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2002 Edition

Vitale and Giglierano

Chapter 11Business-to-Business Selling: Developing and Managing the Customer Relationship

Prepared by John T. Drea, Western Illinois University

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Both Sellers and Buyers Are “Boundary Personnel”

BoundaryPersonnelBoundaryPersonnel

Individuals in the organization who span the boundaries of their own organizations and those of customers.

Boundary personnel serve as the liaison withother key organizations – they can be a major

asset in the buyer-seller relationship.

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Exhibit 11-1 Business-to-Business Selling Characteristics

1. Repeated, ongoing relationships

2. Solution-oriented, total system effort

3. Long time period before selling effort pays off

4. Continuous adjustment of needs

5. Creativity in problem solving often demanded by buyer of seller

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1. Repeated, ongoing relationships1. Repeated, ongoing relationships

• The relationship between the seller and buying center members is a series of dyadic interactions– One-to-one meetings or interactions

between stakeholders in the buying center and the seller or other individuals in the selling organization’s value chain.

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2. Solution-oriented, total system effort2. Solution-oriented, total system effort

• Customers buy solutions, not technologies or core products.– The seller and the selling organization

must understand the needs of the customer.

– The seller must also understand the different motivating elements between members of the customer buying center.

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3. Long time period before selling effort pays off

3. Long time period before selling effort pays off

• In business-to-business selling, the outcome of the sales effort may not be known for months (or years!)– It is important to use the development

period to reinforce the value offering relative to competitive offerings.

– Reduce buyer perceptions of risk by reinforcing the total value of the offering.

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4. Continuous adjustment of needs4. Continuous adjustment of needs

• It is important to be flexible and responsive to the changing needs of customers.

• Customer needs evolve as they learn more about the sellers offering and how the offering can be applied to their needs.

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5. Creativity in problem solving often demanded by buyer of seller5. Creativity in problem solving

often demanded by buyer of seller

• Customization of the offering to meet the specific needs of the buyer is expected, especially by large customers.

• Approaching each customer’s problem in such a way that the customer perceives the offering as unique is particularly advantageous.– Can relieve the seller of concerns relative to

pricing

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What Constitutes a “Relationship” in Relationship Marketing?

DiscreteExchange

MultipleTransactions

Collaboration/Partnering

Differentiating an Undifferentiated

Product

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Philosophies of Marketing

ProductionEra

ProductionEra

Societal/Partnering/

Value NetworkEra

Societal/Partnering/

Value NetworkEra

SalesEraSalesEra

MarketingEra

MarketingEra

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Four Forms of Seller Roles

Order Taker Primary role is taking orders and ensuring timely delivery of products.

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Four Forms of Seller Roles

Order Taker

Persuader/Sustainer

Primary role is taking orders and ensuring timely delivery of products.

Updates customers about offerings, attempts to convince customers of offering value.

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Four Forms of Seller Roles

Order Taker

Persuader/Sustainer

Motivator/Problem Solver

Primary role is taking orders and ensuring timely delivery of products.

Updates customers about offerings, attempts to convince customers of offering value.

Assists customers in maximizing product value by providing advice and customer education.

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Four Forms of Seller Roles

Order Taker

Persuader/Sustainer

Motivator/Problem Solver

Relationship/Value Creator

Primary role is taking orders and ensuring timely delivery of products.

Updates customers about offerings, attempts to convince customers of offering value.

Assists customers in maximizing product value by providing advice and customer education.

Creates a partnership with the buying center that stimulates customers. Often built by sales and marketing teams.

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Culture

Buying Center and Buying Patterns

Channels

Competitors

Markets and Customers

Products

Sellers must know and understand the customers’…

Technologies

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Other Types of Selling Roles

• Missionary Sellers/Field Marketers– Critical in finding new customers, new

market segments, and developing business within existing accounts.

• Post-Sale Customer Service– Effective customer service can reinforce

the purchase decision and create superior value for a customer.

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Exhibit 11-2 Organizational Relationship - Field Sales and Field Marketing

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Organizational buyers and sellers have

three needs to satisfy:

Organizational buyers and sellers have

three needs to satisfy:

1. The needs of the job function

3. The individual needs of the buyer and seller.

2. The needs of the organization

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DirectSales Force

Field sellers directly employed by the supplier of the offering

Manufacturers’Representative

An independent businessperson who does not take title and usually represents several non-competing producers

DistributorsRepresents a manufacturer’s goods by taking ownership and providing local inventory

Selling Structure

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Top-Down and Bottom-Up Forecasts

Top-Down:The result of

researchefforts to forecastmarket

Potential, thenReducing it toSegments in

question

Bottom-Up:Begins withan analysis

of how muchproduct can be

sold to eachcustomer in a

particularterritory.

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Sales Force Compensation

StraightCommission

StraightCommission

CombinationPlans

CombinationPlans

StraightSalary

StraightSalary

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StraightCommission

StraightCommission

•Most appropriate where repeat efforts are necessary to sustain customer purchases.•Rewards are linked to short-term, repeated performance.•Sellers will likely concentrate on customers that have a patterns of frequent and substantial purchases.•Inappropriate during new product introductions.•May not work well for sophisticated products where missionary work is needed.•Compensation variability/volatility may create problems for the sellers.

Sales Force Compensation

Methods

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•Management is able to exercise greater control over the sales force (compared to straight commission).•Appropriate when personnel in selling roles are required to provide design and engineering assistance.•Motivator/problem solver and relationship/value creator roles are appropriate for straight salary compensation.•Creates stability of sales employees.•Does not tie financial rewards to sales results – may attract personnel who are security oriented instead of achievement oriented.

Sales Force Compensation

Methods

StraightSalaryStraightSalary

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CombinationPlan

CombinationPlan

•Most frequently used form of compensation.•Salary portion of compensation corresponds to management’s needs for the sales staff to perform administrative duties, while the commission portion encourages increased selling effort.•The commission portion of the compensation is paid as it is earned, as opposed to a bonus (most likely paid on a quarterly or annual basis).

Sales Force Compensation

Methods

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Manufacturers Representatives

Memo to reps:Reps are compensatedwhen the sale is culminated. In most instances, this occurs when the customer has paid the invoice.

When is a sale booked? Why are fixed costsimportant?

Memo to reps:Rep compensation isa variable cost. Reps cover the fixedcosts throughcommissions earned on all products represented. Addingmore related productshelps cover fixed costs.

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Direct Sales or Mfg. Representatives?

• Appropriate for direct sales force– Product is technically

complex– Control is important– Missionary work

needed to build relationships

– Concentrated customer base

– Explicit customer feedback desired

• Appropriate for mfg. representatives– Product is generic or

standardized– Control is less

important– Reps have other

complimentary lines– Market is dispersed

and matches rep’s existing call patterns

– Direct customer feedback is less critical