PURPOSE OF SALESFORCE

Earlier days

Communicate value of their companies offerings Creating value by bringing in revenue But bringing in revenue collecting value bringing in revenue creating value

Today's scenario

Value is in the eye of the beholder Buyers know as much about the products as sellers do Sales force must create value , rather then just communicating it

WAYS FOR SALES DEPARTMENT TO

CREATE VALUE
1.

Generate additional benefits

Increase the ability of the sales force to deliver benefit by

Giving technical support Improving their problem solving capabilities Working more on customers issues

2.

Reduce cost of existing benefits

Create value by cutting sales cost Eg. Using telephonic selling or electronic commerce

Better approach depends entirely on customer as even different customer in same industry have different notions of value.

SEGMENTING BY SIZE ISNT SUFFICIENT

Despite superficial similarities customers have very different needs Eg. Needs of three of three insurance brokers of roughly the same size

1.

Customer A - wants just cheap quotes quickly

Customer B - wants working assistance in establishing the tool. Customer C - wants strategic partnership to work and develop the tool

2.

3.

MATCHING STRATEGY TO CUSTOMERS

Different approaches for selling to different customers even if customers are similarly sized Customers should be segmented according to the way they perceive value Three such segmentations:

Transactional sales Consultative sales Enterprise sales

INVESTING TO MEET CUSTOMERS EXPECTATIONS

Investment by Supplier
Waste (Over resourcing)
Consultative sales Enterprise sales

Transactional sales

Risk (Competitive vulnerability)

Investment by Customer

TRANSACTIONAL SALES

Related to customer A Want:

Favorable cost Ease of acquisition To waste no time with salespersons Sales techniques to be efficient, risk and hassle free

E.g. Walmart

E.G. A BOTTOM-LINE BUYER

A manufacturer of packaging material

Competed in a market where 90% of the players were transactional buyers

Cost were slightly high, hence losing sales Upgraded sales-force from sales reps to packaging consultants

Costs:

Recruit, retain and develop new marketing strategy - $10 mn Operating Expense, cost of each call - $890

Strategy was a disaster Customers wanted neither value nor advice. For them the value lay in the product

CONSULTATIVE SALES

Related to customer B Value is not inherent in the product; it lies chiefly on how the product is used

Put premium on advice and help

For Sales:

Persuasion is not important Ability to listen to and understand the customers requirements is of utmost importance

Empathy takes precedence over knowledge

CUMULATIVE SALES, CONT.

Sales-force need to create value not communicate value

Help customers understand their problems and responsibilities in a new or different ways

Provide better solutions than customers would have discovered themselves

Act as their advocate inside their own company (ensure resources and solutions are tailored to their specifications

E.G. MAKE THE SALE AND MOVE ON

A Consulting firm

Did not have dedicated sales force

Its consultants worked closely with client to create tailored solutions

New CEO horrified to see expensive consultants in business development process

Created dedicated sales team

Ruthless cost efficiency Increase coverage Did not spend time in understanding customers requirement

New customer contacts quadrupled, cost fell by half

Companys most profitable clients moved on to competitors as they bought consultatively and were willing to pay premium for that

Lost business, removed the CEO and went back to previous model

ENTERPRISE SALES

Related to customer C Demand Extraordinary level of value creation Dont simply want products and advice of the supplier

Want to make full use of suppliers core competencies

It is an alliance between business equals working

together to create value that neither could create alone

E.G. THE END OF A RELATIONSHIP

A manufacturer of containers Long term relationship with a major food company Customer asked for a different type of relationship,

that would involve:

Taking some of the customers production activities Joining with it to develop radically new approaches to

packaging

CEO of packaging company saw a risk and denied the offer

TAKE AWAY

It is fatal to adopt one sales model when customer wants another

Sales cannot transform customer from one form to

another

Customers requirements are changing dramatically as they are becoming increasingly clear of what they want

VIEWS - DEBATABLE

Sales segment

Enterprise Sales It is a strategic business alliance Product and sales force are secondary Primary function is to leverage any and all of the suppliers corporate

assets

No sales person or sales team can setup or maintain an enterprise relationship Invariably initiated at high level in both organizations

It should not be considered as a part of sales segmentation. It is a alliance between two companies with no role to be played by the sales team

THANK YOU