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Part II SALES FORCE ACTIVITIES. Chapter 4: Account Relationship Management. The Key Aspects of Business-to-Business Relationships. Account Relationship Management Concepts. Account Purchasing Process. The Buying Center. Building Account Relationships. Account Relationship
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Part IISALES FORCE ACTIVITIES Chapter 4: Account Relationship Management
Account Relationship Management Concepts Account Purchasing Process The Buying Center Building Account Relationships Account Relationship Binders Figure 4-1: Account Relationship Management Concepts
The Purchasing Process • In order to be successful the sales force must create value for the customer .to better understand how the sales force can create customer value, look through the purchasing process where a sales force can potentially add value . • A key determinant of the nature of the purchasing process is the buying situation faced by an account .
The Purchasing Process • Three different types of situations are possible , each of which will influence the nature of the four steps in the purchasing process, and the opportunity for the seller to provide value to the customer in completing the purchasing process . • 1- straight rebuy purchasing situation , in which the product has been previously purchased , and there is no change desired in the product or offering , it often involves replenishing inventories of products .(add value through :make the purchase easy –convenient –hassle –free as possible , the purchasing dep. Responsible for the entire purchasing process in this situation
The Purchasing Process • 2- A modified rebuy purchasing situation occurs when some changes are anticipated in a product that the buyer has previously been purchasing ( the seller can add the most value . • (a group of people from different functional areas of purchasing organizations is usually involved ) • 3-the new rebuy purchasing situation which is the most complex , the seller has the opportunity to add value for the buyer during three of the four stages of purchasing process, recognition of needs , evaluation of options , implementation and evaluation .
Recognition of Needs Evaluation of Options Purchase Decision Implementation and Evaluation Value Added Role of Sales Force: Figure 4-2:The Typical Purchasing Process
Recognition of needs • Occurs when the account recognizes that a need exists. • The need is immediate and focus on resolving a problem )this type typical of transactional relationship ). • In many consultative- type relationship ,a customer may not be a ware of a problem or opportunity . • For enterprise type , the problem of cost and efficiency are the main customers problem. • Sales person to identify the need must understand the concept of derived demand, which refers to the dynamic in which demand for a product or service is derived from the demand for the customer product s and services .(professional buyer buy to resale ).
Evaluation of Options • Business may spend considerable time and money in searching and evaluating alternative suppliers, depending on the strategic significance of the purchase . • You as a seller must helps the customer make amore informed evaluation of alternatives base on the total worth of the solution to the customer . • The main goals for this is to reduce the cost , like Jawwal Mix program ) • One of the key activities in this phase is the development of a precise statement of the requirement and tolerances referred as product specification. • In transactional type customer developed their own product specifications , before the supplier gets involved in the process ,the customer take decision away from the seller . • In enterprise and consultative customers work together to jointly develop product specification . • Proposals :is a written offer by a seller to provide product or service to a purchasing organization. • Proposal may result from receiving a Request for Proposal (RFP) from a buyer , RFP in a notice that a customer sends out to qualified suppliers asking them to provide specific product with certain specifications.
Purchase Decision • It is the last activity in the sales process, which involve writing orders , persuading, negotiating , finalizing terms, and closing the sale . • This phase is the place to create value for customers in a straight rebuy and in the transactional type of relationship by make the purchasing process easy , convenient, and hassle free .
Implementation and Evaluation • The purchasing process does not end with the purchase , during the seller post purchase phase , the seller obligation is to ensure that all promises are fulfilled and customer expectations are met or exceeded.( no defects, timely arrival , right place, warranties are honored , needed information provided . • After the post purchase activities , the seller focus moves to customer retention and growth . • When effectively managed , conflict can have positive effect on relationship and sales like ; • 1- stimulating interest in exploring new approaches . • 2- providing an opportunity to air problems and explore solutions • 3 mobilizing the resources of the parities in a relationship
No 16% Yes 84% PURCHASING - Survey Results Do you track supplier performance? Do you single out certain suppliers as “preferred”? 9% N.A. Yes 55% No 36% (% of respondents) (% of respondents)
PURCHASING - Survey Results Do you have multiple tiersfor ranking suppliers? No 40% Yes 51% 9% N.A. (% of respondents)
PURCHASING - Survey Results Have any suppliers attained and lost top-level status? No 23% Yes 77% (% of respondents)
PURCHASING - Survey Results Traits of Top-Performing Suppliers (% of respondents) <5% 5% 7% 8% 12% 14% 28% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . Good Management . . . . . . . . . . . . . . . . . . . Good Response/Flexibility . . . . . . . . . . . . . . . . . . . . ISO 9000 Certification . . . . . . . . . . . . . . . . . . . . . . . . . Service . . . . . . . . . . . . . . . On-Time Delivery Quality
Implementation and Evaluation • Value analysis : many organization evaluate suppliers by a formal value analysis , and or vendor analysis . • Value analysis :developed by GE (General Electric )as a basis for cost reduction , it is a detailed analysis of a product . Its focus on the relative cost of providing a necessary function or service at the desired time and place with the necessary quality , value analysis focus on total cost , not just invoice cost . • For repetitively purchased items ,possession cost ,( cost related to holding the inventory and acquisition cost usually far exceed the price on the invoice that the customer pays for the product . • Vendor analysis :similar to value analysis but focus on the vendor by looking at such items as delivery reliability , product quality , price , service , technical competencies and wavelength • Wavelength : measure such value like attitude ,responsiveness, and follow up on details
Supplier tiers • Companies segmenting their supplier base according to the importance of the supplier’s product and the difficulty of finding alternative sources for the product .
Determine the Decision-Making Process • Nothing is more important to driving an accurate selling strategy than understanding your client’s decision-making process. • Project teams typically have a well-defined evaluation process, but not a well-defined decision-making process. • In the law of algebraic democracy, some people’s votes count more than others. • Know who gets a straw vote and who gets a real one.
Determine the Decision-Making Process • A salesperson must understand how a decision will be reached even more clearly than the client does. • You must also understand the approval process once you’ve been chosen. • Analyze each stakeholder based on pain, preference, power, and the part he or she plays in the decision-making process. • Don’t resort to price or discounts to create a sense of urgency. • In negotiation, power lies in alternatives, weakness in deadlines.
(2) The Buying Center • The term buying center refer to :all the people formally or informally involved in the purchasing decision , that is all the people who must say yes for a sale to occur or influence the people who will ultimately say yes or no to the purchase . • The buying center not a formal department in the organization , and the number of people included in the buying center may vary from 1 to 6 or more , depending on numbers of factors , including how many departments use the item , the $ value of the purchase , the product degree of technical sophistication . • A purchasing role refers to the set of issues or concerns that a member of the buying center will consider when deciding whether to approve or recommend either a purchase or a specific supplier . • These concerns may be grouped into one of three purchasing roles , (economic buyer, user buyers, technical buyer ) • An individual member may occupy multiple purchasing roles , but each role is expected to held by at least one member in any major purchasing situations . • A fourth person must also present for the sale to success refer to an advocate .
Economic Buying InfluenceThe person or the committee with the power to give final approval to buy product. ROLE: 4 Asks “Why” 4 Gives final approval CHARACTERISTICS: 4 Access to money 4 Can release money 4 Veto power FOCUS:4 Total organization 4 Bottom line 4 The Future Establish the priority of projects Concerned with the economic health of the firm Can say yes even if every one else say no
User Buying Influencethe role of the user buyer is to determine the impact of the purchase on the job that they or their people perform ROLE:4To decide on how a purchase will affect job performance CHARACTERISTICS:4Implementation oriented 4Use or supervise use of product or service FOCUS: 4Tactical, not strategic 4The job to be performed
Technical Buying Influencethe role of technical buyers is to act as gatekeepers by screening out products and services that do not meet the needs of the buying organization . ROLE: 4To eliminate alternatives 4To recommend CHARACTERISTICS:4Focuses on quantifiable aspects of product and service 4Gatekeeper 4Can only say “no,” not “yes” FOCUS:4Product specifications 4Asks “What,” not “Why”
Advocate ROLE:4Helps guide the sale, buy provide information about the organization and the people involved in the purchase decision CHARACTERISTICS:4May be inside or outside of the buying organization 4Furnishes and interprets information Trust and convinced that you are the best FOCUS:4Your success
Advocate:Ways in Which an Advocate can Help • Recommend selling strategies. • Build a groundswell of interest. • Refer you to other advocates. • Review your presentation. • Gain access to decision-makers.
(3) Building Account Relationships Revolution of relationship : Marketers focus on having long term relationship with customer. companies now learn the salespeople the importance of understanding how to build and enhance professional relationships at all levels in the organizations . Now we are explaining how relationships are likely to evolve over time . According to research in social psychology , relationship evolve through 5 stages .
Dissolution Stage: Warning Signals • Missing information • Uncertainty about information • Uncontacted buying influence • Customer personnel new to the job • Reorganization
Account Relationships • Relationship Enhancers • Creating Value:Acceptable conduct and performance • Meeting Expectations:Measures of performance levels • Building Trust:Importance of trust
Account Relationships • Creating Value: refer to the perception that the rewards exceed the cost associated with establishing and/or expanding a relationship . • Value to buyer not always the lowest list price, may save time or labor , or result in higher sales of the customer’s products. • Through the next chart, for transactional and consultative relationship , focused given to the first 2 phase of the purchasing process , but for enterprise relationship , the focus is to create exceptional customer value through all the four phases of the purchasing process.
Customer Value Creationin the Purchasing Process High Customer Value Low Figure 4-5:Customer Value Creation in the Purchasing Process
Account Relationships • Meeting Expectations: • The involved parties in a relationship are develop expectations , refer as rules or norms, with respect to acceptable conduct and performance . • Acceptable behavior vary by individual preferences ,company policies , national cultures . • Expectation are also develop with respect to performance ,in which performance include the performance of the product , as well as a number of service activities such as frequency of sales calls , notification of price changes , lead time in delivery , emergency orders , and installation .
Account Relationships • Building Trust: • Trust refers to the opinion that an individual’s word or promise can be believed and that the long term interests of the customer will be served . • Trust takes time to develop , research show that salespeople whom buyers trust possess the following five attributes :
Figure 4-7: Account Relationship Strategy and Relationship Binders
