A Cinderella Story
The story of Cinderella is an ancient fable of victory, recognition of inherent merit and rightful restoration. The heroine is maltreated by a malevolent stepmother but achieves happiness and marries a prince through the benevolent intervention of a fairy godmother. The tale itself is 9th century AD Chinese and is later disseminated into Western culture. Cinderella is the embodiment of a person or thing of merit, undeservedly neglected or forced into a wretched or obscure existence. This person suddenly or unexpectedly arises to recognition and success.
In relationship to it's sexier stepsister "marketing," "sales" has been perceived as the soot covered and dirty Cinderella. Yet, the fairy godmother of change has created circumstances that will take Cinderella to the ball and eventual marriage to the prince.
Academics and companies have traditionally viewed the salesforce and its management as a mere sub-set of the promotional (communications) element of the marketing mix (the traditional 4-Ps). Sales has not been fully appreciated as to the degree of its integration into the wider marketing activities of the firm and its specific importance in selling to industrial and organizational markets. Major and relatively recent developments dictate rethinking this limited view. Appreciation of the expanding importance of the role of sales require consideration of changes in attitudes and practices of salesforce management and training.
Factors Changing the Selling Profession
External Variables. These variables are external to the sales organization and require understanding and management to enhance sales and profitability. The sales organization does not control these and must respond or react as the external variables independently evolve. These variables are reported by Hartley and Starkey in an original study (Abberton and Associates, 1991) and include (Hartley and Starkey, 1996, p. 20):
1. Changing customer needs.
2. increasing customer sophistication;
3. the evolution of new customer supplier relationships;
4. increases in the demands suppliers make on sales people; and increasing internationalization.
Internal Variables. These variables are controllable by the sales organization by taking a "proactive" approach in order to enhance sales and profitability and reduce selling costs. The most important ones from the study are:
1. Salesforce effectiveness - increasing emphasis placed here. Focus is on "profits" vs. "sales potential" when attempting to optimize market coverage and deployment of resources.
2. Salesforce efficiency - the increasing costs of supporting a salesforce are driving companies to seek savings through efficiencies.
3. Multiple and new methods of customer contact - face-to-face selling by the company's "field sales force" is being supplemented and supported by: (a) direct mail, (b) telesales, (c) merchandizers, (d) third party sales support companies, etc.
(As accounts are segmented by potential and loyalty, top accounts receive the most intense "relationship" attention by the account executive with lesser accounts relegated to increased communication via these "supporting" methods. Thus, salesforce organizational forms are shifting (Cluster selling at Marriott is an example).
4. New technology is a catalyst for change - technology in all of its forms is driving change. (Salesforce Automation -SFA is a family of technological tools).
Rethinking the Sales Force
The above "sea changes" in the new economic environment has initiated a new way of conceiving and using the sales force. These changes are leading to a redefinition and focus of "selling." The old focus of selling was on the "selling process" as viewed through the eyes of the selling organization. The new focus of selling is on the "buying process" as seen and valued by the customer. Successful salesforces of the future will create and capture customer value.
1. The Buying Process - Customers select one product over another based on the added value that they perceive. Sales people can (but not always) add value during the buying process. Customers typically buy products/services (especially complex products/services)in the following stages:
a. Recognition of Needs - The value that a salesperson can add at this stage is the help customers recognize and define problems and needs in a new or different way.
b. Evaluation of Options (Alternative products) - The value that a salesperson can add here is to show superior solutions, options, and approaches that customers may not have understood or considered.
c. Resolution of Concerns (Decide on one of the alternative products)-Value here is created by the salesperson in helping customers to overcome and remove obstacles to acquisition.
d. Purchase (Logistics of acquisition) - The value a salesperson can contribute here is to make the purchase painless, convenient, and hassle-free.
e. Implementation - The salesperson adds value by showing customers how to install and use the product/service.
The new selling profession focuses on the buying process and how the salesperson can create value for the customer. Value is created within the buying process; this added value above and beyond the intrinsics of the product/service.
2. Three Emerging Selling Modes - The old saying that "selling is selling" comes from a widely accepted but outdated myth that there is a single set of basic sales principles that applies to all selling situations. The new economic and technological environment has dramatically changed this notion.
The three emerging selling modes are "situational." The appropriateness of which selling mode to use depends on: (a) simple or complex product or service, (b) selling in a "single-call" (salesperson initially meets and attempts to "close the sale" in one appointment) or "multiple-call" selling, (c) number of people involved in purchase decision, and (d) sophistication level of buyer. The three modes are: Transactional Sales, Consultative Sales and Partnering Sales.
a. Transactional Sales - This form is the oldest form of selling. It evolved in the early history of selling (think of traveling peddlers). The form became more sophisticated over the years, however it retained the same basic historic characteristics. These salespeople sell low to medium-priced and simple products/services. Long-term relationships with customers are a costly luxury since the salesperson relies on many sales transactions to achieve his/her revenue goals. These salespeople sell in "single-calls" in a single appointment with the buyer.
Today, many products and services are becoming commoditized; all competitive products are of similar quality and can more or less perform the same. Simultaneously, buyers are becoming more sophisticated and have easy access to product/service specifications. Since these buyers know what they want, where to get it, and have access to many product suppliers (ease of the Internet), they are primarily interested in one thing-PRICE. What value can the salesperson perform in the "buying process?" The answer-NOT MUCH! In fact, the salesperson in "transactional sales" is a cost that raises price. So, a competitor who sells without salespeople (over the Internet, for example) has a lower price.
In transactional sale, the customer is interested in the lowest price and will choose the supplier offering the lowest price. An example of this is new car sales. Buyers don't need salespeople to tell them the features/benefits of a new car; you can get these on the Internet. Salespeople are not needed to negotiate prices; many dealerships have listed and non-negotiable prices. Also, buyers shop the Internet to learn invoice costs and then shop further for the lowest prices. Could this same thing happen in limited-service hotels that have small meeting rooms that seek non-complex training meetings? Are many of these limited-service hotels very similar-commodities?
What will happen to today's salespeople selling in transactional situations? They will be downsized! Afterall, this customer is sophisticated and doesn't need a salesperson.
b. Consultative Sales - This form is the second oldest of the three basic forms. It theoretically evolved by the mid-1980s and only today is being put into full practice. These salespeople sell high-priced and complex products/services. Long-term relationships with customers are a distinguishing and mandatory characteristic. They sell in "multi-calls" over a lengthy time period and usually need to influence "buying committees." Fortunately, large conferences and conventions are complex products/services. Consultative selling is the focus of this course.
Here salespeople add value through ALL stages of the "buying process" (revisit discussion above of value created at each stage). Their primary function is to build relationships with and to penetrate major customer accounts. In hospitality sales, the primary buyer is the MEETING PLANNER and their meeting buying committee. Knowing in detail the meeting planner's process for buying is mandatory for success in consultative selling.
What will happen to today's salespeople selling in consultative situations? They will become more valuable to the selling company. The company will invest more resources in these people. Pay will rise and they will be increasing supported by technology and continuous training and development. The selling company will support these "lead" consultative salespeople with a staff and this staff will simultaneously be in training to learn and eventually grow into the role of "consultative salesperson in the future.
c. Partnership or Enterprise Sales - This form of selling is the newest and at the "cutting edge" of the three selling modes. As the newest form, it is also the rarest. In its most complete form, there is no visible distinction between the seller and the buyer. In fact, the selling company forms a selling team that exactly matches the buying team. Teams are represented by cross-functional areas: for example, both teams include a technology person and/or financial person as the situation dictates. These teams are as permanent as is the partnership. These strategic alliances are characterized by such things as the buyer and seller sharing the same warehouse and/or computer purchasing system. The seller may even have a permanent office located at the buyer's facility. The "vendor/buyer" distinction found in both the transactional sale and the consultative sale is blurred.
In Getting Partnering Right (Rackham, Friedman, and Ruff, 1996, p. 13) several dramatic examples of the blurring of sellers and buyers is presented including:
· McDonnell Douglas cut almost $300 million from the development cost of its MD-95 by partnering with a number of suppliers including Dalfort Aviation--who will actually assemble the new plane.
· FedEx has partnered with Intel to take over part of Intel's logistics. As a result, guaranteed delivery time has improved from four business days to three-and delivery errors have been substantially reduced.
What will happen to today's salespeople in the light of the growing "partnering" selling situations? It's logical to expect that "consultative" salespeople will be the initiators of new partnering arrangements. While "partnering sales" requires a strategic commitment from each organization's top executives, consultative salespeople who currently have solid relationships with major accounts should be able to perform a key "brokerage" role to these strategic alliances. Additionally, these salespeople will retain an important long-term role in the partnering teams.
This class will not elaborate on this third "selling mode."
The new profession of selling is upon us. Cinderella is being transformed into the princess that she is. Unlike the fable, she will not return to the under-appreciated stepdaughter. The new profession of selling is one of "micro-marketing" of customized products and services. It is being redefined as it focuses on creating value in the "buying process" as opposed to focusing on itself-"the selling process." Three selling modes are currently on the radar screen
Transactional sales will be executed in two phases: (a) Technology (internet) linkage between sellers and buyers to match needs with appropriate product specifications and (b) Personal linkage between sellers (now customer service Vs traditional salespeople) and buyers to finalize price and facilitate delivery and implementation. Traditional salespeople will not be needed here.
Consultative salespeople of the future will be fewer in number but more technologically educated and supported by their companies. They will continue to grow in importance to selling companies.
Partnership selling will continue to grow, however will probably remain suitable to fewer situations than consultative selling. Consultative salespeople will be the "lead" people in evolution to these partnership/enterprise sales alliances.
Go on to Group Assignment 2: Discuss Perceptions about Salespeople
Go back to Overview of the Hospitality Industry
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