Optimal contact: weekly
High potential customer value
Highest customer value
Extended sales force visits Infrequent sales force visits
Yearly intervals 6-month intervals
Low Lifetime
Direct mail/telemarketing Direct mail/telemarketing
Earning Value
Optimal contact: quarterly Optimal contact: bimonthly
Low value customer Low potential customer value
5-23
The Stages of B2B Customer
Relationship Management
1
Up-sell / cross-sell to existing
customers
2
Manage customer relationships
to earn higher profits
3
Offer customized solutions to
most profitable buyers
5-24
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
 Release the outcome
 The end result does not define the salesperson
 Best to focus on what is learned during the sales process
 Emotions
 Connect emotionally to the buyer’s reason to purchase
 Important to express empathy
5-25
Inspiring Your Team Members (continued)
 Accountability
 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
 Likeable
 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!
Based on: Rick Wnuk, “Keep Your Team Members Real,” Sales & Marketing Management,
September/October 2008, 16-17.
5-26
Maximizing the Buyer’s Value
Value
Benefits Functional Benefits + Emotional Benefits
Costs
= Monetary Costs + Time Costs + Energy Costs + Psychic Costs
Increase value by
1 Increasing benefits
2 Decreasing costs
3 Both
5-27
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
5-28
Important Salesperson Behaviors
Fostering a long-term perspective
Being honest and sincere
Understanding customer needs and problems
Meeting commitments
Providing after-sales service
5-29
Why Business Relationships End
 Partner is too complacent
 Goals no longer match
 Cultures have diverged
 1 or both parties have
behaved irresponsibly
5-30
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Part Three:

Analyzing Customers and Markets

Problem Information Evaluation of Purchase Postpurchase

 Occurs when a complex or expensive product is

 Purchase of a product or service that is currently

 Buying firm moves directly from need recognition

Buying Stages New Buy Modified Re-Buy Straight Re-Buy

Customer Relationship Management

 Identifying and grouping customers in

 Buyer-seller relationship can be adversarial when

Facilitative  Trust and cooperation between buyers and sellers

 Deepest relationship, where selling firm becomes

Trust Little trust Increasing trust Broad trust

A few depts begin Direct communication

form a relationship with a person one does not know

 In Japan, the process of forming a relationship

requires a significant amount of effort that involves

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 at night for karaoke, drinking and talk)

allows the Japanese to see the character of the gaijin

(foreigner) Falkland Islands (Islas Malvinas) (adm. by UK, claimed by Argentina)

South Georgia (adm. by UK, claimed by Argentina)

Source: Based on John B. Ford and Earl D. Honeycutt,

Fostering a long-term perspective

Being honest and sincere

Understanding customer needs and problems

Providing after-sales service

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