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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.
Integrating Sales w/ Other
Functions
Sales’
adoption of
marketing
concepts Hire
Finance excellent
sales
R&D employe
Cross- Sales es
function
al
meeting
Mfg
s
Mkg
IT
HR
CRM
Common
Cause

Source: HR Chally Group (2007) The Chally World Class Excellence Research Report:
The Route to the Summit. Dayton, OH: HR Chally Group. 3-2
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

3-3
Example of CRM Software
Sales and Marketing Module
Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk
Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd 3-4
Example of CRM Software
Support Helpdesk Module
Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk
Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd 3-5
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
Source: “Making Budget
Sense of Sales,” BusinessWeek, Spring 2006, www.businessweek.com.
3-6
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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Classifying capabilities
of market-oriented
firms

Source: George S. Day, “Capabilities of Market-Driven Organizations,” Journal of


3.3 Marketing 58 (October 1994), pp. 37–52. Reprinted by permission of the American
Marketing Association. 3-10
Answers
the most
basic
Strategy Development
questions
about an
organizatio
n’s reason Mission
for being
Flow from
the
company’s
mission, Goals
represent
more
specific
targets
Specific, Objectives

measurable
, and
realistically
attainable

3-11
3.5

Steps in developing
and implementing
strategies

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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 3-14
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. 3-15
Porter’s Typology
Business Strategies Sales Force Implications

Low-cost Supplier Large customers, prospects


Sell on price
Significant order-taking
responsibilities
Differentiation Sell non-price benefits
High-quality service
Low price-sensitivity customers

Niche (or focus) Expert in target market operations


and opportunities
Non-price benefits

Generic business
strategies and their
implications for the
sales force

Source: Adapted from William L. Cron and Michael Levy, “Sales Management
3.4a Performance Evaluation: A Residual Income Perspective,” Journal of Personal Selling
& 3-16
Sales Management 7 (August 1987), pp. 57–66.
Miles & Snow’s Typology
Business Strategies Sales Force Implications

Prospector Sales volume growth


Customer penetration and prospecting

Defender Current customer base


Little prospecting
Customer service, account
penetration
Analyzer Service
Prospecting
New applications
Mature product distribution
New product campaign support

Generic business
strategies and their
implications for the
sales force

Source: Adapted from William L. Cron and Michael Levy, “Sales Management
3.4b Performance Evaluation: A Residual Income Perspective,” Journal of Personal Selling
& 3-17
Sales Management 7 (August 1987), pp. 57–66.
Types of
relationships between
3.6 buyers 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 3-21
Relationship Development

Stage 1 Stage 2 Stage 3


Exploration Expansion Commitment

Determine Generate Build loyalty,


value, build repeat sales, become a
trust, set full-line preferred
proper selling, cross- supplier,
expectations, selling engage in
monitor 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
3.7 IMC strategy
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3.8
Illustrative factors
that influence the
design of IMC
strategy

Source: Adapted from David W. Cravens and Nigel F. Piercy, Strategic Marketing, 8th
ed. (New York: Irwin/McGraw-Hill, 2005), p. 348. 3-25
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

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3.4 Leveraging Value in Era
3
Era 1 Era 2 Era 3
1950-75 1975-95 1995-
Economy Unlimited Globalization, Overcapacity
expansion more suppliers

Customer Open to ideas, Choices, Overwhelmed


willing to sophistication w/choices,
View spend complex
problems

Sales Role Persuader, Problem- Process


sometimes solver, analyst,
Create value manipulative consultant project
to provide manager

customers Challenge Customer Some Create


“wised-up” customers revenue-
with may not know building
own needs solutions
competitive beyond
advantage customer
expertise
Source: Jeff Thull, “Selling in Era 3: How to Leverage Value to Win—and Keep—
Profitable Customers,” The American Salesman, January 2004, p. 12 3-27