India Trip Itinerary

16/09/2009 by admin.

I depart this Friday (18^th September) for my 10 day adventure with Ian Hunter.  I will be updating my progress throughout the trip so please feel free to join me, as such, on my travels.  I am also supporting the British Heart Foundation, so please support me by supporting them.  (www.justgiving.com/chris-stock or follow the link on the right.) 

Wish me luck! Oh what have I got myself in to?

India Trip Itinerary 

18^th Sept: Depart London Heathrow to Delhi. Arrive 19^th September.

19^th Sept: Day 01: Delhi – Pathankot (Overnight bus/train journey). 

20^th Sept: Day 02: Mountain bike Pathankot – Garima

21^st Sept: Day 03: Garima – Inner Kangra Valley  

22^nd Sept: Day 04: Inner Kangra Valley – Garola  

23^rd Sept: Day 05: Garola - Himalayan Orchards

24^th Sept: Day 06: Himalayan Orchards - Jot

25^th Sept: Day 07: Jot - Pongdam

26^th Sept: Day 08: Pongdam – Dharamshala – Delhi (Overnight bus/train journey)

27^th Sept: Day 09: Arrive Delhi. Relax!

28^th Sept: Day 10: Depart Delhi and arrive London Heathrow. 

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Key Account Management and Delivering Sales Performance

16/09/2009 by admin.

(This is a draft working paper for the purposes of my Doctorate.  I am taking a grounded approach to research at this stage and am always looking to interview CEO’s, MD’s and Sales Directors to garner their views on the topic of sales.  If you are happy to partake, please contact Michèle, my PA (michele@endlessperception.com) to arrange a meeting.Thank you.) 

Introduction

 

When organisations created sales forces, they were typically aligned to a product within a geographical territory. Organisations would have local sales offices servicing customers within close proximity. The sales people would be product experts and their value to their customers would be the knowledge they had. In larger organisations sales forces were aligned to different product types. At this stage, the sales person was focused on their product rather than focused on the customers business. The evolution of this was the creation of national account managers. The salesperson would have responsibility of a larger geographical territory. Their focus is to provide a higher level of service to more of their more important customers (Sharma 2007).

 

In the last 10 years there has been a shift in sales forces and their focus with customers. This shift can be attributed to firstly the results of sales automation and secondly to the increased expectations by customers in their level of contact and service (Sharma 2007). Sales Automation takes the form of the internet and Customer Relationship Management systems. Both provide more economical ways of carrying out functions typically found in the sales organisation (Rackman and Vincentis, 1999). [Quoted via Piercy & Lane 2005]

 

In the field of sales and marketing management there has been considerable research over the last 10 years. According to (Baldauf et al. 2005), this demonstrates the importance of the topic for researchers and managers. (Piercy and Lane 2005) suggest many major organisations are examining their sales force as a source of enhanced productivity.

 

The Business Drivers

 

Customers organisations are reducing the number of suppliers they carry out business with, though at the same time with technologies such as the internet, these same organisations have an increase in the number of potential suppliers (Liu and Leach 2001).The internet makes products very substitutable making it a highly competitive marketplace (Stephens, 2003). [Stephens quoted via Piercy & Lane, 2005]. With the introduction of the internet, customers were able to obtain information on the product without interacting with a sales person. Customer can make informed decisions and also progress the order on the internet. The internet as a sales channel is inexpensive compared to that of a sales person.  (Sharma 2007) estimated it cost an organisation $500 to conclude a piece of business with a sales person, yet the same transaction would cost $10 over the internet.

 

It is therefore important for salespeople to be more strategic in their relationships with their customers. Some of these customers are actively seeking a partnership to create new sources of value and solve unique problems (Beverland 2001). As a consequence, organisations are working hard to forge stronger and more strategic relationships with their key customers (Liu and Leach 2001). Aligned with this, is that customers are demanding better service and enhanced relationships (Capon, 2001). [Capon quoted via Piercy & Lane, 2005]

 

On the contrary to these drivers, there is a tendency for the sales management to focus on short term revenue goals. This causes an issue within the sales organisation. The short term focus is caused by cash flow implications on the business such as monthly salaries and the external impact of market forces such as company valuations and shareholder value (Olson et al. 2001). Whilst organisations consider Key Account Management strategies, research by (Sharma 2007), found Transactional customers were more profitable in each industry, followed by relationship customers and then deep relationship customers. This research has significant implications for organisations that are following strong key account management strategies.

 

Strategic Customer Relationships

 

The relationship with the customer has become an area of focus within the topic of selling. Earlier we discussed the drivers that are causing this shift. Customer relationships are seen by organisations as the next area within the organisation to achieve productivity gains following initiatives such as business process engineering and supply chain management (Piercy and Lane 2005). There is opportunity to consider sales more strategically and as a result gain competitive advantage within the market. (Olson et al. 2001), define competitive strategies as plans for a business to gain sustainable business advantage in specific markets. The focus for many organisations is based around a product or portfolio of products. As a salesperson for IBM for nearly 10 years, I had first had experience of this model. As salespeople, we were part of a sales team during the 1990’s within a product division. At times a customer could meet with 3 or 4 IBM salespeople all selling their IBM product and in effect competing against each other. IBM’s competition would win competitive business as the customer decided to buy elsewhere whilst IBM battled itself! Hulbert et al., 2003; Lombardi, 2005 (via Piercy 2005) position strategic customer relationships as the most critical asset in the business and also say it remains elusive.

 

(Piercy and Lane 2005) have positioned a strategic framework to transform sales back onto the strategic radar of senior executives as too long it has been tactical and operational.

 

 

Involvement: Ensuring sales is in the core of the business strategy debate.

Intelligence: Building customer knowledge as a strategic resource.

Integration: Establishing cross-functional relationships.

Internal Marketing: Aligning the whole organisation and partners to deliver value.

Infrastructure: Managing sales and account management to match customer expectations.

 

 

 

Key Account Management

 

(Homburg et al. 2002), comment that given the importance of key account management (KAM), there is limited sound academic research.  KAM structures are seen as a way of developing close customer relationships and to meeting their needs. The limitation of KAM as put forward by (Piercy and Lane 2003), is to think all major customers want to have this close type of relationship. Buying professionals can often reduce the decision down to price. The key is to match the correct strategy to customers. If the customer derives value from the product, then a transactional relationship will be sufficient. A consultative selling relationship is where the customer gets it value based on how the product is used. In this situation, the salesperson builds an understanding of the customer’s situation and is therefore able to ensure solutions meet the customer’s needs. The third tier is Enterprise sales where the customer requires an extraordinary level of value creation. This is where the customer leverages all the suppliers’ resources to contribute to their own strategic success (de Vincentis and Rackham 1998).  However, the conclusion drawn by (Homburg et al. 2002), demonstrates that actively managing key accounts leads to better performance than neglecting them.

 

 

Sales Performance

 

Sales performance appears to be a key area of focus for researchers as well as the findings and implications for practitioners and sales managers. The importance of sales performance is very definable in terms of revenue and profitability. It is interesting to note (Leigh et al. 2001), accumulated a list of the “top ten” articles of the 20^th Century. They defined the top ten as the most influential and seminal in nature by seeking the opinion of experts in the sales academic community. Within the list of 10, the majority of articles focused on sales performance and sales effectiveness.

 

A Meta-Analysis of the past 75 years of research into sales performance was conducted by (Churchill Jr et al. 1985). This research was included in the “top ten”. It concluded the determinants for sales persons performance ranked in the following order: (1) personal factors, (2) skill, (3) role variables, (4) aptitude, (5) motivation, and (6) organisational / environmental factors. It was also noted that no single predictor had a significant effect on the variance of performance. According to (Sharma et al. 2007), the (Churchill Jr et al. 1985) research was the last major study in sales performance variance.

 

 

At the same time, (Weitz et al. 1986), put forward a framework to impact sales performance. This focused on the salespersons ability to change sales behaviours in customer interactions. This was called the Adaptive Selling Framework. It is suggested that the adaptive selling is a viable option when the costs of doing it are outweighed by the effectiveness. The effectiveness in business terms is realised through revenue and profitability which should be attained by having a better relationship with the customer resulting in larger deals. The impact against the resources is the time for the sales person to research and understand their customer to a level that allows the behavioural flexibility with the customer. The cost impact can be reduced if a salesperson has a number of similar customers within the same industry. It is likely the same problems, issues and opportunities may exist within a customer segment and similar cost/benefit sales arguments can be used by the salesperson. In simple terms, (Weitz et al. 1986), in putting forward the Adaptive selling Framework suggest that knowledge structures are a key variable in achieving sales performance.

 

From the research of (Churchill Jr et al. 1985) it was concluded no single predicator caused a significant variance in sales performance. For sales managers, practitioners and researchers, understanding what could be the single largest variable would be a key development. (Sharma et al. 2007) looked to answer the question – how much variance in sales performance do knowledge structures variables explain? Their research found that knowledge structures count for a large proportion of salesperson performance. [DEFINE KNOWLEDGE STRUCTURES]. The implications of this is that  salespeople need to be trained to develop better knowledge structures and combine these with information gained from everyday selling experiences.

 

Conclusions

 

The benefits and challenges put forward by (Weitz et al. 1986), are not dissimilar to those concepts being proposed by Piercy et al., 2005. Problem solving is a critical element in key account management and knowledge and information acquisition is fundamental in developing knowledge structures (Weitz et al., 1986). And the variance in sales performance by knowledge structures is argued by Sharma et al., 2007.

 

Whilst key account management has strategic benefits, it has to be managed as part of a wider portfolio of customers. Customers may want a transactional relationship and these are more profitable to the organisation.

References

 

Baldauf, Artur, David W. Cravens and Nigel F. Piercy. 2005. “SALES MANAGEMENT CONTROL RESEARCH–SYNTHESIS AND AN AGENDA FOR FUTURE RESEARCH.” Journal of Personal Selling & Sales Management 25:7-26. 

Beverland, Michael. 2001. “Contextual Influences and the Adoption and Practice of Relationship Selling in a Business-to-business Setting: An Exploratory Study.” Journal of Personal Selling & Sales Management 21(3):207. 

Churchill Jr, Gilbert A., Neil M. Ford, Steven W. Hartley and Orville C. Walker Jr. 1985. “The Determinants of Salesperson Performance: A Meta-Analysis.” Journal of Marketing Research (JMR) 22(2):103-118. 

de Vincentis, John R. and Neil Rackham. 1998. “Breadth of a salesman.” McKinsey Quarterly(4):32-43. 

Homburg, Christian, John P. Workman Jr and Ove Jensen. 2002. “A Configurational Perspective on Key Account Management.” Journal of Marketing 66(2):38-60. 

Leigh, Thomas W., Ellen Bolman Pulling and Lucette B. Corner. 2001. “The Top Ten Sales Articles of the 20th Century.” Journal of Personal Selling & Sales Management 21(3):217. 

Liu, Annie H. and Mark P. Leach. 2001. “Developing Loyal Customers with a Value-adding Sales Force: Examining Customer Satisfaction and the Perceived Credibility of Consultative Salespeople.” Journal of Personal Selling & Sales Management 21(2):147. 

Olson, Eric M., David W. Cravens and Stanley F. Slater. 2001. “Competitiveness and Sales Management: A Marriage of Strategies.” Business Horizons 44(2):25. 

Piercy, Nigel F. and Nikala Lane. 2003. “Transformation of the Traditional Salesforce: Imperatives for Intelligence, Interface and Integration.” Journal of Marketing Management 19:563-582. 

Piercy, Nigel and Nikala Lane. 2005. “Strategic imperatives for transformation in the conventional sales organization.” Journal of Change Management 5:249-266. 

Sharma, Arun. 2007. “The Metrics of Relationships: Measuring Satisfaction, Loyalty and Profitability of Relational Customers.” Journal of Relationship Marketing 6(2):33. 

Sharma, Arun, Michael Levy and Heiner Evanschitzky. 2007. “THE VARIANCE IN SALES PERFORMANCE EXPLAINED BY THE KNOWLEDGE STRUCTURES OF SALESPEOPLE.” Journal of Personal Selling & Sales Management 27(2):169-181. 

Weitz, Barton A., Harish Sujan and Mita Sujan. 1986. “Knowledge, Motivation, and Adaptive Behavior: A Framework for Improving Selling Effectiveness.” Journal of Marketing 50(4):174-191. 

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