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New trends in business-to-business sales require interdynamic integration.

New Trends in Business-to-Business Sales Require Interdynamic Integration

Introduction

Ten years ago, personal salespeople in business-to-business activity would have scoffed at the idea of using direct marketing techniques as a sales approach applicable for an industrial customer. In fact, it was considered that these tools were only for the use of companies selling items to mass markets. Today, these tools have been integrated into the fabric of more than half of the Fortune 500 companies as part of their normal way of conducting business[7, p. 2].

The thesis of this article is that the role of the personal salesperson is in a process of dramatic change. Her or his role in the process will be that of a team member, no longer the individual "star." The purpose then, is to examine the changing role of the individual in industrial sales and to see how the highly sophisticated techniques available to the "team" are increasingly changing the interaction that may occur with the "client" before closure.

When we look at business-to-business selling concepts in 1990 and beyond, we must change our frame of reference from a theory of "personal" towards one of "interdynamic" selling. It will become important to realize that today's merchandiser is a member of a sales team who "integrates" several different methods in order to complete a successful sale. For example, an initial sale may be the result of a response to direct mail activity, transferred to a salesperson or a telemarketing group for closure. Dictaphone uses the technique and turns to their dealer network for further contact.

Referrals may also come through the creation of an MGM (member-get-member) program, if the customer is satisfied with the product received. Trading-up and cross selling are also techniques which are now used in industrial sales to encourage the customer, post-sale, to buy a better model or to increase the total purchase[7, p. 372].

While these last two techniques are not necessarily new to selling, they are new in the sense that they may now be accomplished by in-house sellers, rather than the personal salesperson who originally called on the customer. These are examples of techniques that would not have been tolerated before, because of assumed interference with the salesperson's relationship with the customer. The end result is that promotional activity resulting in sales has become an integrated program where advertising, direct marketing, and personal selling have become highly intertwined. The result is a complete strategy of promotion at far lower cost than one-on-one selling. The challenge for the business marketer is to create an advertising and sales promotion strategy that effectively blends with personal selling efforts in order to achieve sales and profit objectives.

The Problem

Personal selling has commonly been thought of as the process where the buyer and seller conducts communication in a face-to-face encounter. However, because of advances in telecommunications, personal selling also occurs over the telephone, through video teleconferencing (enhanced by the movement of documents through fax machines), and through interactive computer links between buyers and sellers.

If we identify the classic roles of the outside representative as those of identification of new customers, acquiring product specifications, giving out catalogs and accumulating intelligence, writing large orders, and having primary responsibility for high potential accounts, then the personal salesperson has ceased to exist in many types of industry. The function of order taking by the salesperson has been greatly reduced because of increasing costs and technological methods available to perform the same types of activities. Now it is not uncommon for orders solicited through the cold call to be so expensive that the cost of the call exceeds the list price of the product.

Sales costs must continue to decrease; time must be better organized and sales ratios improved. Leads must be analyzed more thoroughly, and the number and quality of sales must improve as resales become less common and customer lapses become more frequent. It is no longer realistic to think of the individual salesperson as having the time or the expertise required to be as flexible as required to treat the customer as an individual, especially when product complexity requires that a given company use a buying center instead of an individual buyer. As a result, many salespersons find that they no longer treat client companies with deference or customize product orders as needed. The result is that companies take on the same aura as a customer treated through mass marketing.

Pressures on the selling company have continued to increase. For example, sales costs increased by more than nine percent between 1985 and 1987. The average cost per call exceeds $250, and when multiple calls are required before closure, costs can be more than $750 (normal activity now requires the salesperson to make five or more calls.) Researchers find that customer trust is a key influential factor. Most salespeople indicated that somewhere between one and 29 calls were necessary to develop trust, with 5.6 calls being the mean[10]. If those statistics are even remotely correct, it means that a sale can cost as much as $7,250. While this may be the extreme, it does help to point out the dilemma that companies face as they move into the 1990s.

Some factors causing reduced sales profitability are conspicuous. Transportation and road expenses increase as less amiable buyers, also under economic pressures, demand price decreases. Under these conditions, marginal accounts may cost more than the company receives for the order.

The continuing spiral in sales costs has made it requisite that companies examine more effective tools for reaching the business prospect. Companies must examine the possibilities of using "interactive," "supplemental," and "impersonal" selling methods to reach the business-to-business customer in order to continue successfully. Figure 1 suggests that it now requires sales integration of multiple techniques for today's company to succeed in this new sophisticated global environment.

The Migration Toward Interdynamic Selling

It must be emphasized that personal selling remains a highly human intensive activity, regardless of the method used or the technology involved. Examples of how the three types of personal selling are now being handled -- order taking, order getting, and support activities -- indicate that many functions are being performed without the direct help of the salesperson. American Hospital Supply has removed the order taking functions from the sales representative in favor of computer purchasing. Sales representatives are now expected to "detail high tech" products. Louisiana Oil and Tire uses electronic selling, thus having changed the responsibilities of their sales people.

There is little doubt that use of tools such as mass advertising has traditionally made an impact on the work of the salesperson. That is, the individual has been able to conduct business much more effectively and at a much lower cost. It has been concluded that sales per person were higher when the customer has previous exposure to the company and the product[3].

Research has also indicated that advertising helps pre-sell buyers, When a buyer had been exposed to a product before she took action, advertising was influential in causing her to respond positively through a purchase or a request for information. Buyers were also found to be more prone to discuss and refer the product to others. For example, Mineral Panels Division of Manville Corporation ran an ad several times in Architectural Record, using a numbered reader service card for direct response. Each time the ad was run, more prospects responded than the first time. The last three insertions drew between 93 and 99 percent of the initial ad's response[1]. Future dividends will continue to come in the way of sales through the use of tools increasingly made available by information technology[8, p. 37].

Additional value can be seen by the creation of highly sophisticated customer profiles stored in computer data bases. Knowledge of individuals and companies not previously available except through the personal salesperson is now available to people not used previously in sales. Accordingly, direct marketing techniques have become widely usable in both the individual and the mass selling domain.

As information becomes more timely, marketing will change. It will be possible to move from circumstances where companies and products are relatively undifferentiated to situations with individual needs which can now be dealt with in a unique manner. The personal salesperson will be able to function with better support and become a better manager of resources through territory management techniques, lead tracking, customer targeting, and account monitoring. The end result will be that the future of the salesperson will change from order taking to becoming a consultant for the customer. Direct marketing will enhance selling as we use large databases to reach prospects and customers in their homes[8, p. 38].

The implication for business-to-business marketing is that those involved in purchasing no longer have to be tied to a single location. With the increased use of laptop computers, telephone modems, and fax machines, members of the buying center can communicate with each other from a variety of places. This can lead to quicker decisions by high level managers involved in purchasing decisions previously complicated by delays or incomplete information.

Today several phenomena are occurring. First, salespeople are becoming better and more productive. Second, there is a move toward more tightly integrated organizations. The third relates to the sales of all of the services of the entire company. The outcome should be the creation of a sales/marketing/manufacturing/distribution team concept.

The industrial distributor's outside salesperson increasingly changes from the role of the order taker of the high potential account to that of a "marketing and product specialist," whose responsibility calls for the location and development of significant new business for the firm. The better sales people will take advantage of the new techniques available, because they are adaptive and tend to alter sales approaches according to the peculiar situation.

Recent research found that some industrial sales people are now using direct mail in conjunction with advertising programs, special trade promotions, and telemarketing programs. Also, many tended to use direct mail as a tactic rather than a strategy, and perceived it as a technique used in isolation. For example, companies used direct mail to promote corporate image, distribute sales outlet information, or for other strategic functions. However, most businesses used a mix of promotional activities, including face-to-face selling, trade shows, and trade advertising. The industrial customers who were currently using direct mail sold both technical and non-technical products in a relatively stable, homogeneous market where price was not the dominant feature. There did tend to be more usage of direct mail where the products were somewhat unfamiliar to prospects who could be identified and targeted fairly easily. It was also used as a tactic to facilitate product differentiation, generate sales leads, and to achieve direct sales[4].

Personal selling is an area where the seller can be truly adaptive, restricted only by the willingness of the person to use techniques now available[9].

In relation to telemarketing, almost 20 percent of domestic industrial firms now use the technique in some capacity. Usage of this particular medium increases about 25 percent each year, resulting in about $100 billion in annual sales revenue. Outbound telemarketing is particularly good, because it allows the seller to reach the customer at significantly reduced costs vis-a-vis the personal sales call[5].

If companies are willing to examine the new tools available, their channels of distribution can be expanded. There is nothing to keep the distributor from using specialty catalogs, telemarketing programs, and demo/vans or trains in order to allow demonstrations at the customer's door. For example, Rank Xerox used a rail car to demonstrate copiers and office equipment all over Europe. Demonstration/product centers will allow the seller to work in a competition free environment. Medtronics takes heart surgeons and cardiologists to Minneapolis to teach them the intricacies of pace makers.

Multi-technique mixes can cause significant improvement in sales. Telephone preceded by direct mail can cause increases in response rate by 2.5 to ten times. Broadcast can be combined with long distance telephone by the use of fax and 800 numbers for immediate response. Print campaigns can be run in trade journals to be followed by direct mail and telemarketing[2].

New Trends

There is little doubt that a much tougher business world is developing. As the domestic marketplace moves toward a global environment, mass markets will tend to disappear. Technology costs will decline as capabilities expand, causing more prevalent use. As students who mature using computers enter the work force in increasing numbers, the environment for new methods of conducting business will continue to increase.

The salesperson will continue to be an integral part of the environment, but not in the same guise. Specialization in marketing techniques and presentation of products will expand. "Blanket orders," "systems contracts," and "electronic order-entry systems" will become commonplace in customer facilities. End users will electronically network with distributors' inventory systems, and prices will be electronically adjusted without the involvement of the individual salesperson.

The relationship between the manufacturers' representatives and the distributors' will invert, that is, the distributors' will become more implicated in buyer/seller interaction[6]. The field agent will turn responsibilities for prospecting and prospect qualification over to those who communicate by telephone or mail. The field agent will become a true "agent" in that she/he will identify prospects and needs without spending time in qualification. That activity will become the responsibility of other team members who will also handle small and marginal accounts while gathering marketing intelligence and solving minor technical problems. Instead, the personal salesperson's time will be devoted to the development of product and service recommendations, rather than the actual sale of product or service individually.

Predictions are that by 1990 about half of a company's sales force will work inside. The field person will continue to exist but in a different role. New roles will include customer instruction and training, and technical advising instead of taking orders. New salespeople should become more technical and specialized. The importance of the personal contact between buyer and salesperson is continuing to diminish as the inside group improves.

Corporate customers are more often entering into buy/sell agreements by interacting through inbound and outbound telemarketing, annual purchase agreements, and free hot lines to solve problems. Some of the products now sold in this manner include office supplies, pumping systems, and microcomputers and software. More than 17 percent of the six billion dollar microcomputer software market was sold through mail in 1986, along with five percent of the hardware market. Wang uses catalogs, direct mail brochures, and outbound telemarketing in addition to field agents who sell annual purchases agreements and offer discounts in return for purchase commitments with the direct mail division.

Emerging selling systems now include personnel who specialize in the role of consultant, negotiator, system seller, and team member. The consultant must be as sensitive to the needs of the buyer as to those of the seller. In this role, it is conceivable that the consultant will be placed in a position of rejecting the position taken by her/his own company. This risk taker will become the champion of the buyer. The "prospect" will become the "client." Time commitments will be required of the field agent in order to become attuned to buyer needs. In the true sense of the word, the purpose will be to provide analysis and solutions. The negotiator will require goal maximization in order to create a common objective partnership and defense against the competition of the buyer and the seller. The system seller will move beyond product sales into a myriad of common problems. The result could be recommendations which involve other functions, such as the buyers' production function and/or communication flow.

New sales teams will have functional expertise and be flexible enough as a group to allow for modification of the team to match the circumstances. In other words, the team literally becomes a matrix organization made up of those individuals who could most effectively work with a particular buyer.

As the business environment moves towards an increasingly complex situation, the salesperson may be the individual who becomes the team manager or coordinator, using a variety of blandishments -- which could only be administered by someone in close proximity to the end user.

The World of the Future

Selling should be redefined in such a way that it is described as a process whereby the seller ascertains, activates, and satisfies the needs or wants of the buyer to the mutual, continuous benefit of both the buyer and seller. The process should involve helping the customer identify problems, supplying information on potential solutions, and providing after-the-sale service to ensure long term satisfaction. This should be done in the most convenient manner and at the lowest possible cost, using whatever means and methods necessary to satisfy customers' needs and wants.

The sales effort must now be re-examined in light of the new techniques and pressures that are faced by those interacting in buying and selling. The field sales agent must move toward the kind of expertise that used to be within the domain of the master salesperson. Few salespeople have the time or capabilities necessary for handling the sales of business products without help from many various sources.

In conclusion, the cost of personal selling has reached prohibitive levels. It is now time for sales oriented institutions to develop their sales efforts in such a manner that they truly become "interdynamic" and "integrated." The total selling effort should include interactive, supplemental, and impersonal selling methods in order to truly offer the customer the wherewithal of the selling company. If traditional barriers to cooperation within the company can be destroyed, then synergism can occur and true success is possible.

Personal selling, in the classical sense, is no longer personal. It is true that the role of the individual is important in the overall process of selling. However, she/he must assume a position among a team of sellers involved in a complicated process of moving products from the manufacturer to the end user.

References

[1]Ahrend, Herbert G. "Direct Marketing Differs for Business-to-Business." Direct-Marketing, March 1986, pp. 162-163. [2]Bencin, Richard L. "New Wave in Sales." Zip Target Marketing, March 1986, pp. 70-72. [3]Hutt, Michael D and Thomas W. Speh. Business Marketing Management, 3rd ed. The Dryden Press, 1989. [4]Kennedy, Ellen. "The Use of Industrial Direct Mail: A Paradox." Proceedings of the Southern Marketing Association, 1989. [5]Marshall, Judith J. and Harrie Verdenburg. "Successfully Using Telemarketing in Industrial Sales." Industrial Marketing Management, 1988, pp. 15-22. [6]Narus, J.A. and J.C. Anderson. "Industrial Distributor Selling, The Roles of Outside and Inside Sales." Industrial Marketing Management, 1986, pp. 55-62. [7]Nash, Edward L. Direct Marketing. McGraw-Hill Book Co., 1986. [8]Sales and Marketing Management, November 1988. [9]Sujan, Harish, Barton A. Weitz, and Mita Sujan. "Increasing Sales Productivity by Getting Salespeople to Work Smarter." Journal of Personal Selling and Sales Management, August 1988, pp. 9-19. [10]Swan, John E., et al. "How Industrial Salespeople Gain Customer Trust." Industrial Marketing Management, Vol. 14, 1985, pp. 203-211.

Rawlie R. Sullivan is Assistant Professor of Marketing at the College of St. Thomas in St. Paul, Minnesota.
COPYRIGHT 1990 St. John's University, College of Business Administration
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Author:Sullivan, Rawlie R.
Publication:Review of Business
Date:Jun 22, 1990
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