Part II

SALES FORCE ACTIVITIES

Chapter 4:
Account Relationship
Management
Account
Purchasing
Process
Figure 4-1: Account Relationship Management Concepts
The
Buying
Center
Building
Account
Relationships
Account
Relationship
Binders
Account Relationship
Management Concepts
Implementation
and Evaluation
Value Added Role of Sales Force:
Figure 4-2: The Typical Purchasing Process
Purchase
Decision
Evaluation
of Options
Recognition
of Needs
Help customers
recognize a need
or problem and to
define them in a
new or different
way.
Identify options,
provide superior
solutions and
approaches and
help overcome
obstacles to
acquisition
Make the
purchasing process
convenient,
hassle-free and
inexpensive.
Support the
purchase decision
by showing
customers how to
install and use the
product, replenish,
and evaluate
value.
Tier Type of Supplier Nature of the Relationship
A In
Traditional arms length relationship, usually
established at an individual level over time.
Standardized, non-strategic, products for which
there are may qualified suppliers.
B Preferred
Relationship centers on suppliers products and
services, but there is a high level of familiarity and
trust between the supplier and the customer.
C Extended
The relationship typically involves a breadth of
products and services and usually crosses numerous
sites. Usually involves several collaborative
processes product design, inventory
management, sales force training, etc. Supplier is
viewed best in class.
D Partner
Supplier is viewed as key to the customers ongoing
competitive position. The business relationship is
rarely challenged and is treated as exclusive along
some dimension, critical along other dimensions,
and , in general, special.
Figure 4-3:
Tiering of Suppliers
Standard Questions in a
Value Analysis Study
Value Analysis Focus: TOTAL COST
1. Can the item be eliminated?
2. If item not standard, can standard item be used?
3. If item standard, does it completely fit application
or misfit?
4. Does item have greater capacity than required?
5. Can its weight be reduced?
6. Is there a similar item in inventory that can be
substituted?
7. Are tolerances specified closer than necessary?
8. Is unnecessary machining performed on the item?
Standard Questions in a
Value Analysis Study
Value Analysis Focus: (continued)
9. Are unnecessary fine finishes specified?
10. Is commercial quality specified?
11. Can item be manufactured cheaper in-house
12. If manufactured in-house can it be purchased cheaper?
13. Is item classified to obtain lowest shipping rate?
14. Can packaging costs be reduced?
15. Are suppliers asked for suggestions to reduce costs?
Determine the
Decision-Making Process
Nothing is more important to driving an accurate
selling strategy than understanding your clients
decision-making process.
Project teams typically have a well-defined evaluation
process, but not a well-defined decision-making
process.
In the law of algebraic democracy, some peoples
votes count more than others.
Know who gets a straw vote and who gets a real one.
Determine the
Decision-Making Process
A salesperson must understand how a decision will
be reached even more clearly than the client does.
You must also understand the approval process once
youve been chosen.
Analyze each stakeholder based on pain, preference,
power, and the part he or she plays in the decision-
making process.
Dont resort to price or discounts to create a
sense of urgency.
In negotiation, power lies in alternatives,
weakness in deadlines.
Figure 4-4:
Organization Level and Need Indicators
Level Need Indicator
CEO EPS
CFO ROI, EBITDA
VP Operations Cost of Goods Sold
Plant Manager Machine Availability
Maintenance Manager Maintenance Expense
Machine Operator Oil on the Floor
Buying Center Members
MARKETING
When a purchasing decision has an effect on the
marketability of a firms product, such as altering the
products materials, packaging, or price.
MANUFACTURING


Manufacturing is responsible for determining the feasibility
and economic considerations of producing
end products.
RESEARCH AND
DEVELOPMENT
Is involved in the initial development of products and
processes and set broad specifications for component and
materials criteria, minimum end-product performance
standards, and occasionally manufacturing techniques.
GENERAL
MANAGEMENT
Top management is likely to be involved when the
purchase situation is unusual for the firm or when the
decision is likely to have major consequences on the firms
operation.
PURCHASING
Purchasing agents are specialists who have negotiation
expertise, knowledge of buying products, and close
working relationships with suppliers. They tend to
become most involved in the purchasing situation in the
later stages of a new buy situation. Are generally the
dominant decision makers in repetitive buying situations.
Economic Buying Influence

ROLE: 4 Asks Why
4 Gives final approval

CHARACTERISTICS: 4 Access to money
4 Can release money
4 Veto power

FOCUS: 4 Total organization
4 Bottom line
4 The Future

User Buying Influence

ROLE: 4To decide on how a
purchase will affect job
performance

CHARACTERISTICS: 4Implementation oriented
4Use or supervise use of
product or service

FOCUS: 4Tactical, not strategic
4The job to be performed

Technical Buying Influence

ROLE: 4To eliminate alternatives
4To recommend

CHARACTERISTICS: 4Focuses on quantifiable
aspects of product and
service
4Gatekeeper
4Can only say no,
not yes

FOCUS: 4Product specifications
4Asks What, not Why
Advocate

ROLE: 4Helps guide the sale

CHARACTERISTICS: 4May be inside or outside
of the buying organization
4Furnishes and interprets
information

FOCUS: 4Your success

Advocate:
Why Your Winning is a Personal Win
PERSONAL
Wants you to win because they know you,
they like you, and theyd like to see you be
successful.
PROFESSIONAL


Wins by doing their job better, achieving
their goals, and helping their companies
meet objectives.
RECOGNITION
Wins by receiving recognition from their
own organization.
NEGATIVE
Really wants someone else to lose.
Advocate:
Ways in Which an Advocate can Help
Recommend selling strategies.
Build a groundswell of interest.
Refer you to other advocates.
Review your presentation.
Gain access to decision-makers.
Relationship
Stage Description Key Selling Objectives
AWARENESS Recognition that a supplier may be
able to satisfy an important need.
Gain customers attention
Demonstrate how the
product/service can satisfy a need
EXPLORATION A tentative, initial trial with limited
commitments by both parities.
This trail period may go on for an
extended period of time.
Gain initial acceptance.
Build a successful relationship.
EXPANSION Expanding the rewards for each
party in the relationship
Get to know customers and their
businesses better.
Expand ways to help the customer.
COMMITMENT The commitment by both the
buyer and seller to an exclusive
relationship
Interaction at levels between the
buyers and sellers organizations.
Early supplier involvement in
development process.
Long-term focus to the relationship.
DISSOLUTION Total disengagement from the
relationship. This may occur at any
point in the relationship.
Look for warning signals.
Attempt to reinitiate the relationship.
Figure 4-5: Stages in a Buyer-Seller Relationship
Considerations
When Choosing a Partner
POTENTIAL
FOR IMPACT
Is there some real value for both parties that
can come out of partnering that could not be
achieved from a traditional supplier relationship?
COMMON VALUES


Is there sufficient commonality of values? In
particular, it is important that both companies be
ethical and look at quality and the quality
process similarly.
GOOD
ENVIRONMENT
FOR PARTNERING
How does each party look upon the partnership
long-term relationship versus profit on the sale,
future oriented or present? Are there frequent
interaction and transactions between the two
companies?
CONSISTENCY
WITH SUPPLIERS
GOALS
Is a partnering relationship with this customer
consistent with our own product and market
strategy, and with our overall direction as a
company?
Account Relationships
Relationship Enhancers

Creating Value:
Acceptable conduct and performance

Meeting Expectations:
Measures of performance levels

Building Trust:
Importance of trust
High


Customer
Value



Low
Figure 4-6: Customer Value Creation in the Purchasing Process
Customer Value Creation
in the Purchasing Process
Recognition
of Needs
Evaluation of
Alternatives
Purchase
Decision
Implementation
and Evaluation
Relationships:
___ Enterprise
---- Consultative
..... Transactional

Figure 4-7 Account Intelligence
Market Intelligence:
Which of the customers products are most important in
terms of revenue and profit contribution? What markets
do they serve, and which are the most important? Who
are their major competitors?
Financial Intelligence:
When does the annual capital budgeting process begin?
When does it end? Who initiates capital project requests?
What hurdle rate is required to win approval? What is the
projected capital spending for the year?
Organizational Intelligence:
What reporting relationships in each department influence
purchasing decisions? What are the top business
objectives each relevant department manager is expected
to achieve in the current year?

Figure 4-7 Continued
Operational Intelligence:
What are the details of the process used by Operations to
produce results (e.g., raw materials coming in, processing
equipment, budget to produce finished goods, etc.)? Are
there specific measures of performance for your products
or services?
Personnel Intelligence:
Who are the people having a direct or indirect influence on
buying decisions for your products? What are their formal
responsibilities? How often have you met with them in the
past year? What is your relationship with each person?
Who are their friends and enemies with the account?
Competitive Intelligence:
Which of your competitors have an installed bas position in
the account? What is the account share for each
competitor? Which ones are likely to gain share?

Figure 4-8: Account Relationship
Strategy and Relationship
Binders
Transactional
Relationship

Consultative
Relationship

Enterprise
Relationship
Create Value
A good product that can
be conveniently
purchased.

A solution to an
important problem

A supplier that will
increase the share
holder value of the
organization.

Meet
expectations
Buyer has a clear set of
expectations as to the
conduct of the
relationship.
Buyer knows a problem
exists but is unsure of
the solution of what will
be involved in
addressing the problem.

Buyers expectations are
strategic in nature,
though the process for
achieving strategic
objectives may not be
known.

Build Trust
A supplier would do what
has been promised.
A supplier will do what is
necessary to solve the
problem.

A supplier will do
everything possible to
increase the buyers
competitive advantage in
the marketplace.