Customer Relationships

Some buyers and sellers are more interested than others in building strong relationships with each other. Generally speaking, however, all marketers are interested in developing strong relationships with large customers. Why? Because serving one large customer can often be more profitable than serving several smaller customers even when the large customer receives quantity discounts. Serving many small customers, calling on them, processing their orders, and dealing with any complaints is time consuming and costs money. Big box retailers such as Home Depot and Best Buy are examples of large customers to whom companies want to sell because they expect to make more profit from bigger sales orders.

Marketers also want strong relationships with customers who are innovative, such as lead users. Similarly, marketers seek out customers with status or customers who are recognized by others for having expertise. For example, Holt Caterpillar is a Caterpillar construction equipment dealer and is recognized among Caterpillar dealers for its innovativeness. Customers such as Holt influence others. When Holt buys or tries something new and it works, other Cat dealers are quick to follow. Some companies are reaching out to opinion leaders in an attempt to create stronger relationships. For example, JCPenney uses e-mail and Web sites to form relationships with opinion leaders who will promote its products.

Salespeople are also tasked with maintaining relationships with market influencers who are not their customers. Professors who teach data warehousing influence future decision makers, whereas consultants and market analysts influence today’s decision makers.

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Types of Sales Relationships

Think about the relationships you have with your friends and family. Most relationships operate along a continuum of intimacy or trust. The more you trust a certain friend or family member, the more you share intimate information with the person, and the stronger your relationship is. The relationships between salespeople and customers are similar to those you have, which range from acquaintance to best friend (see Figure 12.1).

 

Business relationships range from transactional, or one-time purchases, to strategic partnerships that are often likened to a marriage. From the seller’s perspective, the motivation to relate is a function of an account’s size, innovation, status, and total lifetime value.

At one end of the spectrum are transactional relationships; each sale is a separate exchange, and the two parties have little or no interest in maintaining an ongoing relationship.

Functional relationships are limited, ongoing relationships that develop when a buyer continues to purchase a product from a seller out of habit, as long as their needs are met. MRO (maintenance, repair, and operations) items, such as bolts used to repair manufacturing equipment, are often sold on the basis of functional relationships. There are small price, quality, and service differences associated with the products. By sticking with the product that works, the buyer reduces his costs.

Affiliative selling relationships are more likely to occur when the buyer needs a significant amount of expertise from the seller and trust is an issue.

A strategic partnership is one in which both the buyer and seller commit time and money to expand the market for both parties. For example, Pratt & Whitney manufactures the engines that Boeing uses in the commercial planes it makes. Both companies work together to advance the state of engine technology because it gives them both an edge. Every time Boeing sells an airplane, Pratt & Whitney sells one or more engines. A more fuel-efficient or faster engine can mean more sales for both companies. As a result, the engineers and other personnel from both companies work very closely in an ongoing relationship.

Going back to the value equation, in a transactional relationship, the buyer calculates the value gained after every transaction. As the relationship strengthens, value calculations become less transaction oriented and are made less frequently. There will be times when either the buyer or the seller engages in actions that are not related directly to the sale but that make the relationship stronger. For example, a Pratt & Whitney engineer may spend time with Boeing engineers to educate them about a new technology. No specific sale may be influenced, but the relationship is made stronger by delivering more value.

Note that these types of relationships are not a process—not every relationship starts at the transactional level and moves through functional, affiliative, and finally strategic. Nor is it the goal to make every relationship a strategic partnership.

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Selling Strategies

A salesperson’s selling strategies will differ, depending on the type of relationship the buyer and seller either have or want to move toward. There are essentially four selling strategies: script-based selling, needs-satisfaction selling, consultative selling, and strategic partnering.

Script-Based Selling

Salespeople memorize and deliver sales pitches verbatim when they utilize a script-based selling strategy. Script- based selling is also called canned selling. The term “canned” comes from the fact that the sales pitch is standardized, or “straight out of a can.”

Script-based selling works well when the needs of customers don’t vary much. Even if they do, a script can provide a salesperson with a polished and professional description of how an offering meets each of their needs. The salesperson will ask the customer a few questions to uncover their need, and then provides the details that meet it as spelled out in the script. Scripts also ensure that the salesperson includes all the important details about a product.

Needs-Satisfaction Selling

The process of asking questions to identify a buyer’s problems and needs and then tailoring a sales pitch to satisfy those needs is called needs-satisfaction selling. This form of selling works best if the needs of customers vary, but the products being offered are fairly standard. The salesperson asks questions to understand the needs, and follows this by presenting a solution. The method was popularized by Neil Rackham, who developed the SPIN selling approach. SPIN stands for situation questions, problem questions, implications, and needs-payoff, four types of questions that are designed to fully understand how a problem is creating a need. For example, you might wander onto a car lot with a set of needs for a new vehicle. Someone else might purchase the same vehicle, but for an entirely different set of reasons. Perhaps this person is more interested in the miles per gallon, or how big a trailer the vehicle can tow, whereas you are more interested in the vehicle’s style and the amount of legroom and headroom it has. The effective salesperson would ask you a few questions, determine what your needs are, and then offer you the right vehicle, emphasizing those aspects that meet your needs best. The vehicle’s miles per gallon and towing capacity wouldn’t be mentioned in a conversation with you because your needs are about style and room.

Consultative Selling

Needs-satisfaction selling and consultative selling may seem the same, however the key difference between the two is the degree to which a customized solution can be created. With consultative selling, the seller uses special expertise to solve a complex problem in order to create a somewhat customized solution. For example, Schneider-TAC is a company that creates customized solutions to make office and industrial buildings more energy efficient. Schneider-TAC salespeople work with their customers over the course of a year or longer, as well as with engineers and other technical experts, to produce a solution.

Strategic-Partner Selling

When the quality of the relationship between the buyer and seller moves toward a strategic partnership, the selling strategy gets more involved than even consultative selling. In strategic-partner selling, both parties invest resources and share their expertise with each other to create solutions that jointly grow one another’s business.

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Choosing the Right Sales Strategy for the Relationship Type and Selling Stage

The sales-strategy types and relationship types we discussed don’t always perfectly match up as we have described them. Different strategies might be more appropriate at different times. For example, although script-based selling is generally used in transactional sales relationships, it can be used in other types of sales relationships as well, such as affiliative-selling relationships. An affiliative-sales position may still need to demonstrate new products, a task for which a script is useful. Likewise, the same questioning techniques used in needs-satisfaction selling might be used in relationships characterized by consultative selling and strategic-partner selling.

The typical sales process involves several stages, beginning with the pre-approach and ending with customer service. In between are other stages, such as the needs-identification stage (where you would ask SPIN questions), presentation stage, and closing stage (Figure 12.2).

 

The pre-approach is the planning stage. During this stage, a salesperson may use LinkedIn to find the right person to call and to learn about that person. In addition, a Google search may be performed to find the latest news on the company, while a search of financial databases, such as Standard & Poor’s, can provide additional news and information. A salesperson may also search internal data in order to determine if the potential buyer has any history with the company. Note that such extensive pre-call planning doesn’t always happen; sometimes a salesperson is literally just driving by, sees a potential customer, and decides to stop in. Most pre-call planning can be accomplished through digital resources.

In this approach, the salesperson attempts to capture enough of the prospective customer’s attention and interest in order to continue the sales call. If it is a first-time call, introductions are needed. A benefit that could apply to just about any customer may also be offered to show that their time will be worthwhile. In this stage, the salesperson is attempting to convince the buyer to spend time exploring the possibility of a purchase.

A typical sales process starts with the pre-approach and moves through several stages to the close. Good salespeople follows up after closing the sale by making sure the customer gets the product, uses it right, and is happy with it.

After approaching the potential buyer, the salesperson then moves into a needs identification section if the potential buyer permits it. In complex situations, many questions are asked, perhaps over several sales calls. These questions will follow the SPIN outline or a similar technique. Highly complex situations require that questions be asked to many people in the buying company. In simpler situations, needs may not vary across customers so a prepared presentation may be more likely. When prepared presentation is implemented, it means that instead of identifying needs, the salesperson simply lists potential needs and describes their solutions.

A presentation is then made that shows how the offering satisfies the needs identified earlier. One approach to presenting solutions uses statements that correspond to FEBA. The FEBA acronym stands for Feature, Evidence, Benefit (Objection), and Agreement. The salesperson says something like, “This camera has an automatic zoom [Feature]. If you look at the viewfinder as I move the camera, you can see how the camera zooms in and out on the objects it sees [Evidence]. This zoom will help you capture those key moments in the teams’ games that you were telling me you wanted to record and post on your social media account and send to alumni donors [Benefit]. Won’t that add a lot to your donor campaigns [Agreement]?”

Note that the benefit was tied to something the customer said was important. A benefit only exists when something is satisfying a need. The automatic zoom would provide no benefit if the customer didn’t want it. Objections are concerns or reasons not to continue that are raised by the buyer, and can occur at any time. A prospect may object in the approach, saying there isn’t enough time available for a sales call or nothing is needed right now. Salespeople should probe to find out if the objection represents a misunderstanding or a hidden need. Further explanation may resolve the buyer’s concern or there may need to be a trade-off.

When all the objections are resolved to the buyer’s satisfaction, the salesperson should ask for the sale. Asking for the sale is called the close, or a request for a decision or commitment from the buyer. In complex selling situations that require many sales calls, the close may be a request for the next meeting or some other action. When the close involves an actual sale, the next step is to deliver the goods and make sure the customer is happy.

There are different types of closes. The first on the list is clearly a clear and direct ask for the sale whereas the second two assume that the customers will say yes. Psychologically it can be more difficult to respond by not agreeing to the sale than when the direct request is used.

• Direct request: “Would you like to order now?”
• Minor point: “Would you prefer red or blue?” or “Would you like to view a demonstration on Monday or Tuesday?”
• Summary: “You said you liked the color and the style. Is there anything else you’d like to consider before we complete the paperwork?”

When done properly, closing is a natural part of the process and a natural part of the conversation.