Account Relationship Management Topic 4 Sales Management 1

Account Relationship Management Topic 4 Sales Management 1

AIM: account relationship management. OBJECTIVES: 4. 1 Identify the steps in the professional purchasing process. 4. 2 Identify the different buying influences in the buying center. 4. 3 Explain how relationships are likely to evolve. 4. 4 Describe factors critical to gaining commitment to a relationship. 2

4. 1: Steps in the Professional Purchasing Process • In order to be successful the sales force must create value for the customer. • Sales force can add value in the purchasing process. Recognition Of needs Evaluation of options Purchase decision Implementation and evaluation 3

1: Recognition of Needs: • Need may be immediate & focus on resolving a problem. • Help customers recognize a need or problem & to define them in a new or different way. • Derived demand – demand for product is derived from customers demand (in B 2 B, purchasing is for production not personal reasons. 4

2. : Evaluation of Options: • Business may spend a lot of time searching/evaluating suppliers. • Specification- of product which will dictate the cost to produce the product. • In transactional relationship customers mostly develop specs before supplier gets involved. • In consultative relationship customers & suppliers both work jointly to develop product specs. 5

• Proposals- a sales proposal is a written offer by a seller to provide a product to a purchasing org. • RFP – (request for proposal) is a notice that a customer sends out to qualified suppliers asking them to bid on a project with a certain spec. • in purchasing for building, contractors may consider service, product quality, supplier support, low price. 6

3. : Purchase Decision: A purchase decision using one of the three: • a straight rebuy (involves replenishing inventories). Seller adds values by making it convenient. • a modified rebuy (some changes in the offering are present) • a new buy (customer has not previously purchased the offering). 7

4. : Implementation & Evaluation: • Sellers obligation in the purchasing process is to ensure that all promises are fulfilled & customer expectations are met. • Some potential benefits conflict mgt are 1. stimulating interest in exploring new approaches, 2. providing an opportunity to air problems & explore solutions, 3. mobilising the resources of the parties in a relationship. 8

• Many orgs. Evaluate their suppliers by a formal value analysis (vendor analysis) • VA basis for cost reduction – relative cost of providing a necessary function or service at desired time & place with necessary quality. • VA is similar to value analysis but focuses on the vendor by looking at reliability, product quality, delivery and cost conpetitiveness. 9

Supplier Tiers Tier Type of Supplier A B Nature of Relationship In-supplier A traditional ‘arms-length’ relationship, usually established at an individual level over time. Standardized products Preferred Relatships centers on suppliers products. High level of trust & familiarity bet. Supplier & customer C Extended Involves several collaborative process – product design, inven. mgt, sales force training. D Partner Supplier is key to customers ongoing competitive position. 10

• Companies are segmenting their supplier base according to importance of suppliers product & difficulty of finding alternative sources. • Placing suppliers in tiers. Some suppliers are much more important than others. • Complex sales is when various people in the customers org. must give approval before a sales takes place. 11

4. 2: Different Buying Influences in the Buying Center • Buying centre – all the people formally/informally involved in the purchasing decision. • A purchasing role – the set of issues or concerns that a member of buying center will consider before dis/approving purchase. • An individual may occupy multiple purchasing roles, a 4 th person must be present for sale to be concluded known as an advocate. 12

Purchasing Roles: 1. Economic buyers • person or committee with the power to give final approval to buy a product. • Establishes the priority of projects • Is concerned about the economic health of the business • Focuses on future, asks why and can say ‘yes’ when others say ‘no’ (vice versa) • Seller must identify the EB, by asking who started the project, who will be affected by the outcome of the project, who has highest rank & greatest influence. 13

2. User Buyer • Role is to determine the impact of purchase on the job that they/workers perform. • Their focus is more narrow than economic buyer. • Users are mostly personnel whose daily work will be affected by the product. • Focus on past & present rather than future (except to ask how will this affect me). 14

3. Technical Buyers • Act as gatekeepers by screening out products & suppliers that do not meet the needs of the buying org. • Can have powerful influence on final decision but by themselves cant say ‘yes’ or ‘no’. • Focus on specifications of the product e. g. engineers, legal counsel & purchasing agents. • May be able to say ‘no’ but needs approval to say ‘yes’, can recommend, influencer to decision maker, focused on present, asks ‘what’ but does not ask ‘why not’. 15

• Advocate – used in a complex selling involving multiple buying influences. • Role of advocate is to help guide you in the sale by providing critical infor. about the org. & people involved in buying. • Advocate may be internal or external to org. they are able to sell for you in your absence. • Advocates may win due to personal (want u to win bec they like you), professional (are better), recognition (from their own org), negative (wants someone else to lose) reasons. 16

Advocate may help the sales person: • Recommending selling strategies • Build a groundswell of interest (encourage discussion among decision makers) • Refer you to other advocates • Review your presentation • Gain access to decision makers. An advocate is critical & must be selected & developed with care. 17

Challenges • Salespeople must be diverse in their knowledge & flexible in behavior. • Technical buyers may be the most frustrating & professionally challenging people in the buying center. • It is important to understand why a gatekeeper would want to block you from completing a sale. 18

4. 3: How Relationships Evolve. Growing relationships evolve through 5 stages: • Awareness • Exploration • Expansion • Commitment • Dissolution May be difficult to determine exactly when a relationship moves to next stage. Salespeople should be aware of these chagnes & proceed accordingly. 19

Relationship Stage Description Key Selling Objectives Awareness Recognition that a supplier may be able to satisfy an important need. • Gain customer’s attention • Demonstrate how product can satisfy need Exploration A tentative initial trial with limited commitments by both parties. May go on for extend time. • Gain initial acceptance • Build a successful rel. ship. Expansion of rewards for each party in the relationship. • Get to know customers & their business better • Expand ways to help customer Commitment by both buyer & seller to an exclusive relationship • Interaction at levels between the buyer’s & seller’s org. • Early supplier involvement in dev. processes. Dissolution Total disengagement from the relationship. This may occur at any point in the relationship. • Look for warning signals • Attempt to reinitiate the relationship. 20

4. 4: Factors Critical to Gaining Commitment to a Relationship Salespeople should be aware of factors that lead to committed relationships – • creating value, • meeting expectations & • building trust. 21

Creating Value • Value refers to the perception that the rewards exceed the costs associated with establishing and/or expanding a relationship. • Value may be low price, save time & labour. • Transactional relationship makes purchasing hassle free & easy, in the last 2 stages of purchasing. • Consultative customer relationships create value by helping customers solve problems & identify opportunities for growth in the 1 st 2 stages of purchasing. • Enterprice relationship is to create exceptional customer value in all 4 phases of the purchasing process. 22

Meeting Expectations • Involved parties develop expectations (referred to as rules/norms) with respect to acceptable conduct & performance. • This depends on company policies, individual preferences, national cultures. • Salesperson must be careful not to encourage unfavorable buyer expectations as a result of present behaviors. • At times cross functional teams are assigned to meet customer expectations. 23

Building Trust • That an individual's word/promise can be believed. • Very important to buyers and sellers. 5 most important trust earning attributes of salespeople are: - dependability (complete promises) - competence (know what they are talking) - customer orientation (put buyers interest) - honesty (tell truth) - likeability (buyer enjoys knowing) 24