12-1 Personal Selling, Database Marketing, And Customer Relationship Management 12 Personal selling –Retail sales –Business-to-business sales Database marketing Direct marketing Permission marketing Frequency programs Customer relationship management Chapter Overview

Personal Selling Word of mouth communications – Good experience  tell average of 6 – Bad experience  tell average of 11 IMC relies heavily on personal selling. “Last three feet” of marketing Personal selling categories – Retail sales – Business-to-business sales © 2007 by Prentice Hall11-2

Retail Sales Selling in retail outlets – Single transaction sales – Order takers Selling services – Repeat transactions Telemarketing – Inbound telemarketing – Outbound telemarketing – Text messaging © 2007 by Prentice Hall11-3

Problem recognition Information search Evaluation of alternatives Purchase decision Post-purchase evaluation © 2007 by Prentice Hall11-4 Retail Selling F I G U R E Consumer Buying Process

The Manufacturer’s Dilemma Purchase decisions – 50% in store Retail sales personnel can influence purchase decision. To enhance manufacturer brand within retail stores, manufacturers Provide training for retail salespeople Advertise extensively Offer contests and incentives at retail level Missionary salespeople 12-5

Cross-Selling During initial purchase During inbound telemarketing Successful cross-selling – Quality customer data – Integrated information technology – Software and decision models – Selling culture – Hiring and training of right staff © 2007 by Prentice Hall11-6

Business-to-Business Personal Selling Field sales Order-getters In-house sales Technology-based programs – Telemarketing sales – Internet sales 12-7

Four Attributes of Great Salespeople Jack Carroll Integrity – being honest with customers. Diligence – working hard. Resiliency – ability to bounce back and not take “no” personally. Intelligence 12-8 Source: Jack Carroll, “The Four Attributes of Great Salespeople,” SalesLinks Bulletin, Mentor Associates Sales Training. (

12-9 Types of Selling Relationships F I G U R E

1.Awareness 2.Trial purchase 3.Expansion of purchases 4.Commitment 5.Partnership © 2007 by Prentice Hall11-10 Source: Based on James C. Anderson, “Relationships in Business Markets: Exchange Episodes, Value Creation, and their Empirical Assessment,” Journal of Academy of Marketing Science, Vol. 23 (19960, pp Steps in Developing a Strategic Partnership

How to Build Trust in a Strategic Partnership - Thomas Wood-Young Communicate frequently. Return all phone calls immediately. Handle complaints promptly with empathy and honesty. Offer great customer service. Understand your customer. Become a valuable resource. Create solutions that add value for your customers. Partner with customers. Create a customer, not a sale! Source: Thomas Wood-Young, “Building Trust Results in Customer Loyalty,” Sales Doctors Magazine (

Identifying prospects Qualifying prospects Knowledge acquisition Sales approaches Sales presentation Follow-up Personal Selling Process F I G U R E

© 2007 by Prentice Hall11-13 n Sales promotion n Vendor leads n Channel leads n Networking n Cold calls Methods of Prospecting F I G U R E n Customer leads n Databases n Trade shows n Advertising inquiries n Internet inquiries

What is the sales volume potential? Is the prospect dissatisfied with its current vendor? Does the prospect use single or multiple sourcing? Is the prospect a good fit with current customers? Does the prospect fit with the firm’s IMC plan? How difficult will it be to get past the gatekeeper(s)? © 2007 by Prentice Hall11-14 Questions for Qualifying Prospects F I G U R E

Identify current vendor(s). Identify prospect’s customers. Assess customer needs. Determine the roles of price, service, and product attributes in the purchase decision. Determine roles of trade and sales promotions in purchase decisions. Determine critical customer benefits or product attributes. Identify risk factors in switching vendors. Identify the buyer’s personality type. © 2007 by Prentice Hall11-15 Knowledge Acquisition F I G U R E

Buyer Personality Types Intrinsic value buyers Extrinsic value buyers Strategic value buyers © 2007 by Prentice Hall11-16

Sales Presentations Types of sales presentations – Stimulus-response – Need-satisfaction – Problem-solution – Mission-sharing Determinants of sales approach – Buyer-seller relationship – Product being sold – Buyer personality – Buying situation © 2007 by Prentice Hall11-17

Sales Presentations and Buyer-Seller Relationships © 2007 by Prentice Hall11-18 Mission-sharing Problem-solution Need-satisfaction Stimulus-response Strategic partnership EDI relationship Trust relationship Contractual agreement Repeat transactions Occasional transactions Single transactions

Follow-Up Customer satisfaction Repeat business and loyalty Salespeople and follow-up – No incentive to follow up – Create environment – Provide incentive © 2007 by Prentice Hall11-19

Decline in the number of salespeople Expansion of selling channels Long-term relationships and strategic partnering Team selling Database customer segmentation © 2007 by Prentice Hall11-20 Trends in Personal Selling F I G U R E

Database Marketing © 2007 by Prentice Hall11-21 Database Programs Direct Marketing Database

Determine objectives. Collect data. Build a data warehouse. Mine data for information. Develop marketing programs. Evaluate marketing programs and data warehouse Steps in Developing a Database F I G U R E

Determining Objectives Who will use the information? What kinds of data are available? When will data be collected and used? Where will the data be located or stored? Why do we need certain data and not other types? How will the data be used? © 2007 by Prentice Hall11-23

Internal customer data. Survey data of customers. Channel members. Commercial data sources. Government data sources. © 2007 by Prentice Hall11-24 Sources of Data

Internal customer data. Survey data of customers. Channel members. Commercial data sources. Government data sources Sources of Data F I G U R E

Where are the customer located? What have they purchased? How often have they purchased? How did they initially make contact? How do they order or purchase? (in person, Web, mail, phone, etc.) What is known about their families, occupations, payment histories, interests, attitudes, etc.? If B-to-B, who are the influencers, users, deciders and purchasers? If B-to-B, is it a corporate office or branch offices? Internal Data Information F I G U R E

The Data Warehouse Internal data External data Geocoding information Data put into warehouse must be relevant to objectives

Mining Data for Information Building profiles of customer groups Preparing models that predict future purchase behavior Examples – First Horizon – profiles best prospects – American Eagle – price markdowns – Goody’s – shopper baskets – Staples – profiles of best customers 12-28

Developing Marketing Programs Data can be used: – to develop advertising, sales promotion and other marketing materials. – for sales support. – for direct marketing efforts. – to target specific customers. – by service support staff

Direct Marketing Direct Marketing Association – Prospecting  60% – Customer retention  40% Dell Computers – Catalog – TV and radio ads – FSI ads © 2007 by Prentice Hall11-30

Mail Catalogs Telemarketing Mass media Alternative media Internet Methods of Direct Marketing F I G U R E

Direct Mail High usage in B-to-B markets. Success depends on quality of database. Message must appeal to target group. Digital direct-to-press. Major problem is large volume of direct mail received by both consumers and businesses

Catalogs Viewed as low-pressure sales tactics. Catalogs saved for a longer period of time. Catalogs often passed along to others or viewed by others. Key is the use of enhanced database and targeting of catalogs

Direct Marketing (cont.) Mass media – Broadcast (television, radio) – Print (magazines, newspapers) Alternative media – Package insert programs (PIPs) – Ride-a-longs – Card pack Internet © 2007 by Prentice Hall11-34

Steps in Developing a Permissions Marketing Program ·Obtain permission from the customer. ·Reinforce the incentive to continue the relationship. ¹Increase the level of permission. ºLeverage the permission to benefit both parties Source: Seth Godin, “Permission Marketing: The Way to Make Advertising Work Again, Direct Marketing, (May 1999), Vol. 62, No. 1, pp

Successful Permission Marketing Programs ¶Mutual relationship ¶Participant empowerment ¶Company reciprocity © 2007 by Prentice Hall11-36

Frequent Shopper Programs Source: A.C. Nielson, Santella & Associate  70% of U.S. households participate in a frequent- shopper program.  59% of participating households belong to two or more programs.  82% use their frequent shopper card each time they shop.  Primary reason for joining is to receive discounts.  60% say the reason they shop at a particular grocery store is because the store has a frequent shopper program.

Maintain sales, margins or profits. Increase loyalty of existing customers. Induce cross-selling to existing customers. Differentiate a parity brand. Preempt the entry of a new brand. Preempt or match a competitor’s frequency program Source: Grahame R. Dowling and Mark Uncles, “Do Customer Loyalty Programs Really Work?” Sloan Management Review, (Summer 1997), Vol. 38, No. 4, pp Frequency Program Objectives F I G U R E

Principles in Building Frequency Programs  Design the program to enhance the value of the product.  Calculate the full cost of the program.  Design a program that maximizes the customer’s motivation to make the next purchase. © 2007 by Prentice Hall11-39

Customer Relationship Management Foundation Database technology Interactivity through Web sites, call centers, and other means of contacting customers Mass customization technology © 2007 by Prentice Hall11-40

Customer Relationship Management Steps to Develop Identify the company’s customers. Differentiate customers in terms of their needs and their value to the selling company. – Lifetime value – Share of customer Interact with customers in ways that improve cost efficiency and the effectiveness of your interaction. – Improve cost efficiency – Enhance effectiveness of interaction. Customize some aspects of the goods or services being offered to the customer

Share of a Customer Customer spends an average of $24,000 per year with Company A. The customer purchases from two other vendors a total of $36,000 for the same materials or product. Total expenditures by the customer is $60,000. Company A has 40% share of the customer. © 2007 by Prentice Hall11-42

Customer Relationship Management Reasons for Failure Implemented before a solid customer strategy is created. Rolling out a CRM program before changing the organization to match the CRM program. Becoming technology driven rather than customer driven. Customers feel like they are being stalked instead of being wooed