Topic 9
Overview of Selling Strategy
I. Why a Brief Overview?
II. Three Basic Sales Force Strategies
III. Easy and Hard Sales Situations
IV. Relationship Selling
V. Organizational Purchasing Process
VI. Buying Center
VII. Economic, Technical and User Influences
VIII. Building Trust
IX. Annual Assessment of Key Customers
I. Why A Brief Overview?
How to sell and personal selling has enough content for a full course. The AU marketing department
currently offers an elective class on the undergraduate and Executive MBA level on personal selling.
This overview highlights sales strategy issues. This class focuses more on sales strategy and how to
recruit, motivate, train and strategically use a sales force.
II. Three Basic Sales Force Strategies
1] Low Cost Marketing Strategy - seeks vigorous pursuit of cost reductions from experience and tight cost
control. Sales force role: Service large current customers, pursue large prospects, minimize costs, sell on
the basis of price. The salespeople often have significant order-taking responsibilities.
2] Differentiation Marketing Strategy - creating an offering perceived as being unique leading to high
brand loyalty and low price sensitivity. Sales Force Role: Sell non-price benefits, educate the customer,
provide consulting, order-generating, servicing, and be responsive to needs of customers. High-quality
sales force is usually required.
3] Niche Marketing Strategy: Servicing a target market effectively, focusing all decisions with the target
market needs in mind, dominating sales with the segment. Sales Force Role: Experts in the operations
and opportunities associated with a target market. High margins needed. Focus on non-price benefits,
and allocate sales time to the target market.
III. Easy & Hard Sales Situations
There is no “one way” of doing sales jobs. Selling varies due to different customer buying
processes and different degrees of product complexity & risk. The competitive environment, market
demand, number and aggressiveness of competitors and the health of the economy all have an impact.
For example, some customers do not have the sales levels necessary to justify calling them faceto-face even once. All current customers and all potential customers are not equally important. You have
to prioritize customers based on what their needs are and the potential profitability for your company.
You cannot have a relationship (or relationship selling) with every customer.
The key used to determine the success/failure of personal selling efforts is profitability.
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Selling is easy (and high levels of salesperson skills are not necessary) when:
You have a critical product advantage and no direct competitors or
You are the lowest cost product available or
The product is being sold to the trade on a restocking basis with lots of preselling (Coke).
Selling is Harder when:
You have some product advantages, but they are not unique and the selling price is higher.
Selling is Hardest when:
You are trying to gain new customers, especially for capital purchases or when the product is not the
lowest cost alternative and lacks a clear product advantage.
IV. Relationship Selling
This goes beyond just making a transaction with a customer. You try to enhance the effectiveness of the
purchasing firm, to share information to lower total costs, and develop a long-term business relationship.
Note that relationship marketing is not often not profitable or feasible unless the buyer is a major
purchaser. Developing the information needed to perform relationship marketing is very costly in terms
of time and money.
The relationship marketing trend has a major point. It is usually cheaper to retain a current client
than it is to gain a new client. Discuss cost to get vs. retain a customer. Often it is easier to get new
business from existing clients rather than from firms that have not purchased from you. Always balance
the cost of forming a relationship with the profit obtained. Not all clients will desire or benefit from a
relationship approach.
Traditional View
Goal is to make the sale.
Relationship View
Goal is to create a customer.
Objective is to make the sale and
find the next customer.
Objective is to satisfy the customer you have by
delivering superior value.
Growth comes from new customers.
offerings
Growth comes mostly from enhanced product
for existing clients
Supplier is valued for products and
problem services at a price.
Supplier is valued for its present and future
solving abilities.
[Frederick Webster at Marketing Educator’s Conference, August 8, 1993.]
V. Organizational Purchasing Process
There are three general types of purchasing situations for business customers. The sales process
and the relative advantage of the “in-supplier” (the company who currently holds the business) over the
“out-suppliers” differs profoundly.
Straight Rebuy - Customer repurchases, sometimes from a list of approved suppliers. Sometimes
done through automatic, computerized purchasing when stocks go below a certain level (sometimes called
electronic data interface or EDI). One person (purchasing agent) or perhaps no people (EDI) are
involved. Difficult to get purchaser to switch suppliers unless there are clear cost savings or there are
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product problems. The in-supplier has a profound advantage. The out-suppliers hope that the in-supplier
makes an error, or that the purchaser decides to reconsider the entire purchasing situation.
Modified Rebuy - More than one person may be involved, but often just the purchasing agent.
Basic decision criteria are set, but firm has slightly altered requirements or is choosing between suppliers.
In-supplier has an advantage, but not as profound as with straight rebuy. The purchaser is reconsidering
the purchase and is open to suggestions or considerations on how to do things at least somewhat
differently.
New Purchase - refers to a situation where extensive problem solving takes place. Although
called new purchase, it may be something the company has purchased previously. Almost always done
for large capital purchases, or purchases key to the core product of the company, or changes in basic
business procedures. Buying center with many members is almost always used. The in-supplier has the
weakest advantage in this situation.
Setting Specifications defines the characteristics and quantity of items to be purchased. Final
specifications can favor one product over another, so this is a critical step. This is often done early in the
process in both modified rebuy and new purchase. Being an in-supplier means that you often have the
potential to realize that specifications are being set or that the purchasing situation has changed to a
modified rebuy or a new purchase situation. Often information is key.
Performance evaluation is the critical area where repurchase decisions are made. Regardless of
the salespersons abilities, poorly performing products are not repurchased.
VI. Buying Center - all people formally or informally involved in the purchasing decision. It is all of the
people who must say “yes” for a sale to occur or influence the people who will ultimately say “yes” or
“no” to a purchase decision. This is not a formal department and its composition changes over time.
Explain.
This is critical for salespeople. Salespeople must know what stage in the purchasing process each
account is currently emphasizing. Salespeople have to focus on who has the most influence at each stage
and which factors are most important to each functional area. Salespeople may sell to purchasing agents,
engineers, production managers and controllers in order to close a single sale. Determining who is
involved in the purchase decision, and the role they are playing in the purchase is critical, and often
difficult to do.
Customers’ buying centers are likely to involve a wider variety of participants when they are
considering the purchase of a technically complex, expensive product than when the purchase involves a
simpler or less costly product. Team selling is most often used when companies sell complex and
expensive products or products that change the basic way the firm does business (computer systems,
production equipment, inventory control systems, logistics, etc...).
Buying centers are common for new purchase decisions and almost never used for straight
rebuys. Simply knowing who is involved in the buying center and their role in the decision making
process is a critical advantage to a seller.
Some common members of a buying center include:
Purchasing Agents - are professional buyers in a firm. They typically are highly educated and
have 10 or more years of experience. They are expert in negotiations and tend to have good knowledge
about the suppliers and competitors product offerings and terms of sale. They have the most influence at
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the end of the purchasing cycle for new products and may be the only decider for straight rebuy or
modified rebuys.
Engineers are primarily concerned with technical aspects of the product. They set technical
specifications for purchasers and evaluate how well items meet these standards. They often appreciate
useful data or technical assistance.
Production Managers focus on the assembly line and are interested in speed of delivery, inventory
savings and ways to improve labor productivity.
Controllers are financial experts primarily concerned with terms of sale and purchase contracts.
Financing and leasing options are of great interest to them.
Gatekeepers - control the flow of information of people involved in the purchase. Often done by
purchasing agents or screens (support staff who decide if the salesperson can see an individual in the
firm).
Users – These are the people who use the product or service. They may be internal to the
company or may be the customers of the purchasing company. Users are very important in terms of
defining the initial problem, but often fade in importance compared to the other people in the buying
center.
Salespeople must determine who the buyer is (the one who places the order) and most especially
the decider (person with the final authority to make the purchase). The buyer and the decider can be
different people. If you do not convince the decider, you do not get the sale.
Often the most critical first step is having a friend or informant within the company who will
inform the salesperson what the critical problem is, who is impacted by the problem, the people involved
in the decision, and the role each decision maker plays. It is hard to over-estimate the critical role that
accurate information plays in complex decision making. Remember, buying centers are not identified on
organizational charts. The real issues in play are often opaque to an outsider.
VII. Economic, Technical and User Buying Influences
Economic Buying Influence - person or committee that has the power to give final approval to buy your
product or service. They have the money and authority to spend it. Focus is not just on price, but on
value.
The buyer must be identified in each sale. The organizational position depends on the dollar
amount of the purchase, the business condition of the purchaser, the experience with you and your firm,
product experience, and the potential organizational impact of the purchase.
The more expensive the product, the more depressed the organizations business condition, the
less experience the customer has with you, your firm, and the product, and the greater risk of a poor
purchase the more likely it is that the buyer will be higher up the organization.
User Buying Influence - determines the impact of the purchase on the job that they or their people
perform. The focus is narrower than an economic buyer because they are primarily concerned with their
own operating areas or departments. Each user is concerned with how the purchase will help them do
their job better or easier. Salespeople need to be conversant with a variety of functional areas.
Acceptance must be gained by the using department because if there is poor product performance, there
will be no repeat purchase.
Technical Buying Influence - acts as gatekeeper by screening out products and suppliers not meeting the
needs of the buying organization. They function to narrow down choices and suppliers. They can't say
yes, only no.
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They tend to focus on quantifiable aspects of the purchase. Engineers, legal counsel and purchasing
agents often function here. Some salespeople are fooled that these people are economic buyers, but they
are not.
You need a friend in the firm you are trying to sell to - For complex purchase situations, it is important to
have a friend who can guide the salesperson to members of the buying committee and identify the focus
of members of the various influences. They can be internal or external to the firm. They do not make the
purchase decision, but can provide information.
VIII. Building Trust
First, make sure the basics are correct. Are orders filled and delivered promptly. Is training to
use the product adequate? Are they using the product correctly? Is billing accurate? Are inventory levels
at the proper level?
Then, reinforce the value of your product to the purchaser before the next order. Value is not just
price, it includes time savings, labor savings, greater sales of the customers products.
Make sure your customers know in advance of any changes in policy and procedures including
delivery, new products, dropping old products (discuss), emergency orders, installation, price changes,
etc...
Don't Lie. Trust is a valuable asset. Don't squander it. For example:
Follow through on your promises.
Know what you are talking about (competence)
Put the purchasers interests first.
Tell the Truth
Be likable.
IX. Annual Assessment of Key Customers - A yearly, written assessment of key customers can help a
salesperson. Sample questions include:
Market: What markets do they serve? Who are their major competitors?
Financial: When does the annual capital budgeting process begin and end? What hurtles must be
crossed to win budgeting approval? What is projected capital spending for the year?
Organizational: What are the top business objectives each relevant department manager is
expected to achieve in the current year?
Operational: What are the specific measures of performance for your products or services?
Personnel: Who are the people having a direct or indirect influence on buying decisions for your
brands? What are their formal responsibilities? What is your relationship with each person?
Competitive: Which of your competitors are doing business with the account? What is the
account share of each competitor? Which ones are likely to gain share?
Amazingly, surveys have indicated that 47% of salespeople admit to not having a clue about their
customer’s biggest concerns.
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