Building Account Relationships

Xerox 5,000 500 -90%Motorola 10,000 3,000 -70%Digital Equipment 9,000 3,000 -67%General Motors 1,800 1,000 -44%Ford Motor 1,800 1,000 -44%Texas Instruments 22,000 14,000 -36%Rainbird 520 380 -27%Allied Signal Aerospace 7,500 6,000 -20%

Number of Suppliers Percent Previous Current Change

SUPPLIER REDUCTION TRENDS

Relationship Selling Stage Objectives

Awareness

Exploration

Expansion

Commitment

Dissolution

• Gain customer attention• Demonstrate how product can serve need

• Gain initial acceptance• Build toward successful relationship

• Know customer & business even better• Look for additional ways to help customer

• Greater organization level interactions• Supplier involvement in development process• Long-term focus

• Warning signals• Reinitiate relationship

Account Relationships

Exploration Stage: Pricing FlexibilityConsider the following sales force market conditions:

• Demand is highly price elastic

• Product/service offering is complex

• A heterogeneous customer base

• Large number of product lines

• Products are perishable

Which of the following is the best alternative:

Account Relationships

Exploration Stage: Pricing FlexibilityAlternative Management Systems

• Low Pricing Authority: Management approval required for all price discounts

• Medium Pricing Authority: A specific limit placed on discounting (e.g., 10% below list price)

• High Pricing Authority:Base commissions on gross margins

to control price discounting

Account Relationships

Pricing Flexibility: Research Results

Lower Authority

Medium Authority

High Authority

° Highest gross margins° Highest sales growth° Highest return on assest

° Highest sales/salesperson° Average return on assets

°Lowest gross margins° Lowest sales growth° Lowest return on assets

Account Relationships

BUSINESS EXPANSION QUESTIONS

EXISTING USE

POSSIBLE NEEDS

POSSIBLE SOLUTIONS

POSSIBLE NEW USES

DECISION CRITERIA

What limits current operations? What makes them more difficult than they need to be?

Which of these are most important? What do managers see as their worst

problems?

What do managers need to make theiroperations better?

What do they want to maketheir life easier and more pleasant?

What does the client think might be possible

Which do they favor?

What new operations do they believe might be

possible? Which do they favor?

In supporting any solution, what would thebusiness and personal criteria be?

JUST IN TIMEPHILOSOPHY

Removing waste and developing a program of continuous improvement by providing

perfect quality products

exact quantities needed, at the

precise time needed, at the

lowest total delivered cost.

JUST-IN-TIMEBENEFITS

JIT Supplier

Higher market share Customer focus

Demand predictability Investments in productivity Technology sharing

Cycle-time reduction Error-free communication

Quality processes Productivity Gain-sharing

JIT Customer

Management coordination

Supplier focus

Assured source of supply

Technology sharing

Cycle-time reduction Error-free

communication

Quality processes Productivity Gain-sharing

SourceSmallersupplierbase

Long-termagreements

Open, frequent, responsive communication

Continuous improvement philosophy

Dissolution Stage: Warning Signals

• Missing information

• Uncertainty about information

• Uncontacted buying influence

• Customer personnel new to the job

• Reorganization

ACCOUNT RELATIONSHIPS

Relationship Enhancers

• Value -- Reward exceeds cost of relationship

• Expectations -- Measures of performance levels

• Bargaining -- A valued customer expects

• Trust -- Importance of Trust

ACCOUNT RELATIONSHIPS

A “VALUED” CUSTOMERJacobs is about to close the sale when the buyer mentions, “There’s been $5,500 worth of breakage because of your lousy packaging, but I’m willing to split it with you if you give the word right now. I’ve another appointment beginning in a few minutes.” Jacobs suspects that the breakage was the fault of the buyer’s handling equipment, but cannot prove it.Thinking that splitting the difference is always a reasonable way out, Jacobs decides to agree with the buyer and to get the contract signed.

Do you agree with Jacobs’ reasoning? What would you advise Jacobs to have done, if you were her sales manager?

Account Relationships

EARNING BUYER TRUST WHAT IS MOST IMPORTANT?

Trust Earning ComponentsLikeable

Competent

Dependable

Customer Oriented

Honest

Sample Questions“The manufacturers’ rep is

an individual who people enjoy knowing.”

“The manufacturers’ rep knows what he/she is talking about.”

“The manufacturers’ rep is very dependable.”

“The manufacturers’ rep puts the buyer’s interest ahead of his/her own.”

“The manufacturers’ rep is one of the most honest persons in the business.”

Relationship Enhancers Earning Buyer’s Trust

Trust Earning SalesComponent People Buyers

Likeable 1 5Competent 2 2Dependable 5 1Customer Oriented 3 3Honest 4 4

Source: Hawes, Mast & Swan (2009)PS&SM: 193 Salespeople; 173 Purchasing Agents

ACCOUNT RELATIONSHIPS