Relationship Selling Mark W. Johnston Greg W. Marshall McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

What is Relationship Selling? PART ONE

What is Relationship Selling? Customer-centric Puts the customer at the center of the universe Focuses on securing, building, and maintaining long-term relationships with profitable customers Chapter 1 1-3

Understanding Buyers and Sellers Buying Who participates? What are the stages in the process? What is the organizational buying situation? Selling Key drivers of change Selling as a career Key success factors Selling activities Types of sales jobs Chapter 2 1-4

Chapter 3 Value Creation Creating customer value is central to most business models Relationship selling is an important way an organization can create value Communicating the value proposition is a critical skill Chapter 3 1-5

Ethical and Legal Issues Ethics plays an important role Stakeholders are watching companies’ behavior Salespeople and their managers must be aware of legal implications of their actions Chapter 4 1-6

Introduction to Relationship Selling Chapter 1

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Learning Objectives Identify and define the concept of relationship selling Understand the importance of a customer-centric organization Explain why value is a central theme in relationship selling Identify the processes involved in relationship selling Identify the elements in managing relationship selling Discuss and give examples of the elements of the external and internal environment for relationship selling 1-9

Model - Overview Customer-centric Highly customer- oriented Exhibit customer mindset 1-10

Customer Orientation Focus on understanding customers’ requirements Generate organization-wide understanding of the marketplace Respond effectively with innovative products and services 1-11

External Customer Mindset 1.1 Test Your Customer Mindset External Customer Mindset 1 2 3 4 5 6 I must understand the needs of my company's customers It is critical to provide value to my company's customers I am primarily interested in satisfying my company's customers I must understand who buys my company's products/services I can perform my job better if I understand the needs of my company's customer Understanding my company's customers will help me do my job better Strongly Disagree Strongly Agree 1-12

Internal Customer Mindset 1.1 Test Your Customer Mindset Internal Customer Mindset 1 2 3 4 5 6 Employees who receive my work are my customers Meeting the needs of employees who receive my work is critical to doing a good job It is important to receive feedback from employees who receive my work I focus on the requirements of the person who receives my work Total Higher total ➤ Greater customer mindset Strongly Disagree Strongly Agree 1-13

The Customer Customer at center Return on customer investment Lifetime value of a customer 1-14

Innovation 1.1 Want to Think Like a Customer? Avoid... Wasting customer’s time Lacking empowerment to handle problems now Not knowing customer’s business Bringing problems, not solutions 1-15

Value Creation Value - bundle of benefits a customer derives from a purchase Give-get ratio Value creation - adding value for a customer beyond an isolated transaction 1-16

1.2 Transactional vs Relationship Selling Transactional Buyers mainly interested in price and convenience Suppliers bring no additional benefits Suppliers reduce resources allocated to selling Relationship Consultative Buyers willing to pay for new value and additional benefits Enterprise Strategically important customers demand extraordinary value creation Requires cross-functional teams to execute 1-17

Enterprise Selling - Example Proctor & Gamble’s relationship with Wal-Mart P&G uses integrated technology to provide Wal-Mart with just-in-time delivery of products Representatives from many functional areas within P&G are required to make this enterprise selling effort successful 1-18

1.3 Time Investment in Each Stage of the Sale Value-Added Selling Developing Understanding of Buyer’s Needs Traditional Selling Value-Added Selling Presenting a solution Closing the Sale Time Invested 1-19

Difficulties Salespeople Have in the Marketplace 1.2 Biggest Challenge? Shift to Value-Added Selling Difficulties Salespeople Have in the Marketplace Moving to solution-type sell 69% Selling value 67% Inexperience 63% Negotiating 58% Prospecting 55% Closing Unable to get to decision-maker 51% 1-20

Ethics Company’s ethical reputation impacts customer purchase decisions Social values set standards for ethical behavior Some actions may be legal but not ethical 1-21

Ethical Dilemmas Portray products and services accurately Act fairly and treat all social groups equallyShow respect for individuals Design sales territories, assign quotas, and determine compensation with integrity Customer Salesperson Sales Manager 1-22

Relationship Selling Prospecting and sales call planning Communicating the sales message Negotiating for win- win solutions Closing the sale and follow-up Self-management 1-23

Innovation 1.3 Power of Follow-Up Long-term customer relationships ➤long- term success It pays to nurture existing customer relationships It is 5 to 10 times more costly to acquire new customers CRM can help balance new customer acquisition and existing customer service (follow-up) 1-24

Sales Management Motivation Recruiting and selection Training and development Compensation and incentives Evaluating salesperson performance 1-25

1.4 Components of the Internal Environment 1-26

Internal Environment Southwest Airlines Places the employee at the center of its business model Promotes fun Hires people by “tryouts” Lends itself to a favorable service culture 1-27

1.5 Components of the External Environment 1-28

Role Play http://www.mhhe.com/business/marketing/videos/RS/01_RP_intro_relationship_selling.mp4 1-29

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