Sales Force Management 11th Edition Mark W. Johnston Greg W. Marshall Routledge 2013

Linking Strategies and the Sales Role in the Era of Customer Relationship Management CHAPTER 3 Routledge 2013

Learning Objectives Understand key components and goals of CRM Explain importance of market orientation and how it is fostered Identify key steps in developing and implementing strategies Describe role of personal selling in marketing strategy Outline stages in developing strategic partnership relationships Discuss actions salespeople can take to ensure long-term buyer- seller relationships Routledge 2013

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 Routledge 2013

Example of CRM Software Sales and Marketing Module Routledge 2013 Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd 3-5

Example of CRM Software Support Helpdesk Module Routledge 2013 Sources: www.Stromasoft.com, StromasoftCRM software,, Customer Support Helpdesk Module, Sales & Marketing Module, Copyright (©) 2007 StromaSoft Ltd 3-6

Customer Orientation Customer drives the marketing strategy, which is driven by the marketing mix Customer is the center of all marketing activities, and CRM software and touchpoints help ensure that the customer is accurately captured and monitored Routledge 2013

Customer-Centric Cultures Partnership business model with shared risks and rewards Selling as customer business consultation Formalized customer analysis processes and agreements Proactively educating customers about value chain and cost reduction opportunities Focus on continuous improvement principles stressing customer satisfaction Routledge 2013

Marketing Evolution: Technology and Characteristics Routledge 2013 Source: Ronald S. Swift, Accelerating Customer Relationships: Using CRM and Relationship Technologies (Upper Saddle River, NJ: Prentice Hall PTR, 2001), p. 38.

Objectives of CRM Customer Retention Customer Acquisition Customer Profitability Routledge 2013

Advantages of CRM Reduces advertising costs Increases awareness of customer needs Tracks effectiveness of promotional campaigns Competition for customers based on service, not prices Prevents over-spending on low-value clients, under-spending on high-value ones Speeds time to develop and market a product Improves use of customer channel Routledge 2013

The CRM Process Cycle Routledge 2013 Source: Ronald S. Swift, Accelerating Customer Relationships: Using CRM and Relationship Technologies (Upper Saddle River, NJ: Prentice Hall PTR, 2001), p. 40.

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? Routledge 2013

CRM Failures Often Management’s Fault Disruption of routines Perception of CRM as micro-management tool Differences in expectations Perceived lack of management support Routledge 2013

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 Routledge 2013

Classifying Capabilities of Market Oriented Firms Routledge 2013 Source: George S. Day, “Capabilities of Market-Driven Organizations,” Journal of Marketing 58 (October 1994), pp. 37–52. Reprinted by permission of the American Marketing Association. 3-16

Strategy Development From the company mission come the goals and objectives These goals and objectives are overarching for the company, and generate strategy meant to fulfill them Goals and objectives are cut into smaller, attainable ones for employees to reach Strategic business units aid in this process Routledge 2013

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 Routledge 2013

Steps in Developing and Implementing Strategies Routledge 2013

Types of Relationships between Buyers and Sellers Routledge 2013 Source: Barton Weitz, Stephen Castleberry, and John Tanner, Selling: Building Partnerships, 6th ed. (New York: Irwin/McGraw-Hill, 2005).

Personal Selling’s Role in Market Exchanges 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 Routledge 2013

Personal Selling’s Role in Functional Relationships 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 Routledge 2013

Personal Selling’s Role in Strategic Partnerships 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 Routledge 2013

Relationship Development Stage 1 Exploration Stage 2 Expansion Stage 3 Commitment Determine value, build trust, set proper expectations, monitor Generate repeat sales, full-line selling, cross-selling Build loyalty, become a preferred supplier, engage in TQM Note to instructor – click on circles to display activities within each stage 3-24

Building Customer Relationships Under promise, over deliver Don't forget the small things. Stay in contact Establish a feedback system Routledge 2013

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 Routledge 2013

Factors Influencing Personal Selling in an IMC Strategy

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.

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 Routledge 2013