Adjusting to the Dynamic Personal Selling Environment

Chapter 2: Adjusting to the Dynamic Personal Selling Environment 53

CHAPTER 2

Adjusting to the Dynamic Personal Selling Environment

LEARNING OBJECTIVES

After reading this chapter, you should understand:

·  What megatrends are affecting personal selling now and what megatrends will affect personal selling in the foreseeable future.

·  How “online” sales channels are empowering customers, especially giant retailers.

·  How developments in telecommunications technology are dramatically changing personal selling.

·  Why rising personal selling costs are encouraging salespeople and their companies to make increasing use of alternative direct-marketing techniques.

·  What current trends in information management will affect how salespeople do their jobs.

·  Why today’s professional salespeople need to be much like micro-marketing managers in their expanding roles.

Lecture Outline

I. Megatrends Affecting Personal Selling

Salespeople, to become successful or maintain their success, need to be aware of several megatrends to which they must adapt in order to enhance their effectiveness and efficiency. Three major forces—behavioral, technological, and managerial—are influencing buyer-seller relationships and the way that selling is carried out.

Table 2.1. Megatrends Affecting Personal Selling

A. Behavioral Forces

Buyers’ attitudes, preferences, and behaviors, as well as competitors’ efforts, are changing quickly, thus necessitating that salespeople stay flexible and able to modify their selling strategies and approaches. Several behavioral megatrends exist.

1. More Expert and Demanding Buyers

A talented new type of professional salesperson is needed to make sales presentations to professional buyers, buying committees, and consumers who are treating more purchases like long-term investments.

2. Rising Customer Expectations

Successful sales representatives must not become defensive about their company’s products but try to look at their offerings from the perspective of their most critical customers.

3. Microsegmentation of Domestic Markets

America is becoming increasingly multicultural and multilingual. Any company’s sales force that does not understand this rich mix of wants and needs will miss reaching several large, fast-growing markets.

4. Expanding Power of Giant Retailers

Only a few retailers today account for over half of total retail sales. Large retail organizations have been and are continuing to gain an increasing share of the consumer’s dollar. As these giant retailers have grown bigger and exceed the size and power of the manufacturers that supply them, they dictate the buyer-seller relationship.

5. Empowerment of Customers

Like salespeople, customers too are also being empowered by using computers (whether desktop, notebook, handheld, or pocket versions), multi-function cell phones, kiosks, and desktop videoconferencing. With their new empowerment, customers are becoming more knowledgeable, expert, and demanding in their purchasing.

6. Globalization of Markets

The economic health of the United States now depends partially on how well salespeople and sales managers do their jobs as competition from foreign products and services intensifies.

Table 2.2. Empowerment of Customers

B. Technological Forces

Today’s successful salespeople are those who can make skillful and efficient use of technology to increase their efficiency and productivity in serving customers. These include:

1. Sales Force Automation

Among the most important of the technological innovations in sales force automation include:

·  Portable computers

·  Electronic data interchange

·  Videoconferencing

·  Multifunction cell phones and satellite pagers

·  Voice mail

·  Electronic mail

·  Instant messaging

2. Virtual Sales Offices

Conducting business from home, automobile, or virtually anywhere

3. Electronic Commerce

·  Internet

·  Blogs

·  Podcasting

·  Screen-sharing

·  WebEx

·  Intranet

·  Extranet

C. Managerial Forces

In response to the dynamic behavioral and technological megatrends, sales organizations are trying various strategies to achieve profitable sales growth and closer customer relationships (see below).

1. Efforts to Reduce Selling Costs

The median cost of a business-to-business sales call—although it varies widely by industry and company—is now over $250. For some large industrial companies, a sales call can cost $400 to $1,000 or more because of the unusual complexity of both the selling process and the product itself. To reduce selling costs, many manufacturers and service providers are aggressively seeking alternatives to large national sales forces (e.g., use of middlemen, part-time salespeople, and direct marketing efforts).

2. Shift to Direct Marketing Alternatives

To sell to organizational buyers, there are several direct marketing alternatives that support or bypass field salespeople. These include:

·  Direct mail

·  Telemarketing

·  Teleselling

·  Kiosks (or “computer salespeople”)

·  Facsimiles

·  Personalized e-mail

Figure 2.1. Telemarketing Applications, Advantages, and Disadvantages

3. Certification of Salespeople

Because of the public’s negativism toward personal selling, efforts have been directed at certifying sales personnel.

Certification usually requires a salesperson to gain a certain amount of practical experience, enroll in educational seminars and courses, pass a sales competency exam, provide some professional references, and agree to comply with a code of conduct.

It’s Up to You

You have just been assigned to your territory, which has many potential organizational customers. Competition is keen, however, and customers tend to buy chiefly on price—they want the best value for their money. Concomitantly, prospects and customers in your territory have increasing expectations of their suppliers and the service they should provide. Knowing that price is the major driver of prospects and customers and that your firm is not the lowest-priced seller, you are stumped about how you can succeed in this territory. How will you begin to build your sales program? What resources will you call on within your organization and outside it? What technologies and tools might come to your aid?

This is a common situation (price-directed buyers) facing many sales personnel—both new and senior. Approaches to dealing with this phenomenon will become more obvious to students as they progress through this book and the class. At a minimum, however, students will probably be perplexed by this context, which will require their keenly considering what alternatives are available to the seemingly hapless individual.

Discussion should focus on determining the specific kinds of service that customers desire, as well as the kinds and quality of service that competitors are offering. Then, students should compare these results with the kinds and quality of service that the “salesperson’s” firm offers. Areas in which the firm provides superior service vis-à-vis competition should be emphasized to customers—especially in those facets that are considered important to customers. Those areas the firm is at parity with competitors should be pointed out to customers so that they do not think that the seller is sub-par in performance. Finally, those areas in which the firm offers poor service—especially in those facets that customers consider to be important—the salesperson should seek to convince their own management of the disadvantages in offering such inadequate service in this intensely competitive territory.

II. Adapting to Megatrends

The major role of the innovations in telecommunications will be to help professional salespeople do their jobs more effectively and efficiently.

A. Trends in Information Management

Behind the forces that are influencing salespeople and the way they operate are four key trends in the management of information that include (1) database marketing, (2) data warehousing, (3) push technology, and (4) data mining.

1. Database Marketing

Database marketing allows salespeople to focus on those customers who are most likely to respond. A database is a large computerized file of customers’ and potential customers’ profiles and purchase patterns. Sales personnel use the information stored in the database to identify a specific group of customers who are most likely to respond to a particular offer.

2. Data Warehousing

A data warehouse is essentially a very large, corporate-wide database, built with data from a number of information systems already in place in the company. It may not be optimized for sales management purposes, but it contains information that can be.

3. Push Technology

Push technology is the latest iteration of e-mail combined with data warehousing. The key to a successful push strategy is knowing exactly what your customers need and exactly when they need it. When skillfully employed, the customer has more relevant and less irrelevant information to work with.

4. Data Mining

Data mining is the process of using statistical analysis to detect relevant patterns in a database. The analysis gives researchers insight into the relationships between and among variables.

B. Information Management and Relationship Selling

Information management and relationship selling go hand-in-hand as part of the evolutionary development of a marketing strategy used in one-to-one marketing by salespersons as one-to-one relationship builders.

1. One-to-One Marketing

One-to-one marketing represents a sharp philosophical change from the traditional approach of viewing customers as mass markets to seeing them as individuals. Instead of trying to increase market share by selling more goods to more customers, one-to-one marketing concentrates on selling more goods, more profitably to fewer selected customers.

2. Salespeople: One-to-One Relationship Builders

Ultimately, the quality of individual relationships that salespeople develop with customers will determine the success of one-to-one marketing strategies, especially in business-to-business markets.

III. Professional Salespeople as Customer Relationship Managers

Instead of merely selling products, today’s sales representatives are expected to serve customers as consultants who can offer expert advise on improving their lifestyle or making their business operations more profitable. They operate much like micro-marketing managers in the field, with profit objectives for their designated territories or markets:

·  Customer partners

·  Buyer-seller team coordinators

·  Market analysts and planners

·  Customer service providers

·  Buyer behavior experts

·  Opportunity spotters

·  Intelligence gatherers

·  Sales forecasters

·  Marketing cost analysts

·  Allocators of scarce products

·  Field public relations people

·  Adopters of advanced sales technology

end of chapter Key Terms

Sales Megatrends—Major behavioral, technological, and managerial trends that influence how salespeople perform their jobs.

Direct Marketing—Selling alternatives that bypass or partially substitute for field salespeople, including direct mail, telemarketing, teleselling, kiosks, facsimiles, and electronic mail.

Telemarketing—Use of telephone by support staff to help salespeople identify prospects, gather information, and answer inquiries.

Teleselling—Conducting the entire personal selling process via telephone.

Database Marketing—Computerized analysis of sales transaction databases to identify customer purchase patterns and profiles to better serve target markets.

Data Warehouse—Corporate-wide database built from information systems already in place in the company.

Data Mining—Using statistical tools, such as decision trees, cluster analysis, and regression analysis, to detect relevant customer purchase patterns between and among variables in a database.

Push Technology—Combination of data warehousing and e-mail to retrieve and send relevant information to prospects and customers.

One-to-One Marketing—A philosophical change from the traditional approach of looking at customers as a mass market to viewing customers as individuals. One-to-one marketing seeks to sell more products to fewer (selected) customers, rather than more products to more customers.

CHAPTER REVIEW QUESTIONS

1. Describe the three broad megatrends that are affecting personal selling.

Behavioral Forces. Buyers’ attitudes, preferences, and behaviors, as well as competitors’ efforts, are changing quickly, thus necessitating that salespeople stay flexible and able to modify their selling strategies and approaches. The behavioral changes are being manifested owing to more demanding buyers, rising customer expectations, microsegmentation of domestic markets, empowerment of customers, expanding power of giant retailers, and globalization of markets.

Technological Forces. Today’s successful salespeople are those who can make skillful and efficient use of technology to increase their efficiency and productivity in serving customers. Among the most important of the technological innovations for personal selling are the following:

·  Sales Force Automation

·  Portable computers

·  Electronic data interchange

·  Videoconferencing

·  Cellular phones and satellite pagers

·  Voice mail

·  Electronic mail (E-mail)

·  Facsimile machines

·  Virtual sales offices

·  Electronic commerce

·  Internet

·  Blogs

·  Podcasting

·  Screen-sharing

·  WebEx

·  Intranet

·  Extranet

Managerial Forces. In response to the dynamic behavioral and technological megatrends, sales organizations are trying various strategies to achieve profitable sales growth and closer customer relationships—sales cost reduction efforts, shifts to direct marketing alternatives, and salesperson certification.

2. What specific market and competitive forces are changing the personal selling and buyer-seller relationships? What are their effects?

More Expert and Demanding Buyers. Organizational buyers are becoming increasingly skillful at obtaining value for their expenditures. Companies are developing more efficient purchasing processes and using buying committees composed of purchasing, engineering, finance, marketing, legal, and operations management. A talented new type of professional salesperson is needed to make sales presentations to these diverse expert buying committees and to customers who treat purchases like long-term investments.

Rising Customer Expectations. Salespeople must reconcile themselves to the fact that human expectations are probably infinitely elastic (i.e., they will continually rise). Organizational buyers are less and less tolerant of inferior products. Successful sales representatives must be willing and able to look at their offerings from the perspectives of their most critical customers because today’s and tomorrow’s customers will expect ever higher quality products and services. Organizations can then use this critical information to improve their products and their competitive positions.

Microsegmentation of Domestic Markets. The United States has become increasingly multicultural and multilingual. Selling in major parts of most large cities will increasingly require the salesperson to understand different cultures, languages, tastes, and preferences for everything from food and clothing to cosmetics. Some companies have responded to this multicultural mosaic by dividing the United States into distinct markets based on unique cultural and ethnic tastes and preferences. These companies then allocate a percentage of their advertising budget to regional promotion, and in some instances the regional ad budget may be elevated as regional success is realized. Many organizational sellers are also developing and marketing products exemplifying their regional sales approach.

Expanding Power of Giant Retailers. Only a few retailers today account for over half of total retail sales. Large retail organizations have been and are continuing to gain an increasing share of the consumer’s dollar. As these giant retailers have grown bigger and exceed the size and power of the manufacturers that supply them, they dictate the buyer-seller relationship. For instance, several dominant retailers are bypassing wholesalers and distributors to buy directly from manufacturers who give them “key account” (large account) status and special attention. Also, large retailers are leveraging electronic data interchange (EDI) technology to force out manufacturers’ agents and to require manufacturers’ direct sales organizations to assume the functions and/or administrative costs of “just-in-time” inventory control, order billing, sales, and promotion. To meet the demands of giant retailers, large manufacturers have set up sales offices near or sometimes even within the retailer’s headquarters. The growing dominance of these giant retailers has led to establishing single-sourcing, multiyear contracts with manufacturers. In such instances, an agreement between the buyer and the seller allows one manufacturer to be the single supplier for a given product (or array of products); in return, though, the manufacturer is required to provide an extremely high level of service and support for the large retailer. Giant supermarkets have gained so much leverage over producers that they often charge “slotting fees” to allow manufacturers to place their products on the retail shelves.