1. Part II SALES FORCE ACTIVITIES
Chapter 4:
Account Relationship Management

2. The Key Aspects of Business-to-Business Relationships

3. Account Relationship Management Concepts
Purchasing
Process
The
Buying
Center
Building
Account
Relationships
Account
Relationship
Binders
Figure 4-1: Account Relationship Management Concepts

4. (1) The Purchasing Process

5. The Purchasing Process
In order to be successful the sales force must create value for the customer .to better understand how the sales force can create customer value, look through the purchasing process where a sales force can potentially add value .
A key determinant of the nature of the purchasing process is the buying situation faced by an account .

6. The Purchasing Process
Three different types of situations are possible , each of which will influence the nature of the four steps in the purchasing process, and the opportunity for the seller to provide value to the customer in completing the purchasing process .
1- straight rebuy purchasing situation , in which the product has been previously purchased , and there is no change desired in the product or offering , it often involves replenishing inventories of products .(add value through :make the purchase easy –convenient –hassle –free as possible , the purchasing dep. Responsible for the entire purchasing process in this situation

7. The Purchasing Process
2- A modified rebuy purchasing situation occurs when some changes are anticipated in a product that the buyer has previously been purchasing ( the seller can add the most value .
(a group of people from different functional areas of purchasing organizations is usually involved )
3-the new rebuy purchasing situation which is the most complex , the seller has the opportunity to add value for the buyer during three of the four stages of purchasing process, recognition of needs , evaluation of options , implementation and evaluation .

8. Value Added Role of Sales Force:
Recognition
of Needs
Evaluation
of Options
Purchase
Decision
Implementation
and Evaluation
Value Added Role of Sales Force:
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.
Figure 4-2: The Typical Purchasing Process

9. Recognition of needs
Occurs when the account recognizes that a need exists.
The need is immediate and focus on resolving a problem )this type typical of transactional
relationship ).
In many consultative- type relationship ,a customer may not be a ware of a problem or opportunity .
For enterprise type , the problem of cost and efficiency are the main customers problem.
Sales person to identify the need must understand the concept of derived demand, which refers to the dynamic in which demand for a product or service is derived from the demand for the customer product s and services .(professional buyer buy to resale ).

10. Evaluation of Options
Business may spend considerable time and money in searching and evaluating alternative suppliers, depending on the strategic significance of the purchase .
You as a seller must helps the customer make amore informed evaluation of alternatives base on the total worth of the solution to the customer .
The main goals for this is to reduce the cost , like Jawwal Mix program )
One of the key activities in this phase is the development of a precise statement of the requirement and tolerances referred as product specification.
In transactional type customer developed their own product specifications , before the supplier gets involved in the process ,the customer take decision away from the seller .
In enterprise and consultative customers work together to jointly develop product specification .
Proposals :is a written offer by a seller to provide product or service to a purchasing organization.
Proposal may result from receiving a Request for Proposal (RFP) from a buyer , RFP in a notice that a customer sends out to qualified suppliers asking them to provide specific product with certain specifications.

11. Purchase Decision
It is the last activity in the sales process, which involve writing orders , persuading, negotiating , finalizing terms, and closing the sale .
This phase is the place to create value for customers in a straight rebuy and in the transactional type of relationship by make the purchasing process easy , convenient, and hassle free .

12. Implementation and Evaluation
The purchasing process does not end with the purchase , during the seller post purchase phase , the seller obligation is to ensure that all promises are fulfilled and customer expectations are met or exceeded.( no defects, timely arrival , right place, warranties are honored , needed information provided .
After the post purchase activities , the seller focus moves to customer retention and growth .
When effectively managed , conflict can have positive effect on relationship and sales like ;
1- stimulating interest in exploring new approaches .
2- providing an opportunity to air problems and explore solutions
3 mobilizing the resources of the parities in a relationship

13. Evidence from the real world regarding account purchasing

14. PURCHASING - Survey Results
Do you track supplier performance?
Do you single out certain suppliers as “preferred”? No
16%
Yes
84% 9%
N.A.
Yes
55% No
36%
(% of respondents)
(% of respondents)

15. Do you have multiple tiers for ranking suppliers?
PURCHASING - Survey Results
Do you have multiple tiers for ranking suppliers? No
40%
Yes
51% 9%
N.A.
(% of respondents)

16. Have any suppliers attained and lost top-level status?
PURCHASING - Survey Results
Have any suppliers attained and lost top-level status? No
23%
Yes
77%
(% of respondents)

17. PURCHASING - Survey Results
Traits of Top-Performing Suppliers
(% of respondents)
<5% 5% 7% 8%
12%
14%
28%
Others
Good Management
Good Response/Flexibility
ISO 9000 Certification
Service
On-Time Delivery
Quality

18. Implementation and Evaluation
Value analysis : many organization evaluate suppliers by a formal value analysis , and or vendor analysis .
Value analysis :developed by GE (General Electric )as a basis for cost reduction , it is a detailed analysis of a product . Its focus on the relative cost of providing a necessary function or service at the desired time and place with the necessary quality , value analysis focus on total cost , not just invoice cost .
For repetitively purchased items ,possession cost ,( cost related to holding the inventory and acquisition cost usually far exceed the price on the invoice that the customer pays for the product .
Vendor analysis :similar to value analysis but focus on the vendor by looking at such items as delivery reliability , product quality , price , service , technical competencies and wavelength
Wavelength : measure such value like attitude ,responsiveness, and follow up on details

19. Supplier tiers
Companies segmenting their supplier base according to the importance of the supplier’s product and the difficulty of finding alternative sources for the product .

20. Figure 4-3: Tiering of Suppliers
Type of Supplier
Nature of the Relationship 1 In
Traditional “arms length” relationship, usually established at an individual level over time. Standardized, non-strategic, products for which there are may qualified suppliers. 2
Preferred
Relationship centers on suppliers’ products and services, but there is a high level of familiarity and trust between the supplier and the customer. 3
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. 4
Partner
Supplier is viewed as key to the customer’s 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.

21. Some important points regarding the sale

22. Determine the Decision-Making Process
Nothing is more important to driving an accurate selling strategy than understanding your client’s 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 people’s votes count more than others.
Know who gets a straw vote and who gets a real one. 3 3

23. 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 you’ve been chosen.
Analyze each stakeholder based on pain, preference, power, and the part he or she plays in the decision-making process.
Don’t resort to price or discounts to create a sense of urgency.
In negotiation, power lies in alternatives, weakness in deadlines. 3 3

24. (2) The Buying Center

25. (2) The Buying Center
The term buying center refer to :all the people formally or informally involved in the purchasing decision , that is all the people who must say yes for a sale to occur or influence the people who will ultimately say yes or no to the purchase .
The buying center not a formal department in the organization , and the number of people included in the buying center may vary from 1 to 6 or more , depending on numbers of factors , including how many departments use the item , the $ value of the purchase , the product degree of technical sophistication .
A purchasing role refers to the set of issues or concerns that a member of the buying center will consider when deciding whether to approve or recommend either a purchase or a specific supplier .
These concerns may be grouped into one of three purchasing roles , (economic buyer, user buyers, technical buyer )
An individual member may occupy multiple purchasing roles , but each role is expected to held by at least one member in any major purchasing situations .
A fourth person must also present for the sale to success refer to an advocate .

26. Buying Center Members MARKETING MANUFACTURING RESEARCH AND DEVELOPMENT
When a purchasing decision has an effect on the marketability of a firm’s product, such as altering the product’s 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 firm’s 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.

27. Economic Buying Influence The person or the committee with the power to give final approval to buy product.
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
Establish the priority of projects
Concerned with the economic health of the firm
Can say yes even if every one else say no

28. User Buying Influence the role of the user buyer is to determine the impact of the purchase on the job that they or their people perform
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

29. Technical Buying Influence the role of technical buyers is to act as gatekeepers by screening out products and services that do not meet the needs of the buying organization .
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”

30. Advocate
ROLE: 4Helps guide the sale, buy provide information about the organization and the people involved in the purchase decision
CHARACTERISTICS: 4May be inside or outside of the buying organization
4Furnishes and interprets information
Trust and convinced that you are the best
FOCUS: 4Your success

31. Advocate: Why Your “Winning” is a Personal “Win”
Wants you to win because they know you, they like you, and they’d 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.

32. 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.

33. (3) Building Account Relationships
Revolution of relationship :
Marketers focus on having long term relationship with customer. companies now learn the salespeople the importance of understanding how to build and enhance professional relationships at all levels in the organizations .
Now we are explaining how relationships are likely to evolve over time .
According to research in social psychology , relationship evolve through 5 stages .

34. Figure 4-4: Stages in a Buyer-Seller Relationship
Relationship Stage
Description
Key Selling Objectives
AWARENESS
Recognition that a supplier may be able to satisfy an important need.
Gain customer’s 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 buyer’s and seller’s 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.

35. Dissolution Stage: Warning Signals
Missing information
Uncertainty about information
Uncontacted buying influence
Customer personnel new to the job
Reorganization 14 14

36. (4) Account Relationship Binders

37. Account Relationships
Relationship Enhancers
Creating Value: Acceptable conduct and performance
Meeting Expectations: Measures of performance levels
Building Trust: Importance of trust 15 15

38. Account Relationships
Creating Value: refer to the perception that the rewards exceed the cost associated with establishing and/or expanding a relationship .
Value to buyer not always the lowest list price, may save time or labor , or result in higher sales of the customer’s products.
Through the next chart, for transactional and consultative relationship , focused given to the first 2 phase of the purchasing process , but for enterprise relationship , the focus is to create exceptional customer value through all the four phases of the purchasing process.

39. Customer Value Creation in the Purchasing Process
High
Customer
Value
Low
Recognition of Needs
Evaluation of Alternatives
Purchase Decision
Implementation and Evaluation
Figure 4-5: Customer Value Creation in the Purchasing Process

40. Account Relationships
Meeting Expectations:
The involved parties in a relationship are develop expectations , refer as rules or norms, with respect to acceptable conduct and performance .
Acceptable behavior vary by individual preferences ,company policies , national cultures .
Expectation are also develop with respect to performance ,in which performance include the performance of the product , as well as a number of service activities such as frequency of sales calls , notification of price changes , lead time in delivery , emergency orders , and installation .

41. Account Relationships
Building Trust:
Trust refers to the opinion that an individual’s word or promise can be believed and that the long term interests of the customer will be served .
Trust takes time to develop , research show that salespeople whom buyers trust possess the following five attributes :

42. Earning Buyer Trust What is Most Important?
Trust Earning Components
Sample Questions
LIKEABLE
“The manufacturers’ rep is an individual who people enjoy knowing.”
COMPETENT
Salespeople who know what they are talking about
DEPENDABLE
Salespeople who follow through on their promises
CUSTOMER ORIENTED
Salespeople who put buyers interest ahead of their own
HONEST
Salespeople who tell the truth

43. Figure 4-7: 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.
Buyer’s 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 buyer’s competitive advantage in the marketplace.