Communicating Customer Value: Personal Selling and Direct Marketing CHAPTER 13 Communicating Customer Value: Personal Selling and Direct Marketing

Roadmap: Previewing the Concepts Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. Identify and explain the six major sales force management steps. Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing. Define direct marketing and discuss its benefits to customers and companies. Identify and discuss the major forms of direct marketing. Copyright 2007, Prentice-Hall Inc.

CDW – Relationship Building Success Background Nation’s largest reseller of technology products and services to small and mid-size businesses. Since 2000, sales up 48% to $5.7 billion and profits up 15% annually. Highly devoted to customer with “Circle of Service” philosophy. Personal Selling’s Role “Clicks & people” strategy combines personal selling with strong Web presence. Salespeople build and manage relationships by being trusted advisors. Training is extensive as salespeople must be knowledgeable and customer focused. Copyright 2007, Prentice-Hall Inc.

Personal Selling Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. Salespeople engage in prospecting, communicating, servicing, and information gathering on behalf of the firm. Copyright 2007, Prentice-Hall Inc.

The Nature of Personal Selling Most salespeople are well-educated, well-trained professionals who work to build and maintain long-term customer relationships. The term salesperson covers a wide range of positions: Order taker: Department store clerk Order getter: Creative selling in different environments Copyright 2007, Prentice-Hall Inc.

The Role of the Sales Force Sales force serves as critical link between company and its customers. More effective than advertising in complex selling situations. They represent the company to the customers. They represent the customers to the company. Goal = customer satisfaction and company profit. Copyright 2007, Prentice-Hall Inc.

Figure 13-1 Major Steps in Sales Force Management Copyright 2007, Prentice-Hall Inc.

Sale Force Structure Territorial: Product: Customer: Complex: Salesperson assigned to exclusive area and sells full line of products. Product: Sales force sells only certain product lines. Customer: Sales force organized by customer or industry. Complex: Combination of several types of structures. Copyright 2007, Prentice-Hall Inc.

Sale Force Size Workload approach to setting sales force size: Firm first groups accounts into different classes according to size, account status, or other factors related to the effort need to maintain them. The firm then determines the number of representatives needed to call on each class the desired number of times. Copyright 2007, Prentice-Hall Inc.

Outside and Inside Sales Forces An outside sales force travels to call on customers in the field. An inside sales force conducts business from their offices via telephone or visits from perspective buyers. Includes: Technical support people Sales assistants Telemarketers Copyright 2007, Prentice-Hall Inc.

Let’s Talk! Insides sales forces use the phone or Internet to service and contact customers. For what types of products or services do you think that an inside sales force might be more effective than an outside sales force? Explain. Copyright 2007, Prentice-Hall Inc.

Team Selling Used to service large, complex accounts. Can find problems, solutions, and sales opportunities that no single person could. Can include experts from different areas of selling firm. Pitfalls: Can confuse or overwhelm customers. Some people have trouble working in teams. Hard to evaluate individual contributions. Copyright 2007, Prentice-Hall Inc.

Successful Salespeople Careful selection can greatly enhance overall sales force performance while minimizing costly turnover. Key talents of successful salespeople: Intrinsic motivation. Disciplined work style. Ability to close a sale. Ability to build relationships with customers. Copyright 2007, Prentice-Hall Inc.

Recruiting Salespeople Recommendations from current sales force Employment agencies Classified ads Searching the Web College placement services Recruit from other companies Copyright 2007, Prentice-Hall Inc.

Sales Force Training Goals Learn about different types of customers and their needs, buying motives, and buying habits. Learn how to make effective sales presentations. Learn about and identify with the company, its products, and its competitors. Copyright 2007, Prentice-Hall Inc.

Compensating Salespeople Fixed amount: Salary Variable amount: Commissions or bonuses Expenses: Repays for job-related expenditures Fringe benefits: Vacations, sick leave, pension, etc. Copyright 2007, Prentice-Hall Inc.

Supervising Salespeople Goal of supervision is to encourage salespeople to “work smart.” Help them identify customers and set call norms. Specify time to be spent prospecting: Annual call plan Time-and-duty analysis Sales force automation systems Copyright 2007, Prentice-Hall Inc.

Figure 13-2 How Salespeople Spend Their Time Copyright 2007, Prentice-Hall Inc.

Motivating Salespeople Goal of motivating sales force is to encourage salespeople to “work hard.” Organizational climate. Sales quotas. Positive incentives: Sales meetings Sales contests Recognition and honors Cash awards, trips, profit sharing Copyright 2007, Prentice-Hall Inc.

Sales Force Incentives Marketing in Action Sales Force Incentives Many firms offer their sales forces cash, trips, and other incentives to motivate performance. Salesdriver.com helps companies select and manage sales incentives. http://www.salesdriver.com/ Copyright 2007, Prentice-Hall Inc.

Sales Force Evaluation Information about the sales force and its activities comes from: Sales reports Call reports Expense reports Management uses this information to evaluate the planning ability of individuals, and offers feedback as necessary. The performance of the sales force as a whole is evaluated in terms of ROI. Copyright 2007, Prentice-Hall Inc.

Figure 13-3 Major Steps in the Selling Process Copyright 2007, Prentice-Hall Inc.

The Personal Selling Process Prospecting: The salesperson identifies qualified potential customers (called prospects). Preapproach: The salesperson learns as much as possible about a prospect before making a sales call. Approach: The salesperson meets the customer for the first time. Presentation: The salesperson tells the “product story” to the buyer, highlighting customer benefits. Copyright 2007, Prentice-Hall Inc.

The Personal Selling Process Handling Objections: The salesperson seeks out, clarifies, and overcomes customer objections to buying. Closing: The salesperson asks the customer for an order. Follow-up: The salesperson follows up after the sale to ensure customer satisfaction & repeat business. The selling process is transaction oriented; most firms go beyond this and attempt to build mutually profitable relationships. Copyright 2007, Prentice-Hall Inc.

Marketing in Action Technology in Selling Today’s presentation technologies allow for full multimedia presentations to take the place of flip charts. Presentations can be launched from DVD, CD, the laptop hard drive, or a Web site, when using wireless connections. Copyright 2007, Prentice-Hall Inc.

Let’s Talk! How do the actions of the sales force and its use of technology contribute to building / maintaining customer relationships? Explain. Copyright 2007, Prentice-Hall Inc.

Direct Marketing Direct marketing consists of direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. One-on-one communication in which offers are tailored to needs of narrowly defined segments. Usually seeks a direct, immediate, and measurable consumer response. Copyright 2007, Prentice-Hall Inc.

The New Direct Marketing Model Some firms use direct marketing as a supplemental medium. For many companies, direct marketing constitutes a new and complete model for doing business. Some firms employ the direct model as their only approach. Some see this as the new marketing model of the next millennium. Copyright 2007, Prentice-Hall Inc.

Benefits of Direct Marketing Benefits to Buyers: Convenient. Easy to use. Private. Ready access to products and information. Immediate and interactive. Video Snippet Moto, the Motorola brand cell phone, uses direct marketing as one method of communicating with consumers. Branding is important. Copyright 2007, Prentice-Hall Inc.

Benefits of Direct Marketing Benefits to Sellers: Powerful tool for building customer relationships. Can target small groups or individuals. Can tailor offers to individual needs. Can be timed to reach prospects at just the right moment. Gives access to buyers they could not reach through other channels. Offers a low-cost, efficient way to reach markets. Copyright 2007, Prentice-Hall Inc.

Customer Databases An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data. Copyright 2007, Prentice-Hall Inc.

Figure 13-4 Forms of Direct Marketing Copyright 2007, Prentice-Hall Inc.

Telemarketing Used in both consumer and B2B markets. Can be outbound or inbound calls. Inbound consumer telemarketing and outbound business-to-business telemarketing remain strong, despite DNC legislations. Copyright 2007, Prentice-Hall Inc.

Telemarketing Do-Not-Call legislation forbids most telemarketers to contact phone numbers that have been registered on its Web site. Businesses that violate the DNC can be fined $11,000 per violation. Learn more at: https://www.donotcall.gov/default.aspx Copyright 2007, Prentice-Hall Inc.

In-Bound Telemarketing Marketing in Action In-Bound Telemarketing Marketers commonly use inbound toll-free 1-800 numbers to handle orders from television and print ads, direct mail, or catalogues. Copyright 2007, Prentice-Hall Inc.

Direct-Mail Marketing Involves sending an offer, reminder, announcement, or other item to a person at a particular address. Permits high target-market selectivity. Can be personalized, and is flexible. Higher CPM yields better prospects than mass media. Easy to measure results. Copyright 2007, Prentice-Hall Inc.

Catalog Marketing More and more catalogs are going digital on the Internet. Print catalogs are still the primary medium. Expected catalog sales in 2008 = $175 billion. Web catalogues have specific advantages and disadvantages when compared to printed catalogues. Copyright 2007, Prentice-Hall Inc.

Direct Response TV Marketing Direct-Response Advertising: TV spots that are 60 or 120 seconds long. Infomercials: A 30-minute or longer advertising program for a single product. Home Shopping Channels: Entire cable channels dedicated to selling multiple brands, items, and services. Copyright 2007, Prentice-Hall Inc.

Direct Response TV Marketing in Action HSN – The Home Shopping Network – is a direct response marketer’s dream. Products shown on the channel can be ordered via a 1-800 number or over the Internet from the HSN Web site. www.hsn.com Copyright 2007, Prentice-Hall Inc.

Kiosk Marketing Information and ordering machines generally found in stores, airports, and other locations. Copyright 2007, Prentice-Hall Inc.

Let’s Talk! Suppose that you were responsible for the fundraising activities of a charitable organization. What type of direct marketing efforts would you use? Why did you select those forms? Copyright 2007, Prentice-Hall Inc.

Figure 13-5 An Integrated Direct Marketing Campaign Copyright 2007, Prentice-Hall Inc.

Public Policy and Ethical Issues in Direct Marketing Irritating to consumers Taking unfair advantage of impulsive or less sophisticated buyers Targeting TV-addicted shoppers Deception, fraud Invasion of privacy Copyright 2007, Prentice-Hall Inc.

Rest Area: Reviewing the Concepts Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. Identify and explain the six major sales force management steps. Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing. Define direct marketing and discuss its benefits to customers and companies. Identify and discuss the major forms of direct marketing. Copyright 2007, Prentice-Hall Inc.