Part II

SALES FORCE ACTIVITIES

Chapter 4:

Account Management
Account Relationship
Management Concepts

Account The Building Account

Purchasing Buying Account Relationship
Process Center Relationships Binders

Figure 4-1: Account Relationship Management Concepts

Recognition Evaluation Purchase Implementation
of Needs of Options Decision and Evaluation

Value Added Role of Sales Force:

Help customers Identify options, Make the Support the
recognize a need provide superior purchasing process purchase decision
or problem and to solutions and convenient, by showing
define them in a approaches and hassle-free and customers how to
new or different help overcome inexpensive. install and use the
way. obstacles to product, replenish,
acquisition and evaluate
value.

Figure 4-2: The Typical Purchasing Process

Figure 4-3:

Tiering of Suppliers
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 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.
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 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.
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.
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 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 Is involved in the initial development of products and

DEVELOPMENT processes and set broad specifications for component and
materials criteria, minimum end-product performance
standards, and occasionally manufacturing techniques.
GENERAL Top management is likely to be involved when the
MANAGEMENT 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.
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 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.

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.
Figure 4-5: Stages in a Buyer-Seller Relationship
Relationship
Stage Description
AWARENESS Recognition that a supplier may be
able to satisfy an important need.
EXPLORATION A tentative, initial trial with limited
commitments by both parities.
This trail period may go on for an
extended period of time.
EXPANSION Expanding the rewards for each
party in the relationship
COMMITMENT The commitment by both the
buyer and seller to an exclusive
relationship
DISSOLUTION Total disengagement from the
relationship. This may occur at any
point in the relationship.
Key Selling Objectives
 Gain customer’s attention
 Demonstrate how the
product/service can satisfy a need
 Gain initial acceptance.
 Build a successful relationship.
 Get to know customers and their
businesses better.
 Expand ways to help the customer.
 Interaction at levels between the
buyer’s and seller’s organizations.
 Early supplier involvement in
development process.
 Long-term focus to the relationship.
 Look for warning signals.
 Attempt to reinitiate the relationship.
Considerations
When Choosing a Partner
POTENTIAL  Is there some real value for both parties that
FOR IMPACT 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  How does each party look upon the partnership
ENVIRONMENT long-term relationship versus profit on the sale,
FOR PARTNERING future oriented or present? Are there frequent
interaction and transactions between the two
companies?
CONSISTENCY  Is a partnering relationship with this customer
WITH SUPPLIER’S consistent with our own product and market
GOALS 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
 Customer Value Creation
in the Purchasing Process
Figure 4-6: Customer Value Creation in the Purchasing Process

High

Customer
Value

Low

Relationships: Recognition Evaluation of Purchase Implementation

___ Enterprise of Needs Alternatives Decision and Evaluation
---- Consultative
..... Transactional
Figure 4-7 Account Intelligence
Market Intelligence:
Which of the customer’s 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 Consultative Enterprise
Relationship Relationship Relationship

Create Value A good product that can

be conveniently
A solution to an
important problem
A supplier that will
increase the share
purchased. holder value of the
organization.

Meet Buyer has a clear set of

expectations as to the
Buyer knows a problem
exists but is unsure of
Buyer’s expectations are
strategic in nature,
expectations conduct of the the solution of what will though the process for
relationship. be involved in achieving strategic
addressing the problem. 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
A supplier will do
everything possible to
problem. increase the buyer’s
competitive advantage in
the marketplace.