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Peloton
If you have ever taken a class at your local gym, you know the excitement of the camaraderie and competition that takes place when you are in a class of like-minded individuals all sharing the same goal and passion for performance. Former Barnes & Noble e-commerce executive John Foley liked riding his stationary bike but wanted to bring the gym class experience to his at-home riding sessions. And in 2012, the idea for Peloton was born.34
Hailed as “Netflix for Fitness,” Peloton introduced its first bike in 2013. The company had slow and steady growth. With several rounds of funding, the start-up took off and began to take hold among consumers who enjoyed the rigorous workouts provided by trainers through the built-in bike video screens and subscription service to the various “rides.”35
For Christmas 2019, Peloton debuted what turned out to be a significant ad for the young brand. Featuring a husband buying a Peloton for his wife, the ad took viewers through the mind and thoughts of the wife while she rode her bike and seemingly got more “in shape.” Viewer outrage kicked up as some viewers believed the ad depicted a husband body-shaming his wife with the gift of exercise for the holidays. Check out the Peloton Christmas Commercial from 2019.
While the ad may have sparked some controversy, it did one thing successfully—it got people talking about Peloton. The ads allowed the viewer to glimpse the life of a Peloton user—it showed the fun method of the video courses, the use of the bike no matter what the weather outside, and the potential transformation of the Peloton user.
The other element of the ad’s storyline is that it sparked a parody ad produced by Maximum Effort, a film production and digital marketing agency.36 The agency was founded by the actor Ryan Reynolds, and the parody ad featured a voice-over by Reynolds himself. Although the ad was for Aviation Gin, a brand owned by Reynolds, the ad featured the “wife” from the Peloton Christmas ad. The parody ad did three things—kept people talking about Peloton, created a memorable story for Aviation Gin, and connected Reynolds and the Peloton brand.37
As Peloton began to take off in the United States, the country literally came to a screeching halt. In January 2020, the COVID-19 pandemic hit the country. Within months, citizens everywhere were quarantined, with gyms, restaurants, travel, businesses—everything—shut down. What started as 14 days to slow the spread turned into months. Remote work and learning became the norm, and people started to feel restless cooped up in their homes.
As the pandemic surged, so did Peloton. It picked up the fitness gauntlet, and in 2020, for the first quarter ever, the company turned a profit with a 172 percent increase in sales, stock up 220 percent, and over 1 million subscriptions. The new challenge for the organization was in the fulfillment of orders.
During the pandemic of 2019–2021, Peloton became a household name. It was the topic of discussion on the Fox News show The Five. Hosts Greg Gutfeld and Dana Perino regularly discussed the joy they got from using their Peloton bikes. Consumers everywhere were “riding out” the pandemic on a Peloton.
Even as sales surged and Peloton became a household name, it was being woven into the fabric of the American culture, such as on the ’90s hit show Sex and the City. With the aging of the show’s stars, the demographic of viewers was prime for a reboot. And so, in late 2021, the show’s stars reprised their famous roles and And Just Like That debuted.
The show premiered on HBO to a record audience.
Per HBO Max, the Sex and the City revival starring Sarah Jessica Parker, Cynthia Nixon and Kristin Davis had a strong 24-hour performance that ranks as the most viewed series premiere of a new HBO or HBO Max series on the streaming service. Overall, the AJLT opener ranks in the Top 10 of all HBO Max’s movies and series debuts, including both HBO and Max originals, trailing just some of the tentpole Warner Bros. movies that launched on the platform.38
However, the huge debut marked a significant moment for Peloton. In the first episode, one of the major stars of the show, Mr. Big, dropped dead of a heart attack after a spin on his Peloton. Throughout the episode, the love affair Mr. Big has with his bike and his appreciation for the instructor provide the major plotline to the show. This led to the question, How would the character’s death affect Peloton?
Product placement has always been a significant public relations initiative of consumer product companies. The James Bond franchise traditionally partners with well-known brands for placement in the movies and use by the popular cultural icon. The use of real products helps connect the consumer to the movie. It is usually a boon to the brand, and the movie benefits from the more realistic quality the product adds to the movie.
In the case of Peloton and Mr. Big, Peloton did not pay for the placement, but they did agree to the brand’s use in the show. According to a spokesperson for the company, the plotline was a complete surprise.39 So how does the show recover from “death by Peloton”?
Enter a new parody advertisement developed by Ryan Reynolds and Maximum Effort. When Reynolds created the ad for Aviation Gin that poked a little fun at Peloton and its “body-shaming” commercial, the actor became connected with the marketing arm of Peloton. It was time for a new parody. In this go-around, the focus would be on Peloton and Mr. Big. Actor Chris Noth, who played Mr. Big in the television show Sex and the City and the reboot And Just Like That, agreed to appear in the ad. Less than 48 hours after the show debut and the death of Mr. Big, Noth made an appearance in a Peloton ad, which shows him very much still alive. The big win all around is for Peloton and its significant increase in brand awareness.
The response from Peloton to the death of the main character Mr. Big on And Just Like That was to create an advertisement showing him very much alive—a clever approach and certainly an effort that gained Peloton brand recognition. Watch his death on the television show, and watch the commercial response here.
Case Questions
1 .
How did Peloton reach audiences with its message about the advantages of at-home exercise on its bike and corresponding trainer subscription services?
2 .
How was Peloton able to discern the effectiveness of its advertising when it debuted the 2019 commercial that was dubbed “body-shaming”?
3 .
What are some of the ways Peloton has generated brand awareness through publicity?
4 .
Peloton became the subject of the first episode of the show And Just Like That, a reboot of the hit show Sex and the City. What are the advantages and disadvantages to the product placement of Peloton in the show’s premiere episode? | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/14%3A_The_Promotion_Mix-_Advertising_and_Public_Relations/14.13%3A_Closing_Company_Case.txt |
1. Leo Burnett (website), accessed July 7, 2022, https://leoburnett.com/.
2. Leo Burnett.
3. Andrew Long, “‘Fancy a McDonald’s?’ Serves Up Life’s Simple Pleasures: A Q&A with Andrew Long, Creative Director, Leo Burnett London,” Leo Burnett, October 15, 2021, https://leoburnett.com/news/fancy-a-...burnett-london.
4. Leo Burnett.
5. Brian Steinberg, “NBC Seeks Record \$6 Million for Super Bowl Commercials (Exclusive),” Variety, June 16, 2021, https://variety.com/2021/tv/news/sup...rd-1234998593/.
6. Roger Riddell, “Coke Fan’s Halloween Response to Pepsi Ad Goes Viral,” Food Dive, Industry Dive, November 4, 2013, https://www.fooddive.com/news/coke-f...-viral/190208/.
7. “Anheuser-Busch Delivering More Than 5000,000 Bottles of Hand Sanitizer for COVID-19 Relief Efforts,” Newsroom, Anheuser-Busch, updated May 29, 2020, https://www.anheuser-busch.com/newsr...19-relief-eff/.
8. Rebecca Riserbato, “The Beginner’s Guide to Reminder Advertising,” The HubSpot Marketing Blog, HubSpot, updated June 11, 2021, https://blog.hubspot.com/marketing/r...er-advertising.
9. “What Is an Advertising Message: Guide,” Internet Marketing 101, SendPulse, updated August 22, 2022, https://sendpulse.com/support/glossa...tising-message.
10. “About Nielsen,” Nielsen Overview, https://www.nielsen.com/about-us/abo...fuels%20action.
11. “Conversion Rate of Online Shoppers in the United States from 4th Quarter 2020 to 4th Quarter 2021, by Device,” Statista, accessed July 8, 2022, https://www.statista.com/statistics/...ate-by-device/.
12. Business Insider, “People Are Outraged by This Pepsi Ad Starring Kendall Jenner,” April 5, 2017, YouTube video, 01:32, https://www.youtube.com/watch?v=_4CCkUVXHBQ.
13. “Stackla Survey Finds Authenticity Drives Brand Affinity and Consumer-Created Content Influences Purchases,” Nosto Newsroom (blog), Nosto, November 9, 2017, https://stackla.com/resources/report...e-digital-age/.
14. Wikipedia, s.v. “Tilikum (orca),” last modified July 20, 23:09, https://en.Wikipedia.org/wiki/Tilikum_(orca).
15. “7 Companies Hurt by Bad Publicity,” MarketWatch, August 18, 2014, https://www.marketwatch.com/story/7-...ity-2014-08-18.
16. “Three Examples of Successful Public Affairs Strategy,” Quorum, last modified August 2, 2022, https://www.quorum.us/blog/examples-...airs-strategy/.
17. Jake Frankenfield, “Which Industry Spends the Most on Lobbying?,” Investopedia, Dotdash Meredith, updated June 02, 2022, https://www.investopedia.com/investi...bying-antm-so/.
18. “Top Lobbying Spenders in the United States in 2020,” Statista, accessed June 17, 2022, https://www.statista.com/statistics/...ers-in-the-us/.
19. “Susan G. Komen Names Kroger Central Division Outstanding Volunteer Group of the Year,” Susan G. Komen Central Indiana, Susan G. Komen, July 28, 2016, https://komencentralindiana.org/wp-c...d-PR-final.pdf.
20. Alyssa Hardt, “Campfire Treats Embraces the Better Chicken Commitment,” Petfood Industry, WATT Global Media, December 1, 2021, https://www.petfoodindustry.com/arti...ken-commitment.
21. “Campfire Treats Adopts the Better Chicken Commitment to Raise the Bar for Farm Animal Welfare,” Pets+, November 19, 2021, https://petsplusmag.com/campfire-tre...nimal-welfare/.
22. “Understanding the Impact of the Ice Bucket Challenge on the ALS Association’s Finances,” The ALS Association, June 5, 2019, https://www.als.org/blog/understandi...tions-finances.
23. “Pros and Cons of Public Relations,” The Lonely Entrepreneur, October 30, 2017, https://lonelyentrepreneur.com/entre...c-relations-2/.
24. “About,” Truth in Advertising, last modified February 28, 2022, https://truthinadvertising.org/about/.
25. Mura Dominko, “Subway’s ‘Eat Fresh’ Slogan Is Alarmingly Misleading, Operators Say,” Eat This, Not That!, Galvanized Media, April 27, 2021, https://www.eatthis.com/news-subway-...ly-misleading/.
26. Brian L. Wilcox et al., Report of the APA Task Force on Advertising and Children (American Psychological Association, February 20, 2004), https://www.apa.org/pubs/reports/advertising-children.
27. Julia Belluz, “The Vape Company Juul Said It Doesn’t Target Teens. Its Early Ads Tell a Different Story,” Vox, January 25, 2019, https://www.vox.com/2019/1/25/181949...ette-marketing.
28. Scott Thompson, “The Advertisement of Harmful Products,” Small Business, Chron.com, last modified October 26, 2016, https://smallbusiness.chron.com/adve...cts-65363.html.
29. Sara Spary, “Ikea’s Quarantine Campaign Offers 6 Ways to Make Furniture Forts,” Adweek, May 13, 2020, https://www.adweek.com/brand-marketi...rniture-forts/.
30. Jonha Richman, “5 Examples of Companies Succeeding through Transparency,” Entrepreneur, May 27, 2016, https://www.entrepreneur.com/article/274636.
31. Blake Mycoskie, “Trendsetter: TOMS Founder Blake Mycoskie on Starting a Movement,” interview by Katie Morell, October 5, 2011, https://www.americanexpress.com/en-u...ng-a-movement/.
32. “Wear Good,” TOMS, accessed July 8, 2022, https://www.toms.com/us/impact.html.
33. Dan Shewan, “Ethical Marketing: 5 Examples of Companies with a Conscience,” The WordStream Blog, WordStream, updated May 20, 2022, https://www.wordstream.com/blog/ws/2...ical-marketing.
34. Jordan Valinsky, “Peloton Sales Surge 172% as Pandemic Bolsters Home Fitness Industry,” CNN Business, Cable News Network, September 11, 2020, https://www.cnn.com/2020/09/11/busin...ngs/index.html.
35. Valinsky, “Peloton Sales Surge.”
36. David Griner, “Ryan Reynolds on How His Peloton Ad Collaboration Came Together in 48 Hours,” Adweek, December 13, 2021, https://www.adweek.com/convergent-tv...r-in-48-hours/.
37. David Griner, “How Ryan Reynolds Pulled Off Aviation Gin’s Peloton Parody, Capping His Year of Genius Ads,” Adweek, December 13, 2019, https://www.adweek.com/creativity/ho...of-genius-ads/.
38. Joseph Pisani and Megan Graham, “Peloton: Don’t Blame Us for What Happened in ‘And Just Like That . . .’ (Spoilers Ahead),” Wall Street Journal, December 10, 2021, https://www.wsj.com/articles/peloton...ad-11639097331.
39. Alexandra Del Rosario and Nellie Andreeva, “‘And Just Like That . . .’ Delivers HBO Max’s Strongest Series Debut; ‘The Sex Lives of College Girls’ Peaks in Viewers with Finale,” Deadline, December 10, 2021, https://deadline.com/2021/12/and-jus...le-1234889116/. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/14%3A_The_Promotion_Mix-_Advertising_and_Public_Relations/14.14%3A_References.txt |
Since 1919, when Conrad Hilton bought his first hotel, Hilton Hotels and Resorts has been providing a good night’s sleep to travelers around the world. With over 6,800 hotels within its portfolio (including several sub-brands), Hilton has a hotel to meet the needs of just about any traveler. Hampton Inn is a beloved brand for road-weary business travelers as well as families. The Conrad is one of the luxury brands for Hilton. And DoubleTree is another favorite brand for business travelers, known for the gooey, warm chocolate chip cookies presented at check-in. To reward travelers, Hilton offers several tiers of Hilton rewards: Silver, Gold, and Diamond. Reward members are able to trade their points for various perks, including free nights. During off-peak travel, Hilton offers a variety of sales promotions; for example, one program it offers is 3X points on every stay for three nights or more.
Consumers who travel often are able to increase their points through certain purchases and promotions that Hilton will offer to spur more travel. Hilton also connects with customers through Hilton Grand Vacations (HGV). HGV is a time-share within the Hilton portfolio of properties and rooms. When customers join HGV, they are buying ownership in the exclusive club properties.
To increase the sale of the HGV properties, Hilton runs promotions to sign Hilton customers for a tour of a new property and a presentation about the benefits of ownership. In exchange for participating in a tour of HGV properties, customers are offered incentives, such as three nights and four days of a Hilton hotel stay for a discounted price. In exchange for the discounted rooms, customers agree to a tour and to sit through a sales presentation.
HGV sales professionals are typically real estate agents who understand how to structure vacation rental properties and time-share sales. Every sales professional selling the HGV properties is well-versed in the cost of vacations, how to structure real estate deals, and the benefits of being a member of HGV. Once a customer agrees to the tour and the sales presentation, the sales representative is tasked with making sure the decision makers are present, and when possible, the goal is to have customers make their decision before the tour is over. These strategies have been very effective at generating continuous streams of income from HGV members.
15.01: Personal Selling and Its Role in the Promotion Mix
Learning Objectives
By the end of this section, you will be able to:
• Define personal selling.
• Discuss the role of personal selling in the promotion mix.
Personal Selling Defined
Personal selling is the one-on-one interaction between a company representative (salesperson) and the buyer (customer or prospect). The interaction is intended for the salesperson to uncover the needs and wants of the prospect and discuss how the product or service will help to satisfy the customer’s needs and wants. The salesperson works to develop a relationship with the prospect with the intention of having them buy the company’s product and become a customer.
The Role of Personal Selling in the Promotion Mix
The promotion mix includes the marketer’s tactics for communicating with consumers. Determining how to use the promotion mix is dependent on the goals and objectives of the overall marketing strategy as well as the nature of the product, the market segments being targeted, and the message the marketer wishes to send.
Generally, marketers will use a combination of the promotion mix tactics to create an integrated approach to connecting with customers. Out of all the promotion mix strategies, personal selling is the strategy that connects directly with the customer in a one-on-one setting and focuses on building relationships. Personal selling is ideal if the product is more complex in nature, higher in price, and customizable according to a customer’s needs.
Relationship Selling
Relationship selling is a method of personal selling used to better understand the needs and wants of the buyer. If the product is relatively high in price and has some customizable attributes, the salesperson will strive to become a trusted advisor to the customer. This allows the salesperson to develop a relationship that will create trust and ultimately fit the best product with the customer to fulfill their needs and wants and solve a problem they are having that put them in the market for the product. TalEx, a fast-growing human resource company, works with its clients to find the right talent for open positions at a variety of companies. Sales representatives for TalEx work as trusted advisors to collaborate with clients to help find the right staffing solutions for growing companies.
When to Use Personal Selling
Personal selling is best utilized as a promotional strategy when the products are higher in price, variable in nature, and require some explanation or education. Hilton Grand Vacations (HGV) employs real estate agents to sell club memberships. Due to the variety of membership purchase levels, the explanation and education of how to use the membership, and the higher price of the time-share vacations, the sales force spends time educating clients about the product. Typically, personal selling is used for products that are also in the introductory stage of the product life cycle and for products that require significant follow-up after the sale. Business-to-business (B2B) strategies are largely reliant on personal selling as a primary promotional strategy.
Link to Learning: Personal Selling
Watch this video to learn more about personal selling. Learn when personal selling is most relevant, the cons, and what types of products it is most suited for.
Watch this personal selling role-play to gain insight into a sales call situation, and read this guide for the advantages, the disadvantages, the process, the strategies, and examples of personal selling.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Companies typically use personal selling as the promotional strategy of choice when which of these is true?
1. The product is higher in price.
2. The product requires the sales professional to spend significant time educating the customer.
3. The product has a lot of variation.
4. All of these statements are true.
2.
Personal selling is ________.
1. unpaid advertising to consumers
2. a method of increasing sales in the short term
3. one-on-one interaction between a sales professional and a potential buyer/customer
4. used for handling routine purchases
3.
If a company has a higher-priced product that requires some variation according to the customer’s needs and wants, which method of promotion is best?
1. Direct marketing
2. Personal selling
3. Advertising
4. Public relations
4.
Which of the following is NOT a reason for personal selling to be used?
1. When the product is complicated
2. When the product has a lot of competition
3. When the product needs to be demonstrated
4. When the product is highly technical
5.
Jasmine works for a Honda dealership. Jasmine has spent considerable time listening to a potential customer talk about what features they are looking for in a new car. Jasmine is able to identify the best Honda automobile to meet the needs of the customer. What feature of sales is Jasmine demonstrating?
1. One-on-one interaction
2. Meeting the needs and wants
3. Personal communication
4. All of these features are correct. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.00%3A_In_the_Spotlight.txt |
Learning Objectives
By the end of this section, you will be able to:
• List the various roles involved in personal selling.
• Describe the differences between the various personal selling roles.
Order Takers
Within the role of personal selling, there are various types of selling functions. Many organizations utilize more than one type of personal selling. Various sales personnel within an organization may fulfill several of the roles. The type of personal selling is dependent on the nature of the product as well as the customer.
In many sales situations, the salesperson is responsible for prospecting to find new customers as well as working to match the right products with the customer needs and wants. However, some organizations have sales personnel that are only responsible for taking orders from customers, called order takers. They work to identify the customer and find the right product fit. Within the role of the order taker, there are typically two different types of order takers, inside and outside.
Inside Order Takers
An inside order taker is the person who talks with a customer when they walk into the business to place an order, or they are the one who is answering the phone, responding to an online inquiry, or responding to an email to accept customer orders as they are placed. Often the inside order taker may have to answer questions or discuss details of the product order. Their role is to serve as the liaison between the customer and the company. They make sure the right product is ordered according to the requests of the customers.
Restaurants typically replenish inventory on a weekly basis. When a sandwich shop calls its supplier to order more paper products and cleaning supplies, it calls the inside order taker. For some businesses, the inside order taker may be referred to as an inbound customer service agent. In this case, the inside order taker will make sure they have the order submitted correctly and will typically communicate about any out-of-stock products or any variation of the typical order.
Another type of inside order taker is in the business-to-consumer (B2C) market, where a consumer will shop at a store and pick a product. An example of this would be the cashier at Walmart or other retail outlet. When the consumer is ready to pay for the product, and if they choose to check out with a cashier rather than the self-checkout option, they are checking out with the inside order taker. In the role of inside order taker, the cashier carefully scans each of the products and completes the sale. For online retailers, the inside order taker is the one making sure the products ordered from the online shopper are in stock and available for fulfillment. They may contact the customer if the product is unavailable or if there are questions about the order.
Outside Order Takers
Outside order takers work with customers who routinely buy products, and their role is to take in and process those orders. The outside order taker is not required to persuade a customer to purchase, but rather they are a resource for the customer in fulfilling orders. In addition, they are a resource to their customer and may offer insight and advice on inventory patterns and expected delivery times.
Your neighborhood hair salon is a good example of a business that relies on an outside order taker. Hair salons typically have both a supply of the products they use on their customers and a supply of products they sell to their customers for home use. The beauty products sales force consists of multiple sales roles. However, the outside order taker routinely checks in with the salon owner and will fill out the order sheets to replenish product stock that is low.
Order Getters
The role of the order getter is critically important to the revenue of many businesses. The order getter is responsible for finding customers and persuading them to purchase. They might also be responsible for increasing orders from current customers. The order getter is typically well versed in their products and has superior knowledge about the industry. Additionally, successful order getters are often viewed as a trusted advisor by the customers they serve. Many businesses rely heavily on the order getter to work with them to solve their problems through the products they represent.
The order getter must be able to listen to the customer and respond with solutions that will be mutually beneficial to both companies. In the role of the order getter, it is not uncommon to work with a customer for a year or more before ever making a sale. iSalus is a perfect example of this. In an effort to get the company’s cutting-edge patient engagement software into health systems, the sales force must identify the decision makers within the health system as well as work with those who will be using the software. Educating and engaging with a variety of teams within the health system, as well as waiting on budget approvals, can take anywhere from 6 to 18 months. Laying the foundation can be a lengthy process but can be very rewarding when everything comes together and the sale is made.
Support Personnel
A typical sales force includes various support personnel that help facilitate the sales process. Support personnel can take on many functions in the process of making the sale, including marketing, prospecting, setting appointments, educating customers, building goodwill, checking inventory and order status, as well as providing service after the sale. There are two primary types of support personnel utilized in the sales process: missionary salespeople and technical specialists.
Missionary Salespeople
Missionary salespeople are often employed by manufacturing firms to represent the company and call on retailers in an effort to inform or persuade them to buy the firm’s products. In some cases, they may also be referred to as a detailer. It is the job of the missionary salesperson to inform customers about new products and promotional specials and to encourage new orders and reorders. Missionary salespeople are most common with manufacturing, pharmaceutical, and software companies. A salesperson for McKesson Corporation’s pharmaceutical products will work with physicians in their territory. Typically, they meet with the physicians, provide education on new products, leave samples, and connect with the physician’s practice on a regular basis to keep the company’s products in use.
Technical Specialists
A technical specialist serves as an assistant to a firm’s existing customers. Their role is to advise on many aspects of the product, such as technical specifications, application, design, and installation. As the name implies, this job is highly technical and often requires formal training. Many people in the role of the technical specialist have backgrounds in science or engineering. The types of products and the applications for the products determine the need for and training of the technical specialist.
Team Selling
Many of today’s customers and products are complex. The more expensive and high-tech the product, the more important it is to have a team of people to assist the client in making sure the product meets their needs and wants. Team selling is a sales approach that can improve the likelihood of a good experience that meets or exceeds the customer’s expectations. Team selling involves the lead salesperson bringing in other functional support people from within the organization. Other functions that are often involved include finance, engineering, and accounting. These various functions can assist with the skills and knowledge to address specific customer problems or issues and work through objections or special circumstances that may be required to make the sale. Bringing extra skills and knowledge to the situation can make for a better product fit and a good outcome whereby the client sees the company and products as invaluable.
Careers In Marketing: Personal Selling
Personal selling is a technique used by sales professionals to make a connection and possible sale with customers. There are several techniques and tips for personal selling, and you can read about them in this Indeed article.
There are many types of sales jobs. If a career in sales interests you, spend time learning about the different kinds of sales jobs and how they differ. Start by reading this article to learn about the things to consider in a sales job, types of sales job titles, and job types. Read this article from Indeed about all the various types of sales jobs to explore.
There is a lot to explore when learning about sales jobs. Check out these resources to learn more:
A career in sales can be fast-paced, exhilarating, and competitive. If sales interests you, be sure to do your homework so that you’re sure to find a position and industry you’re passionate about.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
The practice of using call centers, where employees receive calls from customers and provide service by taking orders and answering queries, is called ________.
1. customer response marketing
2. guerilla marketing
3. reactive marketing
4. inside order taking
2.
The management of Javier’s Bicycles has an approach where the call center makes appointments and the sales professionals go out to meet with the potential customers and discuss the various products available. This is an example of ________.
1. inside order takers
2. team selling
3. technical specialists
4. internal marketing
3.
Special-Lite makes industrial doors for many commercial applications. Once the sales professional meets with the customer to discuss the products they wish to buy, the sale moves into production, and a special person within the company is assigned to make sure the doors meet the requirements specified in the blueprints. This person is a(n) ________.
1. order getter
2. order taker
3. technical specialist
4. telemarketer
4.
Pfizer uses sales professionals to visit with physician offices and inform the physicians of the new medications and the uses for the medications and to encourage them to prescribe the new medications to their patients. This form of sales professional is often called ________?
1. technical specialist
2. order taker
3. order getter
4. missionary sales
5.
84 Lumber has personnel who work to set appointments and check inventory levels. What type of person does this for the sales force?
1. Support personnel
2. Missionary sales
3. Technical specialist
4. Order getter | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.02%3A_Classifications_of_Salespeople_Involved_in_Personal_Selling.txt |
Learning Objectives
By the end of this section, you will be able to:
• List the steps in the personal selling process.
• Describe each step in the personal selling process.
Step 1: Prospecting and Qualifying
The selling process is a seven-step process (see Figure 15.2) used for selling a product. The process can be multifaceted, lengthy, and complex, depending on the product and the prospect. While all salespeople are different, generally most sales professionals go through the same selling process.
The first step in the sales process is to find, or prospect for, strong potential customers. In prospecting, sales professionals will work to create and develop a database of potential customers, called sales leads through lead generation. Getting the names and contact information for the database is the act of prospecting. Each business or company has its own methods of prospecting and qualifying. For some companies, the process is rigorous and lengthy; for others, it can be nothing more than a quick phone conversation.
There are many methods of lead generation. Utilizing digital strategies is one example. Many companies may prospect leads through a digital advertising campaign that triggers potential customers to sign up for information about a product. Other forms of prospecting can include meeting potential customers at trade shows, use of a referral program, or purchasing a list of customers from a third-party company that meets the criteria for the target market.
Once the sales professional has a database of leads, the next step is qualification of those leads. Not all names in a database may be the right candidates for a company’s products. There are many reasons why a candidate may not be a good fit for a company’s products. For example, some leads may have recently purchased a competitor’s product, and others may not be in a financial position to afford the product. The sales professional wants to reduce the list to include only the leads who are a good fit and are more likely to be receptive to purchasing the company’s products. Qualification may also include making sure the contact has the authority to make the purchasing decision.
You might be asking yourself how a salesperson or company tracks these leads and keeps all the various communication touch points organized. They typically have two software tools to help them: sales force automation (SFA) and customer relationship management (CRM) software. SFAs are used to acquire a customer, and CRMs are used to retain and manage customers after the sale.1
According to Salesforce, a company known for one of the most popular CRMs on the market, CRM software “is a technology for managing all your company’s relationships and interactions with customers and potential customers. The goal is simple: Improve business relationships to grow your business.”2
Link to Learning: Difference between CRMs and SFA
Check out this short article from SelectHub that outlines in more detail the difference between CRMs and SFAs.
Step 2: Pre-approach
The pre-approach stage can best be described as a thorough analysis or research of the potential candidate. It is in the pre-approach stage that the sales professional will conduct a very detailed study of the prospect, which will often include information about specific product needs, what current brands they might be using, brand awareness, who the decision makers are, and general knowledge of personal interests and financial standing. The research findings are meant to help the sales professional to find out needs and wants as well as the best way to approach the prospect for the sales presentation.
Some of the research that sales professionals seek to review as part of their investigation may include interviews with other clients, financial reports, credit histories, and any sources of public information. Most companies with a sales force and sales process will use robust customer relationship management (CRM) databases to collect, filter, and track prospects through the stages of the sales process. Information that is uncovered during the pre-approach will be added to prospect records in the CRM system.
Step 3: Approach
Information gathered in the pre-approach helps the sales professional during the approach phase. Utilizing the insights they have gathered about the prospect, the sales professional seeks to contact the prospect to build rapport and gather more information on the needs and wants of the prospect. During this phase, it is very important for the sales professional to create a positive impression, ask the right questions, and begin building a relationship with the prospect.
A soft approach is generally the best strategy, as the goal is to build the relationship and not necessarily push product. Hard-sell tactics are often rebuffed during this early contact with the prospect. Ideally the role of the salesperson in this early stage is to ask questions and listen. It is through listening intently to the prospect that the salesperson can detect the fit for the product and ultimately the best way to sell the product. Information gathered during the approach will often be used in the presentation stage.
Step 4: Presentation
Once the prospect has made it through the approach stage, the sales professional is ready to present the product to the prospect. During the presentation stage, the goal is to showcase the features about the product that will be of most benefit to the prospect based on the needs uncovered during the pre-approach and approach stages. Often the presentation may include education on the aspects of the product that the prospect will find most beneficial to solve their problems. This is the time for the sales professional to highlight the benefits of the product and answer questions the prospect might have. For example, college admissions departments work with students to showcase the best of the university in an attempt to persuade them to enroll. Part of the presentation process includes tours of the campus, meetings with current students, attending classes, and experiencing campus life.
The best sales professionals are good listeners. Good listening strategies work to build rapport and create winning strategies. When you listen carefully to your prospects, they will tell you exactly how to sell to them. Using information provided by the prospect, a good sales professional will be able to turn it into a winning sale. Several methods of sale presentation include a stimulus-response format, formula selling, a need/satisfaction format, adaptive selling, and consultative selling.
Stimulus-Response Format
When a salesperson has done the research and they understand many of the issues that might be presented by the customer, they are able to provide a stimulus, and the customer provides a response. The skilled salesperson is able to counter every response with a new stimulus. The goal is to sell based on the response from the customer. To be effective, the salesperson must follow a script, which has been developed based on the pre-identified needs and wants of the customer.
Formula Selling Format
Advertising has typically been dependent on the customer going through a specific set of actions before responding. One of the most common consumer response models is the AIDA model, which encompasses attention, interest, desire, and action. Marketers often look to the AIDA model when putting together advertising campaigns. The AIDA model is also used for formula selling. The goal is for the salesperson to take the customer through the various stages of response until they get to the purchase of the product. The skilled sales professional will make sure they are providing stimuli and responses for each of the stages of AIDA.
Need/Satisfaction Format
The need/satisfaction format of selling is an approach where the sales professional opens the sales presentation by probing the potential customer with questions in an effort to uncover their needs. The sales presentation is then tailored to the customer by showing how the product/service will satisfy the customer needs.
For example, the owner of a busy café may be met with a question about scheduling from a salesperson who sells scheduling software. The salesperson may start with a question such as “This café is so busy; is it difficult to schedule your staff?” Once the café owner talks about the challenges of scheduling, the salesperson now has information they need to custom tailor the sales presentation about scheduling software to the specific needs identified by the café owner.
Adaptive Selling
Adaptive selling is one of the most customer-centric sales methods available to the sales professional. Using the adaptive selling approach requires the sales professional to adapt their selling strategy and even the product to meet the needs and solve the problems of the customer. To fully utilize this approach requires that the sales professional rapidly customize their approach to meet the needs of different customers. Many sales professionals are taking advantage of the big data that is now readily available to better target customers. Armed with data about what is going on in the market, the salesperson can now adapt their presentation with real time information.
Consultative Selling
Perhaps this method was best exemplified in the movie Miracle on 34th Street. In the movie, the Macy’s Santa Claus suggests a location, other than Macy’s, where a mother can get a toy for her son. Consultative selling makes the sales professional a consultant who develops a relationship with the customer and takes on an advisory role to help the customer solve their problems. Generally, the problem will get solved through purchase of the product, but it can also be solved in various other ways. The sales professional becomes the anchor to helping the potential customer solve their problems.
Step 5: Handling Objections
Preparation during the qualification, pre-approach, and approach stages of the sale process, provide the sales professional with the information they will need to handle objections. In many situations, seasoned sales professionals are able to successfully present the product and answer questions without having objections. Good research on the customer and an understanding of how the product will help them and solve their problems allow the sales professional to avoid objections. However, when the customer does present an objection, the skilled sales professional will need to be agile at handling them.
Typically, strategies for handling objections include listening, restating the question, and responding with additional questions. Price is generally always voiced as an objection. Knowing the common objections and having a strategy to handle them prior to the presentation will help advance to the close stage.
Step 6: Closing
Asking for the order is perhaps the hardest step in the sales process for many sales professionals. Up to the point of the close, the sales professional has spent a tremendous amount of time and energy with the prospect. Much of the work of the sales professional has been around building a relationship with the prospect. Asking for the order is a source of tremendous fear for many sales professionals because this is the point where all of their work could unravel. What if the customer says no? Then what?
Many sales professionals fear the possibility of rejection. They also consider that they may get the timing wrong. However, if the sales professional has prepared, they know that asking for the order is the point where they make the prospect a customer. One way to eliminate the guesswork of timing is to do a trial close by talking about things such as financial terms or delivery of the product. The customer’s response to the trial close questions will alert the sales professional to the prospect’s readiness to purchase.
Step 7: Follow-Up
After the order is placed, the real work begins. Upon closing a sale and signing the prospect as a customer, the sales professional is now tasked with onboarding the customer and ensuring that everything progresses smoothly with the sale of the product. Because it is much more lucrative for a company to keep current customers happy than to go out and prospect for new customers, the follow-up is a major step in creating lifetime customer value (LCV). Most salespeople would rather maintain their current clients than search for new clients. The follow-up after the sale is a critical step in getting repeat business, customer referrals, and upsells during the next order cycle.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Lucia works for ABC Home Centers. The company sells roofing and windows to customers looking to make home improvements. Lucia’s main job with the company is to identify people who might be in the market for home improvement products. As part of Lucia’s job, she calls people to see if they would be interested in finding out more about ABC’s products. What stage of the sales process is Lucia doing?
1. Closing
2. Handling objections
3. Presentation
4. Prospecting and qualifying
2.
Tony likes everything about the products from Supreme Restaurant Equipment. He is just about ready to purchase, but he has some questions about the payment methods and financing. At what stage of the selling process does the sales professional deal with Tony’s questions?
1. Handling objections
2. Closing
3. Pre-approach
4. Qualifying
3.
Shakira has been working with a customer for quite some time. She has a good rapport with the customer, and the customer often asks her a lot of questions regarding other matters in the industry. When Shakira is ready to work with the customer for an order, she talks with them about the pros and cons as well as other companies’ products that might be a good fit. What type of selling approach is Shakira using?
1. Adaptive
2. Hard sell
3. Stimulus-response
4. Consultative
4.
“Besides you, are there other decision makers that buy apparel?” This is a question that you might ask during what stage of the sales call?
1. Pre-approach
2. Close
3. Approach
4. Handling objections
5.
Keith is with his prospect, and he is out on a test drive for the new Ford F-150. He is telling the prospect about the safety features of the truck. What stage of the selling process is Keith in?
1. Approach
2. Close
3. Presentation
4. Handling objections | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.03%3A__Steps_in_the_Personal_Selling_Process.txt |
Learning Objectives
By the end of this section, you will be able to:
• Identify the issues involved in managing a sales force.
• List the various ways a sales force can be structured.
• Describe the tasks involved in sales force recruitment and selection.
• Discuss key metrics that can be used to assess sales performance.
• Describe the tasks involved in supervising and evaluating a sales force.
• Summarize the metrics that can be used for sales force performance evaluation.
Issues Involved in Managing a Sales Force
A sales force can be the lifeblood of an organization’s revenue cycle, so it’s important that they are incentivized to produce new clients, maintain current clients, and generate revenue for the organization. Proper management of the sales force includes setting goals, motivating, incentivizing, supporting, and monitoring.
Typical issues specific to sales include motivating and challenging the sales force. A sales force is always under pressure to meet sales targets, often linked to revenue goals, so a manger needs to constantly be working with their sales team to keep them motivated and hit the targets.
Finding the right person for the job is an important role for a sales manager. Sales managers often look for recent college graduates to fill sales positions. In addition, sales managers may look for someone already experienced in sales and then train them for the specific industry and products. Whatever set of skills a company might be looking for, finding the right mix of professionals can be challenging.
Sales Force Management Defined
Sales force management includes a very wide range of responsibilities. There are many tasks involved in sales force management, including the process of hiring, training, and motivating sales staff, as well as coordinating activities and implementing a sales strategy designed to increase sales revenue.
Setting Sales Force Objectives
For the sales force to be effective, they must understand what is expected of them. Establishing a clear set of objectives conveys to the sales force the expectation and how they will be evaluated. Sales force objectives can be set for the entire sales force as well as individual sales professionals. Objectives are usually set based on revenue goals, and they should be clearly established with measurement metrics and a time frame for completion. Typical sales force objectives include a mix of generating new customers and working with current customers.
Serving Existing Customers
Much of the work of a sales professional is around serving the existing customer. It is important to keep customers satisfied. Most organizations rely heavily on existing customers to provide good reviews, customer referrals, repeat purchases, and upsell of existing products. Sales professionals are expected to continue developing and building the relationship with existing customers to ensure they are satisfied. This can include checking on inventory, dealing with supply issues, and educating on product application. Objectives may include how often the sales professional is expected to keep in contact with the existing customer.
Developing New Customers
Growth is a key driver of most organizations, and growth comes through new sales to existing customers and also through sales to new customers. A sales force objective of obtaining a certain number of new customers is common. The sales force must have a lead pipeline of prospective customers they are constantly working to turn into customers.
Increasing Market Share and Profit
Additional methods for companies to grow include obtaining more market share as well as more profitable sales. When there are sales objectives for market share, they usually focus on an increase in the proportion of the firm’s sales as compared to the total number of products the firm sells overall in the industry.
Enhancing Customer Satisfaction
An important element of obtaining new customers as well as getting additional sales from existing customers is keeping customers satisfied. Satisfaction can mean good reviews, referral business, and lifetime customers. Objectives for customer satisfaction usually involve the sales force working with customers and obtaining reviews and endorsements.
Designing the Sales Force Strategy and Structure
There are many ways to design and develop a sales force. Careful thought to the customer is usually the best practice for establishing the right structure. Other factors in determining the best structure involve the company and its products. Sometimes organizations utilize all of the methods to structure the sales force.
For example, Pfizer has a neuroscience product and structures its sales force by product, customer type/size, and geography. The Pfizer pharmaceutical sales representative for the neuroscience product calls on neurologists, represents only one or two products so that they are an expert on the efficacy and uses, and has a very tight geographical territory, usually focused on a few zip codes depending on the number of neurological medical practices in a given area.
Territorial Sales Force Structure
Setting up a sales force territory is typically done based on the number of prospects and customers as well as the size of the customer and the potential revenue from the typical sale. The goal is to make the territories equitable for all of the sales force. Geographic territories are typical and take into consideration the amount of time spent in the field and how large the coverage area may be for the sales force.
Product Sales Force Structure
Firms typically want the sales force to be knowledge experts on the products they represent. It is common for a company to provide the sales force with a portfolio of products and to include continuous training on all aspects of the products they sell. In order to provide the best resources, companies create structure around product portfolios and have their sales force structured according to the products they sell. For example, in wine distribution, some sales representatives work with restaurants, the “on-premise” segment. Other sales reps would serve retail outlets, including supermarkets and independent wine shops.
Customer (Market) Sales Force Structure
In addition to knowledge of the products, the sales force needs to be knowledgeable about the customers and the industries they serve. Many companies structure their sales force according to the industry or customers. A company that sells products within the restaurant industry may be structured according to quick service, fast fresh, food truck, and fine dining.
Determining the Size of the Sales Force
Investing in a sales force is significant for any company. Sales professionals must be properly incentivized, and the pay and benefits packages can be quite high for experienced and well-trained employees. Companies must determine the number of potential customers as well as the time to nurture prospects into customers. The size of the sales force must be considered in relation to the complexity of the product, the profit margins on sales, and the size and number of customers in the markets served.
Recruiting and Selecting Salespeople
Hiring and training a sales force is a significant process and cost for companies. The sales manager must have a set of skill requirements and product knowledge that the right candidate must have in order to fill the available roles. There is significant agreement that good salespeople all possess the traits of self-motivation, time management, optimism, empathy, and the ability to network. Many salespeople make themselves valuable based on the network of contacts they are able to maintain.
Most recruiting starts with a job description detailing the requirements and the necessary skills that are needed to do the job. Finding the right candidates often starts through listing available job openings on many of the digital job boards, such as Indeed, CareerBuilder, and LinkedIn. Executive recruiting firms can also be instrumental in finding and matching the right job candidates.
Training Salespeople
Training of the sales force is a significant effort for most companies. Many organizations have a formal training program and spend considerable time and resources to keep the sales force knowledgeable on the products and industries served. Areas of training include sales strategies and how to sell, the products being sold, the industries served, and the company itself.
The best training programs are a combination of classroom activities and in-the-field training. Companies typically have their own training programs. New hires will spend a couple of weeks to a few months in training before they are given their own accounts and territories. Training, however, is not only for the newly hired sales professionals. Most companies have continuous training requirements for their sales force. Training for existing employees often includes company processes, information on products, and enhancing sales skills. Most top-performing sales teams spend time training with company managers as well as other sales professionals.3
Compensating Salespeople
Compensation of the sales force is typically focused on providing a fair wage as well as incentivizing and motivating. Many organizations combine a variety of compensation methods to meet both individual goals and the overarching organizational goals.
Commission Only
Using a commission-only compensation structure provides for the motivation and incentive to make sales. Seasoned sales professionals typically enjoy a higher commission or commission-only structure. They are confident in their ability to sell the products and want to recognize the significant compensation enjoyed by a high commission structure on the sales they make.
The advantages of a commission-only compensation structure are that the company is not burdened with the expense of the sales force, as it only pays the sales professional if they have made a sale. This structure provides incentive and motivation for the sales professional to make sales and work hard.
The disadvantages of this structure include potential burnout of the sales force as well as a possible situation where the sales force uses aggressive practices to make sales.
Salary Only
When an organization uses the sales force more as trusted, it tends to provide a salary structure. Using salary-only compensation provides for stability of the sales force and the inclination of the sales professional to spend significant time with the customers and prospects.
A new salesperson at a car dealership might start on salary for a few months while learning the business. Later, after gaining product knowledge, developing a prospect list, and gaining the trust of the veteran sales staff, that person might switch to commission only.
The advantages of the salary-only structure are that it gives the organization control over the sales expense and is easy to administer. There are, however, a few disadvantages. One of the major disadvantages is that there is no incentive or motivation to make a sale. Another major disadvantage is that when sales decline, the expenses remain the same.
Salary and Commission
Many organizations utilize a combination of salary and commission. This allows for control of the sales force and the activities while still providing the sales force with incentives and motivation.
The major advantage to the combination structure is that it provides a certain amount of financial stability for the sales force while also incentivizing them to make sales. A disadvantage to the organization is that it is difficult to administer, and it makes the selling expense less predictable.
Salary and Individual Bonus
Another form of compensation is a base salary plus individual bonuses upon meeting goals and objectives. The advantages are control over the selling expense and incentive to meet goals and objectives established for the sales force. The disadvantage is primarily in the administration of the structure to make sure the bonus is sufficient to provide motivation and incentive and to keep track of the bonus structure.
Salary, Commission, and Bonus
This is the most complex of all of the compensation methods, as it combines all elements: a base salary, commission based on sales, and bonus based on goal targets. The advantages for the employee are the security from the salary combined with an incentive through the commission and bonus. There are two levels of incentive and motivation to keep the sales force engaged and actively working on making sales. The disadvantages include the complexity of managing the structure and tracking commissions and bonuses.
Supervising and Evaluating the Sales Force
While most sales professionals are self-motivated, they still require supervision, and this will include methods of evaluation to make sure the predetermined objectives have been met. Sales managers are tasked with developing the objectives and goals as well as monitoring and evaluating the success of the sales effort. There are a number of methods used to supervise and evaluate.
Quantitative assessments focus on the items that can be measured. They are less subjective and allow the sales manager to focus on the goals and objectives set for the sales force. A quantitative assessment may include a scale to rank activities of the sales force. For example, Paychex may evaluate the sales force based on how many leads they have acquired in a given month, the number of meetings with prospects, and the number of communication touch points with existing clients.
Another key element of evaluation includes the behavioral aspects of selling. Behavioral evaluations tend to be subjective in nature; however, they can be very helpful in identifying the right actions for the sales force to be effective at selling. Typically, a sales manager may accompany a sales professional for a day. The goal of the sales manager is to see how the sales professional handles their day, communicates with clients, answers questions, and conducts follow-up activities.
Useful Metrics to Assess Sales Performance
There are many metrics utilized by sales managers to gauge the performance of the sales force. The metrics should align with the goals and objectives of the organization and the sales function. Ideally, sales managers rely on metrics to provide the sales force with clear targets to work toward.
Sales Metrics
Sales metrics include data that serve to measure the individual performance of the sales professional, the team as a whole, and the company’s sales performance over a period of time. Sales managers use the data to measure and evaluate areas that are doing well and those that need improvement.
Most sales teams have found that a few key metrics are instrumental in evaluating the overall success of the sales efforts. Every activity of the sales force needs to work toward making the sale. Metrics for sales productivity look to gauge the effectiveness of the efforts. Some typical productivity metrics include
• percentage of time spent on selling activities;
• percentage of time spent updating the CRM;
• percentage of lead follow-up; and
• percentage of leads generated.
Time is of the essence in connecting with “warm” leads, or potential customers who have expressed interest in the product. Lead response time measures evaluate the responsiveness of the sales force to the leads generated. Most sales programs seek an acceptable time frame for response. Some examples include
• time to contact a new lead;
• time to respond to a customer question;
• time to prepare a new prospect presentation; and
• time to create a proposal.
The opportunity win rate is a good measure to gauge the effectiveness of the sales force. It is important to know how many leads the sales force is given and how many leads become prospects. Knowing the opportunity win rate will help to determine where the sales force might need extended training on closing sales; it will also help to determine how many leads are needed in order to convert to clients.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Lev is the sales manager for John Paul Mitchell Systems. He is responsible for the North American sales division. Lev is currently reviewing the total number of salons and looking to estimate the size of his sales force. What sales force management function is Lev performing?
1. Setting sales goals
2. Looking at territories
3. Estimating the number of sales professionals he will need
4. Writing job descriptions
2.
Part of Malika’s job with H2O Pool Supplies is to identify potential new customers. She is required to spend 20% of her time working to bring in new customers. What type of objective is Malika working toward?
1. Serving existing customers
2. Increasing profits
3. Enhancing customer satisfaction
4. Developing new customers
3.
Terra Cotta Landscape Supply is currently developing a two-day session for all sales professionals within the organization. During this two-day meeting, the sales professionals will be learning about new products and applications for their clients. This is an example of what element of managing a sales force?
1. Compensating
2. Training
3. Recruiting
4. Evaluating
4.
Johnny has worked for Nestlé for 15 years. He is paid based on the sales he makes. What type of compensation is Johnny most likely making?
1. Base salary
2. Bonus
3. Commission
4. Salary and commission
5.
Ranee is concerned with making sure she has a set number of appointments with customers each week. Ranee is most likely being evaluated based on what?
1. Percent of time spent on selling activities
2. Percent of time spent generating leads
3. Time it takes her to develop a proposal
4. Percent of time working in the CRM | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.04%3A__Management_of_the_Sales_Force.txt |
Learning Objectives
By the end of this section, you will be able to:
• Define sales promotion.
• Discuss the importance of sales promotion in the promotion mix.
Sales Promotion
Sales promotion is a promotional strategy focused on inducing sales in the short term. Of all the promotional activities, sales promotion is solely focused on a direct call to action to buy something. Sales promotion can be targeted to intermediaries through a push strategy or directly to consumers through a pull strategy. Marketers often use sales promotion in tandem with other promotional strategies. When McDonald’s advertises, for example, “Free fries on Friday when you purchase a menu item through the app,” it is using advertising along with sales promotion to induce consumers to use the app and to increase sales on Fridays.
When products are at the introductory stage of the product life cycle, sales promotion can be effective at inducing trial of a product. The greater the competition, the more a sales promotion strategy becomes important for getting consumers to switch or try a new or different product. Product manufacturers often use sales promotion in-store to set apart the brand or product at the time of purchase. As you walk past the cheese aisle at the grocery store, you might see Sargento offering a buy-one-get-one (BOGO) deal. This is a sales promotion geared toward getting the customer to buy more of Sargento or possibly try Sargento for the first time.
Importance of Sales Promotion in the Promotion Mix
Many of the strategies in the promotion mix are informative in nature. However, when other strategies are combined with sales promotion, there is a direct and immediate call to action to purchase the product. Companies needing to create sales in the short term will benefit from sales promotion. Utilizing sales promotion is a very effective strategy for generating trial of a product in the introductory stages of the product life cycle (PLC).
Spreading of Information
Sales promotion is very effective at spreading information about new products and product modifications. Creating awareness of the brand to new markets and customers is another effective use of sales promotion.
When MyPillow has an advertorial during Fox News and provides a code for a reduced price of its renowned pillows, the advertorial serves to tell new customers about the products as well as provide an incentive to purchase the product immediately.
Stimulation of Demand
One of the key elements to good sales promotion is that it stimulates sales in the short term. Sales promotion gives customers an immediate incentive to purchase a product.
Sonic Drive-In (see Figure 15.3) offers half-price drinks and slushes every day from 2:00 to 4:00 as a “happy hour” special. The use of this sales promotion tactic does two things: first, it incentivizes consumers to buy drinks, and second, it provides sales during the slow times of the day.
Customer Satisfaction
Today’s customer is presented with thousands of messages. Companies are driven to get noticed, increase sales, and keep their customers satisfied. Sales promotions are one method a company may use to increase customer satisfaction. A survey from RetailMeNot “showed that coupons can affect brain chemistry and can make customers happier.” The research concluded that an online shopper who received a \$10 coupon was 11% happier and had 38% higher oxytocin levels than those who didn’t get a discount.4 Providing the occasional discount can chemically make a customer happier, resulting in a more satisfied customer, who may spend more in the future and may become a loyal shopper.5
Stabilization of Sales Volume
Sales promotion can also be used to help stabilize sales volume. Because sales promotion works to incentivize purchase of a product in the short term, companies often use this promotional tactic to drive sales and meet targets. Typical sales promotion tactics used to increase sales include buy-one-get-one-half-off and other specific discounts that are available when used by a certain time. The time element provides the company with the target for the sale, and the customer is provided with an incentive to purchase by a certain time.
Marketing Dashboard: Cost of Customer Acquisition
We often think about profitability based on the difference between what we spend to create a product or service and the amount a customer pays for that product or service. However, we have to remember that there are costs to acquiring customers. In this chapter, you learned about two promotional activities that create costs to reach customers: sales and sales promotion.
Within the sales process, an organization pays a salesperson salary and/or commission to make sales. This is an example of a cost to acquire a customer. As you can imagine, we want our cost to acquire to stay low. For example, if we sold multimillion-dollar airplanes, it would be reasonable to spend thousands of dollars on a salesperson to make that sale. However, if we were selling several-hundred-dollar televisions, our cost to acquire a customer must be much lower.
Sales promotion is another promotional expense. For example, if a pizza brand provides samples at Costco, this might encourage a customer to purchase pizza. And if that customer keeps buying pizza, the cost of the pizza sample was worth it for the value that the customer will bring over the life of the relationship. Other categories of promotional costs include advertising, public relations, social media, search, and direct marketing.
The formula for cost of acquisition is the total cost of marketing activities divided by number of customers acquired.
$Cost of Acquistion=Total Cost of Marketing ActivitiesNumber of Customers AcquiredCost of Acquistion=Total Cost of Marketing ActivitiesNumber of Customers Acquired$
In this formula, you will see an assumption that all customers are worth the same amount, but as savvy marketers, we know that this is untrue. This is why we need to use a variety of marketing metrics when evaluating campaigns.
Give the cost of acquisition calculation a try for yourself. What is the cost of acquisition in the example provided below?
Type of Promotion Expense Yield
Television Advertising \$1,250,000 400,000 customers
Catalog Mailing \$750,000 250,000 customers
Search Engine Marketing \$550,000 90,000 customers
Outdoor Activation \$1,500,000 70,000 customers
Ad Agency Fees \$600,000 0 customers
TOTAL \$4,650,000 810,000 customers
Table 15.1
Answer
Solution $5.74 per customer5.74 per customer$
Formula:
$4,650,000 / 810,0004,650,000 / 810,000$
What additional information do you need to determine whether the cost of acquisition is appropriate for the product or service?
Answer
Solution
The price of the product/service, total sales, expenses, and margins associated with the product or service
Let’s suppose that this example is for a national bookseller. The bookseller has an average profit per customer of \$90 over the customer’s lifetime. Would the cost per acquisition that you calculated provide a good value for the bookseller? Why or why not?
Answer
Solution
Yes. It is worth it to spend \$5.74 to acquire a customer worth \$90 on average over the lifespan of the relationship;
$90>5.74 90>5.74$
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
The retail store Ann Taylor is offering 75% off if you order online today and sign up to receive the newsletter. This is an example of what promotional mix strategy?
1. Advertising
2. Personal selling
3. Public relations
4. Sales promotion
2.
When Starbucks has a happy hour special from 2:00 to 4:00 and drinks are half price, what is the purpose of the sales promotion?
1. Lose money
2. Stimulate demand
3. Spread information
4. Increase customer satisfaction
3.
Rolex calls itself the “Official Timekeeper” of the Wimbledon and Australian Open tennis championships, by virtue of its sponsorships of the marquee events. What is the most likely objective for Rolex’s sponsorship deal with these events?
1. Lose money
2. Stimulate demand
3. Spread information
4. Increase customer satisfaction
4.
Sales promotion consists of a collection of incentive tools designed to do what for the product?
1. Stimulate demand
2. Create brand awareness
3. Provide free publicity
4. Inform
5.
Sally loves to receive her coupons from American Eagle. She typically looks in her email every day to see what promotions the company will be sending. The American Eagle sales promotions are helping to accomplish which important task?
1. Increased customer satisfaction
2. Providing information
3. Increasing brand awareness
4. Developing junk mail | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.05%3A_Sales_Promotion_and_Its_Role_in_the_Promotion_Mix.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss the primary types of consumer-oriented sales promotion.
• Discuss the primary types of trade-oriented sales promotion.
Consumer-Oriented Sales Promotion
Sales promotion can be categorized in two ways. The first category of sales promotion is consumer-oriented, which focuses on the consumer pulling the product through the marketing channels. The second category is trade-oriented, which is intended to push the product through the channel to the consumer.
Consumer-oriented sales promotion provides the customer with an immediate inducement to purchase a product. The goal is to have the consumer seek out the product and “pull it” through the marketing channel. There are many common forms of consumer-oriented sales promotion.
Coupons
The goal of coupons is to reduce the price of the product and prompt the consumer to make an immediate purchase. The major goal is to increase sales quickly, attract repeat purchases, or try new versions of a product. Consumers using coupons recognize the savings when they relinquish the coupon at the time of purchase. Coupons come in many different forms, including printed, digital, and mobile. Because a coupon has to be redeemed to obtain the reward, manufacturers can determine the effectiveness of the coupon offer and the method of delivery.
The company HelloFresh sends a direct mail piece with a coupon for 16 free meals. When consumers sign up for the home delivery meal plan, this is a great example of how a coupon might be used to create brand awareness and acquire new customers. The direct mail might also include a code to use online for digital application of the offer.
Samples
Samples are most often used to induce trial of a new product. This tactic can be very effective to increase sales volume during the early stages of the product life cycle and to help with better distribution. Samples can be given out in stores, at events, or through the mail. This is an expensive form of sales promotion but can be highly effective at inducing purchase. Costco regularly has samples within its aisles and at the immediate point of sale as consumers are shopping. Another example is from the 2022 SXSW conference in Austin, Texas, when Creminelli Fine Meats distributed free mini packs of salami to showcase the company’s line of “charcuterie-grade snacking” products. The makers of White Claw Hard Seltzer were corporate sponsors of the event; conference-goers were treated to free samples of new flavors, such as Passion Fruit.6
Premiums
Premiums are items offered free or at a minimum cost alongside the purchase of a product. Some of the most famous premiums include the McDonald’s Happy Meal toys and Cracker Jack (“The more you eat the more you want”) with a prize inside.7 Premiums are very good for attracting new buyers and providing an incentive for customer loyalty. The use of the Happy Meal toy created significant customer loyalty among consumers who wanted to collect all the toys in a series.
Contests
Contests make consumers use their skills to compete for prizes. Using contests allows customers to engage with products and become invested in the process of trying to win something of value. Companies often use contests in coordination with other sales promotion tactics, such as coupons. Doritos regularly includes a contest as part of its advertising. Pepperidge Farm challenged consumers to #GoForTheHandful and create an Instagram duet with pro basketball player Boban Marjanović. The goal was to see if consumers could hold more Goldfish crackers in their tiny hands compared to the large hands of the pro basketball player. Winners were treated to Goldfish for a year and the title of Official Goldfish Spokeshand.8 Contests are based on analytical or creative skills.
Sweepstakes
Where contests are based on skill, sweepstakes are based on chance. Companies use sweepstakes in order to increase sales volume in the short term. Sweepstakes ask contestants to submit their names for inclusion in a drawing for prizes. Publishers Clearing House conducts one of the most well-known sweepstakes. The company ultimately wants consumers to order magazines; however, the purchase of a magazine is not necessary to enter and win the \$1 million cash prize. However, Publishers Clearing House is able to add to its mailing list when consumers enter to win.
Loyalty Programs
Loyalty programs have increased in popularity. Most of today’s loyalty programs are tied to a mobile app. The attractiveness of loyalty programs is that when consumers spend, they get points toward something free. For example, Wired Coffee Bar offers consumers \$5 off of a product in-store when they spend \$50.
Point-of-Purchase Displays
Point-of-purchase displays have been a hallmark in store aisles for decades. The point-of-purchase display allows manufacturers to showcase their products in a way that stands out from all the other products in the store. Companies typically utilize the point-of-purchase promotion method for new products that are being introduced to the market. Some common forms of point-of-purchase presentations include outdoor signs, window displays, countertop containers, display racks, and self-serve cartons. The key to good point-of-purchase is having a display that attracts customers and enhances the brand image of the product being offered.
Rebates
Rebates provide some type of reimbursement of the cost of a product when the consumer completes certain information about the time, place, and price of the product purchased. Typically, the consumer must submit the rebate form by a certain date and must include receipts or bar codes from the purchase. Rebates usually induce the consumer to buy the product as it is being offered at a perceived cheaper price. Consumers often fail to submit the required materials to receive the rebate, as they might see the process as too laborious.
Marketing in Practice: Domino’s
Companies use sales promotion to generate more sales and to promote their brands. Setting up special days for certain products and causes can help bring focus and attention as well as boost sales or donations in the short term. For example, days such as National Coffee Day, National Pet Adoption Day, and National Pizza Day put a spotlight on the product or cause and can work to create a news story, which helps to generate consumer interest.
During National Pizza Day, companies selling pizza will run various promotions geared toward selling more pizza and getting consumers across the country to eat pizza. While Domino’s Pizza regularly runs discounts and promotions, most of them are “deals” that consumers can use on a regular basis (see Figure 15.4). Pizza delivery companies regularly utilize sales promotion strategies as a way to deal with the highly competitive nature of the pizza delivery industry.
For National Pizza Day 2022, Domino’s, a company known for fast pizza delivery, ran an unusual sales promotion offering cash back if consumers picked up their pizza instead of having it delivered. For a limited time, Domino’s, the world’s largest pizza chain, offered to give consumers back \$3 when they opted to pick up their pizza instead of having it delivered. “The \$3 coupon was redeemable the following week on another carryout order of \$5 or more before tax and gratuity.”9
Trade-Oriented Sales Promotion
Trade-oriented sales promotion is focused on the channel intermediaries: the wholesalers and retailers. The goal is for the intermediary to be incentivized to push the product to the consumer.
Allowances and Discounts
Manufacturers provide the retailers or wholesalers with allowances to pass along in the form of price breaks to the end customer. For example, Ford Motor Company might offer a \$3,000 trade-in allowance for the new F-150. This is an incentive to come into the dealership and buy the F-150.10 The dealer has the allowance from Ford and is able to pass the savings to the consumer as an incentive to come in and buy a new truck.
Cooperative Advertising
Advertising can be expensive for retailers. Typically, they advertise products they have in stock in an effort to induce consumers to come in and make a purchase. Cooperative advertising is a way for manufacturers to help with the cost of the advertising, in exchange for the retailer to advertise the products produced by the manufacturer. When supermarket chain Publix advertises Boar’s Head meats and cheeses, Publix is using cooperative advertising from Boar’s Head to run the ads featuring Boar’s Head products.
Cash Bonuses
Some manufacturers provide bonus cash as an incentive for the retail sales associates to push the manufacturers’ products. Bonuses can be given to the sales associate who sells the most or to the store that is the highest sales producer. It is then up to the store to determine how best to use the cash bonus.
Credit Terms
One way for manufacturers to help the retailers and wholesalers who sell their products is to provide them with favorable credit terms. Often these terms allow the wholesaler or retailer to sell the products long before actually having to pay for the product.
Dealer Conferences
When companies have dealers who distribute their products, they want to incentivize the dealer sales force to sell the product. Additionally, the dealer conferences are a good method of training and educating dealers to work with customers and ultimately sell the product to them.
Push Incentives
Push incentives work to create demand for a product through discounts that retailers pass on to customers. In the mobile phone industry, Apple may provide a discount on phones through one of its retail partners in an effort to encourage buyers to choose the iPhone through the distributor. Push strategies focus on selling directly to the customer. Typical tactics include point-of-sale displays and direct approaches from the retail store sales professionals to the customers.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
________ are certificates that entitle the bearer to a stated saving on the purchase of a specific product.
1. Samples
2. Coupons
3. Rebates
4. Premiums
2.
Which of the following consumer promotion tools offers a free amount of a product or service delivered door-to-door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer?
1. Coupons
2. Rebates
3. Premiums
4. Samples
3.
Which of the following allows consumers to do things in order to have a chance of winning?
1. Coupons
2. Sweepstakes
3. Contests
4. Rebates
4.
Which of the following is an example of a trade promotion?
1. Allowances and discounts
2. Coupons
3. Loyalty programs
4. Premiums
5.
Which of the following elements of the marketing communications mix consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade?
1. Advertising
2. Personal selling
3. Public relations
4. Sales promotion | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.06%3A__Main_Types_of_Sales_Promotion.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss the ethical issues that may arise in personal selling.
• Discuss the ethical issues that may arise in sales promotion.
Ethical Issues in Personal Selling
The goal of sales is to create customer loyalty and repeat purchases. Developing the relationship with the customer is best done through honesty and integrity. Sales should always be conducted with a long-term goal of developing a lifetime customer and not just one sale.
However, with sales goals as the driving force behind the sales activities, the sales force can be pressured into practices that might be counter to building customer loyalty. Without proper regulation and a code of ethics, sales efforts can run afoul of ethical rules. Good sales managers seek to have control features built in to prevent the temptation to have a climate of dishonesty.
Ethical issues that can arise within the sales function of a company include dishonest claims about a product, slanderous comments about the competition, padding of company expense accounts and/or misuse of the expense account, artificially inflating sales data to meet goals and bonuses, and bribes and kickbacks.
Sales professionals are typically self-starters who are out in the field working with their customers. In a sales role, companies provide the sales professionals expense accounts and credit cards as a way to work with and build relationships with clients. Without close supervision and company policies and guidelines, the sales professional can be tempted to participate in unethical practices. If a code of conduct is not present, it is often hard to resist the temptations. Some of the most common practices and temptations include misuse of the company credit card, inflating sales to reach goals, and receiving kickbacks.
Misuse of Company Credit Cards or Expense Accounts
Misuse of company credit cards and expense accounts can happen with any employee, but given the solitary nature of the sales professional, it is typically prone to happen more often with them. Because the work of the sales professional is fairly independent from the rest of the organization, it can create situations where there isn’t enough accountability. Misuse can happen through double billing, padding the expense account, or overcharging for expensed items.
To handle issues of expense misuse, it is best to have policies and procedures in place along with a record of accounting for expenses and providing receipts for all expensed items.
Inflating Sales Data
Because sales professionals are often given sales targets and expectations to meet the targets, they are at risk for finding methods of inflating their sales numbers to meet the targets. If the sales professional gets behind or feels pressure to meet goals, it can be appealing to find methods of showing goal achievement. The method of inflating sales can also be termed channel stuffing. This practice happens when a company forces more products through the distribution channel than the channel is actually capable of selling.
When the sales organization calculates the sales targets based on shipments of products, the method of channel stuffing helps to meet the targets in the short term. However, long-term sales targets are adversely affected, especially if the channel partners return the products.
An example of how this might happen can be explained through a company that sells over-the-counter medicines. If it has products with an expiration date in a few months, it may ship all of the products with the near-term expiration date. When the products don’t sell within the expiration time frame, the products are shipped back for a return. The sales in the short term where high, and the targets were met. However, in the long-term, the company is faced with a large shipment of returned product.
In 2016, in an effort to meet sales goals and targets, Wells Fargo employees created millions of fraudulent savings and checking accounts for clients without their consent. Regulatory agencies such as the Consumer Financial Protection Bureau (CFPB) penalized the company and fined it \$185 million for the illegal activity.11
Accepting Kickbacks
Another unethical practice is when sales professionals accept kickbacks. There are many forms of kickbacks. Companies that deal internationally are often at the biggest risk for kickbacks, as it is common practice in some countries. Sales professionals that have long-term relationships can be tempted to take advantage of the situation, particularly if both sides profit from the scheme. There are many types of kickback schemes. Primarily a kickback scheme involves two people who work together to change the pricing structure, and in turn they both generally pocket some profit from the sale. Under the 1977 Foreign Corrupt Practices Act (FCPA), it is unlawful to pay or promise to pay another person for the purpose of retaining their business.
Companies with a Conscience: Tentree
Tentree is a sustainable clothing brand. Like many online stores and clothing brands, it regularly runs promotions, including a percent off of the purchase price when you sign up for their newsletter. But along with the typical consumer-oriented promotions, Tentree also plants 10 trees for every purchase (see Figure 15.5).
According to Tentree’s Facebook page, “We believe that big change starts small. Small as in bringing your reusable tote to the grocery store, getting your coffee refilled in a thermos, and choosing to wear sustainably made T-shirts. These small choices add up (trust us, we’ve done the math), and we’re here to celebrate each and every one of them. By planting 10 trees for every purchase, we hope to make big change accessible to everybody and show the lasting impact that one small choice can have.”12
So far, the company has planted over 81 million trees. The clothing it manufactures and sells is designed to have a very small environmental impact. And consumers are incentivized to purchase from Tentree because for every item purchased, the company plants 10 trees. Tentree has a goal that customers are pushing to reach—1 billion trees planted by 2030.13 Its earth-first philosophy is at the heart of every garment it sells.
Ethical Issues in Sales Promotions
When it comes to sales promotions, many ethical issues can arise. One of the most well-known issues with sales promotion happened with a popular McDonald’s game (see Figure 15.6). For years, McDonald’s ran its Monopoly game as a method to increase the consumer purchase of meals along with Monopoly game pieces that could net customers winnings from the fast-food giant. Not only was the game popular with customers, but it did exactly what the sales promotion was supposed to do: it increased sales. Unfortunately, the head of security for the company that ran the promotion and printed the game pieces took out all the winning game pieces in a scam worth \$24 million.14
Hidden Fees
One of the most common issues with ethics in sales promotion is in hidden fees that might be tacked on to the promotion. The travel and hospitality industry can be an example of the hidden fees often found in the fine print for the unwary customer looking for a “deal.” An airline might have advertised prices, but upon booking, the traveler may realize the baggage and airport fees make the price higher than other advertised rates. This can also be a common practice with hotels and resorts. The advertised price may look appealing, and the sales promotion may seem like a good deal, but by the time resort fees are tacked on to the price, the promotional discount isn’t as attractive.
Ambiguous Terms and Conditions
Legal documents have long been considered tricky to maneuver. A company may provide the terms and conditions and a link to click or simply acknowledge that you have read through the 15,000-word document for understanding. But does anybody really read the documents? Do consumers really understand what they are reading and agreeing to? Most likely, the legal jargon has gone unread, and the customer is typically unaware of what they have agreed to. However, it is in the best interest of the company to look out for the best interests of their customers. If the end goal is long-term customer satisfaction, all of the work of the company should be around making sure the customer is satisfied. Providing ambiguous terms and conditions does nothing to really protect the customer relationship. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.07%3A__Ethical_Issues_in_Personal_Selling_and_Sales_Promotion.txt |
This chapter covers personal selling and promotions, both integral components of marketing. Personal selling is defined as communication between a buyer and a seller and can be customized based on the product or service. Much of personal selling is enhanced when the salesperson engages in relationship development to build loyalty.
Personal selling involves inside and outside order takers and their primary responsibility to create a relationship with the buyer. Consider inside order takers as the clerks employed by a company to assist the customer and complete the final sale. Outside order takers are out making calls on customers and delivering inventory. Order getters are the highly trained salespeople, and missionary salespeople are the ones that facilitate experiences such as samples in the store. A technical salesperson is one that has extensive product knowledge that they use to present a product.
Personal selling is broken down into steps, It begins with identifying a qualified customer or prospecting; from this point leads are identified. This is then followed by an approach, a presentation, handling objections, closing, and asking for the order. There are many components involved in each step based on the product/service, customer, timing, and ability of the salesperson to close the sale. The final step is the follow-up.
Sales force management was covered, including the definition, purpose, and construction of compensation packages. Assessment of performance, using sales performance metrics for quantitative assessment, and qualitative goals are important functions of sale management.
The final section discusses promotion, which is a form of marketing communication that is used to inform target audiences of a good, service, brand, or issue. Considered a basic element of the marketing mix, promotion includes various tactics that encourage purchase. Examples include coupons, sweepstakes, rebates, premiums, special packaging, cause-related marketing, and licensing. Loyalty programs are increasingly used to build customer loyalty and repeat sales while at the same time generating valuable consumer information.
Additional incentives include push incentives, which cover a marketer’s effort and expenditure to influence channel members stocking and promotional efforts. Pull incentives, on the other hand, cover a marketer’s effort and expenditure to influence consumer and customer demand and preference for the marketer products, using advertising, coupons, and other forms of promotion.
Finally, ethical issues with personal selling and promotions were discussed. Fraud and misuse of funds for sales personnel can be closely monitored using software developed to track this information. With promotions, hidden fees, which are one-time add-ons that may not be fully disclosed to the consumer, will carry additional unfair costs. Where contracts are concerned, ambiguous terms and conditions are considered problematic, and customers as well as marketers should be aware and avoid these issues.
15.09: Key Terms
Example and Directions
Words (or words that have the same definition) The definition is case sensitive (Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages] (Optional) Caption for Image (Optional) External or Internal Link (Optional) Source for Definition
(Eg. "Genetic, Hereditary, DNA ...") (Eg. "Relating to genes or heredity") The infamous double helix https://bio.libretexts.org/ CC-BY-SA; Delmar Larsen
Glossary Entries
Word(s) Definition Image Caption Link Source
adaptive selling an approach to personal selling in which selling behaviors are altered during the sales interaction or across customer interactions, based on information about the nature of the selling situation
AIDA model the model consumers go through when becoming interested in a product. First the product must grab their attention, then they gain interest, they have a desire for the product, and they act to acquire the product
ambiguous terms and conditions when a contract is unclear and misleading
approach the stage of the sales process where the salesperson makes the initial approach to introduce the product to the customer
commission the compensation paid to salespeople based on a fixed formula related to the salesperson’s activity or performance
consultative selling focuses on the expertise of a salesperson with problem solving
contest a marketing or consumer sales promotion technique that involves collection, matching, or use of skill to complete a project or activity with the goal of a prize or reward for the player
cooperative advertising an approach to paying for local advertising or retail advertising whereby the details are handled by a local retail store but is partly or fully paid for by a national manufacturer whose product is featured in the ad
coupon a printed certificate entitling the bearer to a stated price reduction or special value on a specific product
credit terms credit terms of the agreement between the buyer and seller with length of time and payments to be made
customer relationship management the process sales personnel undertake to work with the customer to build the relationship and move into the role of a trusted advisor
formula selling an approach in which the sales presentation is designed to move the customer through the stages in the decision-making process, such as get the customer’s attention, develop interest, build desire, and secure action
hidden fees also called undisclosed fees and are fees that are not made known to the buyer
inside order taker a salesclerk or order clerk that is employed for a company that address questions and complete the final sale
kickbacks illegal payment for preferential or improper service
lead response time the activity of evaluating factors through data analytics, demographics, buyer behavior, competitor analysis, and economics
loyalty programs a form of promotion focused on repeat purchases and frequently attached to a sales receipt, punch card, or stamp card
missionary salespeople individuals who have the power to influence the customer to purchase a product or service
need/satisfaction format a type of customized sales presentation in which the salesperson first identifies the prospective customer’s needs and then tries to offer a solution that satisfies those needs
opportunity win rate the number of sales closed divided by the total number of opportunities created; calculates another opportunity to track sales
order getters highly trained salespeople who know their products, services involved, and competition across the street
order takers sales personnel that are responsible for taking orders from customers by identifying the customer and finding the right product fit
outside order takers salespeople out in the trenches, visiting customers and delivering inventory to retailers and wholesalers
personal selling communication between a buyer and seller. The primary responsibility is to build a relationship with the buyer.
point-of-purchase displays displays that allow manufacturers to showcase their products in a way that stands out from all the other products in the store
pre-approach stage the stage of the sales process where the salesperson will work to understand the needs of the customer and begin working with them to become a customer
premiums a promotional tool that is often defined in three forms: merchandise offered at a lower price or free; an item of value, other than the product; souvenir merchandise
presentation the stage of the sales process where the salesperson showcases the features about a product that will be of most benefit to the prospect based on the needs uncovered during the pre-approach and approach stages
prospect a potential qualified customer who has the willingness, financial capacity, authority, and eligibility to buy the salesperson’s offering
qualification the process the salesperson undertakes to make sure the sales lead is a good fit for the product they are selling
quantitative assessments numbers driven and based on inputs and outputs of the sales cycle
rebates a form of promotion that rewards consumers for sending information to the company
relationship selling a method of personal selling used to better understand the needs and wants of the buyer
sales force automation a software tool that helps organizations acquire customers
sales leads a database of potential customers that sales professionals work to create and develop through lead generation
sales promotion a short-term way of enticing the consumer to purchase a product or service
samples providing consumers with a free sample of a product is a form of promotion
selling process includes all of the steps the salesperson will implement as they work with the buyer to become a customer
support personnel fulfill the responsibilities that assist the sales team in supporting the customer and completing the sale
sweepstakes a marketing or consumer sales promotion that involves the offering of prizes to participants, where winners are selected by chance and no consideration is required
team selling the practice of involving a group of people familiar with the viewpoints and concerns of a customer’s key decision makers to sell and service a major account
technical specialist a salesperson who has extensive product knowledge and uses this knowledge as the focal aspect of the sales presentation | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.08%3A_Chapter_Summary.txt |
1 .
Consider which of the sales positions you have engaged with in the last month. Would they be inside or outside order takers, order getter, missionary, technical, or a team? In what circumstances did you have this experience?
2 .
Explain in detail what happens in each of the steps in personal selling process.
1. Prospecting and Qualifying
2. Pre-approach
3. Approach
4. Presentation
5. Handling Objections
6. Closing: Asking for the Order
7. Follow-Up
3 .
Partner with a fellow student, and practice the personal selling process. Take turns being the buyer and then the seller.
4 .
Define sales promotion and discuss its importance in the promotion mix.
15.11: Critical Thinking Exercises
1 .
Compose a paragraph (150–200 words) using all of the following terms as they relate to personal selling. The goal is to prove you understand the meaning of each term.
Terms:
• Order takers
• Inside order takers
• Outside order takers
• Order getters
• Support personnel
• Missionary salespeople
• Technical specialists
• Team selling
2 .
Consider the promotions that you have participated in. List them and the product that they were used to promote. Did you buy the product based on the promotion? If you did, what was the selling point? If you did not, where did it miss the mark? Pick a product that you are familiar with, and create a promotion aimed at the consumer.
3 .
Identify a time you’ve read about or were personally involved in an unethical sales experience.
15.12: Building Your Personal Brand
Consider the concept of personal selling, and apply it to yourself. What information would you need? How would you go about crafting your message? First, gather the facts that you would like someone to know about you, and create a list. Next, craft the basic “elevator pitch” introduction (that is, you only have an elevator ride to tell someone your unique value). What would that pitch include?
Next, make a list of the situations where you might need an introduction (sales pitch) that is longer and contains more detail. Consider a job interview (much of this information should be on your resume), joining a club or professional organization, or volunteering. Each of these situations calls for slightly different information.
Create several different personal selling scripts for yourself, and have someone you know read them and provide feedback. Consider their feedback, and revise as you see fit. If requested, submit your scripts to your instructor.
15.13: What Do Marketers Do
We are surrounded by personal selling encounters: cell phone, insurance, services in a bank, restaurant, and the list goes on. Pick a service that you would like to learn more about. Now find a person that holds the job of personally selling that service/product. Reach out to them; you can call, walk into a business, or make an appointment, any way that you choose. Introduce yourself, and tell them you are a student and would like to ask some questions.
1. Start with simple information. What does the job entail?
2. How did they get the job? How long have they been doing personal selling?
3. Do they enjoy what they do? What are the best parts and the worst parts of the job?
4. Do they think that there are skills that are needed to do the job well? If they do, what are they?
5. Can they discuss the compensation structure (they might hesitate, but explain you do not need specifics, just general information)?
6. Do they have the opportunity to move up into management if they would like?
Add any additional questions, or ask for clarification of something that you do not understand. End with thanking them for their time.
This exercise should provide you with firsthand information about this job; you can always choose another person that is in a totally different service/product category to compare the details of the job. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.10%3A_Applied_Marketing_Knowledge-_Discussion_Questions.txt |
Cutco
In 1949, Cutco began manufacturing knives in Olean, New York. At the time, Cutco was making products for Wear-Ever Aluminum, a division of Alcoa. In 1982, the company went through a management buyout that made it a private company. The Cutco name was derived from the time under Alcoa, when it existed as the Cooking Utensil Company.
For the past 70 years, Cutco has been a family business that prides itself on being made in America.15 The company has a deep-rooted commitment to providing American jobs. Through quality of craftsmanship, the Cutco products are an American staple in many kitchens, and they are the reliable cookware of choice for many home cooks.
Through its commitment to service and quality, Cutco has one of the leading guarantees in the industry. All Cutco products are backed by The Forever Guarantee. No matter how the consumer acquired the product—self purchase or gift—the products come with a lifetime performance guarantee, which includes free sharpening. If at any time the customer is not satisfied with the performance, Cutco will correct or replace the product. Because Cutco relies on lifetime customers and word-of-mouth referrals, its primary responsibility is to customer satisfaction.16
While Cutco has 15 retail stores in the United States, it has long relied on its sales force through Vector Marketing. For years, Vector has hired and mentored a mostly collegiate sales force. In fact, 85 percent of the Vector sales force is comprised of college students.
Vector Marketing is a single-level direct sales company, and it sells only Cutco. The relationship between Vector and Cutco dates back to 1985. Early in the 1980s, Vector Marketing was an independent seller of Cutco. Because of Vector’s success, Cutco bought it to replicate the success it was having with Cutco’s product.17
The Vector Marketing home office is in Olean, New York—by its parent, Cutco. It also operates 250 independent locations throughout the United States, Canada, and Puerto Rico. However, during its busy summer months, when students everywhere are working to earn money for college, Vector Marketing has over 300 temporary locations.
Because of the weekly pay, flexible schedules, and superior sales training, tens of thousands of college students have experienced the joy of cutting a penny with the kitchen shears or slicing through a piece of extra-thick rope courtesy of the sharp Cutco blades. Hundreds of thousands of family kitchens across North America have watched the sales demonstration, asked good questions, provided referrals, and purchased a set of Cutco knives and kitchen accessories.
Vector Marketing works hard to recruit, educate, train, and incentivize its sales force. The hardworking Vector Marketing sales representatives know that up for grabs is a total of \$40,000 to full-time undergraduate students who sell the most—the top 50 students get this award every summer. Vector also gives a guaranteed base pay and even pays the student for the appointment, regardless of whether they make the sale. The company doesn’t want a reputation for high-pressure sales although they do pay commissions. Vector Marketing and Cutco realize only satisfied customers are repeat and referral customers.
When the Vector Marketing sales representative calls to set up the appointment, they courteously ask about when the customer can view the Cutco presentation. When you are in the presentation, the sales representative will go through a carefully scripted and rehearsed presentation, which will take you through the features and the related customer benefits afforded with ownership of your Cutco blades.
Throughout the presentation, the potential customer is asked if they have questions and, further, what they think of the various Cutco knives and accessories they have been shown. At the end of the presentation, the potential customer is intentionally asked which pieces they are going to buy, and they are encouraged to make the purchase by being offered an additional incentive Cutco tool as a gift with purchase.
Most of the prescreened customers have come to the Vector Marketing representative by way of a close friend or family member. Not only is Cutco an undisputed superior product with a lifetime guarantee, but the quality of the link from the customer back to the sales representative helps to solidify the sale. Saying no is very difficult. Almost all objections have already been eradicated.
After the presentation is over, the order has been placed, and the sales representative is closing up the meeting, they ask for 10 referrals. All good sales representatives know that the best customer is a word-of-mouth referral.
Check out the Cutco website and the Vector Marketing website.
Case Questions
1 .
How would you classify the type of sales force utilized by Cutco?
2 .
What is the presentation style utilized in selling Cutco?
3 .
Describe the compensation structure for the Vector Marketing Cutco sales force.
4 .
Explain how the Vector Marketing sales team develops relationships with its customers?
15.15: References
1. “Sales Force Automation Technology and CRM: What’s the Difference?,” Sales Blog & Field Sales Management, ForceManager, last modified February 4, 2021, https://www.forcemanager.com/blog/sf...how-to-decide/.
2. “CRM 101: What Is CRM?,” Salesforce, accessed June 25, 2022, https://www.salesforce.com/crm/what-is-crm/.
3. Julie Thomas, “What Companies That Grew in 2020 Realize about Sales Training,” Forbes, January 8, 2021, https://www.forbes.com/sites/forbesb...sales-training.
4. Roger Dooley, “Coupons: Better Than Kissing,” Forbes, December 21, 2012, https://www.forbes.com/sites/rogerdo...oupons-kissing.
5. Min-Jee Hwang, “How to Use Pricing and Promotions to Improve Customer Satisfaction,” Wiser Retail Strategies (blog), Wiser, July 13, 2017, https://blog.wiser.com/how-to-use-pr...-satisfaction/.
6. Olivia Cruz, “Creminelli Works with Keep Austin Fed for an Upgraded Snack Experience,” News, SXSW Conference & Festivals, February 22, 2022, https://www.sxsw.com/news/2022/cremi...ck-experience/.
7. Tom Huddleston Jr., “How the ‘McMillions’ Scammers Rigged McDonald’s Monopoly Game and Stole \$24 Million,” Make It, CNBC, February 9, 2020, https://www.cnbc.com/2020/02/07/how-...poly-game.html.
8. Jessica Miller, “9 Examples of Brands Crushing Social Media Contests in 2021,” ShortStack, Pancake Laboratories, June 22, 2021, https://www.shortstack.com/blog/9-ex...tests-in-2021/.
9. Amanda Breen, “It’s National Pizza Day. Grab the Hottest Deals from Domino’s, Papa John’s, Pizza Hut and More,” Entrepreneur, February 9, 2022, https://www.entrepreneur.com/article/417720.
10. “2022 F-150 Pricing and Incentives,” Ford, accessed May 10, 2022, www.ford.com/trucks/f150/pri...nd-incentives/.
11. “Wells Fargo Agrees to Pay \$3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts without Customer Authorization,” Office of Public Affairs, United States Department of Justice, February 21, 2020, https://www.justice.gov/opa/pr/wells...ales-practices.
12. “About,” Tentree, accessed June 25, 2022, https://www.tentree.com/pages/about.
13. Tentree, “Tentree Pledges to Plant One Billion Trees by 2030 in Support of 1t.org,” News Releases, Cision, January 22, 2021, https://www.newswire.ca/news-release...819565992.html.
14. Huddleston, “How the ‘McMillions’ Scammers.”
15. “American-Made Knives. Guaranteed Forever,” Cutco Corporation, https://www.cutco.com/products/american-made.jsp
16. Ibid.
17. “Who We Are,” Vector Marketing Corporation, https://www.vectormarketing.com/who-...%20CUTCO%C2%AE. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/15%3A_The_Promotion_Mix-_Personal_Selling_and_Sales_Promotion/15.14%3A_Closing_Company_Case.txt |
When Dominik Richter, Thomas Griesel, and Jessica Nilsson launched meal-kit provider HelloFresh in October 2011, they did what many successful entrepreneurs seek to do: disrupt a market. While the idea of not having to plan and shop for dinner meals seems enticing for consumers, changing consumer behavior is a challenging task.
HelloFresh needed to convince consumers to stop planning and shopping for meals the way they’ve always done it. The founders recognized that they needed the right combination of traditional direct and online direct marketing tools to persuade consumers to make a hard pivot.
It starts with the HelloFresh website, which offers a beautifully designed, user-friendly experience that makes customizing meals, scheduling delivery, and placing orders easy and secure. HelloFresh also uses social media to drive visitors to respond to a variety of calls to action. For example, website visitors are presented with a variety of offers aimed at persuading them to try HelloFresh, including free shipping, surprise gifts, and free meals.
HelloFresh also recognizes the power of direct mail by sending offers similar to those presented on its website and social media to targeted consumers at home via the US Postal Service. It’s clear that there is integration between HelloFresh’s digital messaging and its direct mail pieces.
HelloFresh has certainly reaped the rewards of an excellent direct and online direct marketing strategy. In 2021, HelloFresh led the market with more than 7.2 million subscribers.1
Check out these additional resources about Hello Fresh:
16.01: Traditional Direct Marketing
Learning Objectives
By the end of this section, you will be able to:
• List and describe the various forms of traditional direct marketing.
• Explain how the digital age has impacted direct marketing.
Forms of Traditional Direct Marketing
Direct marketing involves using communication tools to engage directly with individual consumers for the ultimate purpose of calling them to take some marketing action (see Figure 16.2). That action can be a consumer visiting a website or calling a phone number. Ultimately, the goal is to motivate the consumer to make a purchase. If you’ve received a catalog in the mail or caught yourself watching an entire infomercial about the newest kitchen gadget or gym equipment, you’ve experienced traditional direct marketing as a consumer.
Direct-Mail Marketing
Direct mail arrives in people’s homes every day and is typically delivered by the US Postal Service. When marketers use direct-mail marketing, they communicate promotional messages and offers directly to people’s homes or places of business. Examples of direct-mail marketing include postcards featuring an offer, discount, or coupon code. Seasonal catalogs and glossy look books that present the latest fashions are additional examples.
Like all forms of direct marketing, direct mail is designed to call the consumer to take an action, whether it’s to visit a website, scan a QR code, or call a phone number. It also is highly targeted in that companies can send mail based on demographic characteristics such as age, income, zip code, and buying behavior.
Direct mail has some key advantages over other forms of promotion. First, as consumers are inundated with digital messages, direct mail offers the opportunity to stand out and capture attention. Even mostly digital-facing companies like Warby Parker (see Figure 16.3) and Casper (mattresses) have added direct mail to their promotion portfolios in an attempt to stand out from other brands.
Direct mail also reaches an entire household of people. This is an important advantage for product categories where household members typically discuss and decide on a product together.
Finally, direct mail has the characteristic of lingering. Other forms of promotion, such as advertising and email marketing, don’t have as long a life span as direct mail. According to RetailWire, the average life span of a direct mail piece is 17 days, which means that a household may review that message repeatedly over the life of the mail piece.2
The major disadvantage of direct mail is that many consumers consider it to be junk and throw it out without every reading the offer. Also, mail can take time to land in homes. Although the US Postal Service offers speedier delivery options, these come at an increased cost.
Catalog Marketing
Catalog marketing, also known as direct mail order, dates back to the 19th century and is one of the oldest forms of promotion. Catalogs typically include a variety of products that are often vividly displayed in a high-gloss magazine-like format.
Companies such as Lands’ End and IKEA have long used catalogs to entice consumers to call the phone number or visit the website displayed on the catalog. The call to action is precisely what makes catalog marketing direct marketing. Consumers are presented with vivid product images and an offer such as free delivery or 20 percent off if the consumer responds to the call to action.
According to a 2020 article published in Harvard Business Review, catalogs are making a comeback. Consumers report being excited to receive a catalog. In fact, response rates for catalogs have jumped 170 percent over the last decade.3
Unlike emails and advertisements, catalogs remain in consumer homes long after they arrive. Companies like Target and Amazon have used catalog marketing to connect with customers and present featured products across the seasons.
Telemarketing
Telemarketing is a form of direct marketing that involves a company representative placing or answering customer calls for the purpose of guiding a consumer toward making a purchase. During the calls, the representative or agent typically communicates offers to potential customers. Like other forms of direct marketing, the goal is to motivate the consumer to take some action, such as making a purchase or setting up a follow-up appointment.
Telemarketing can be outbound or inbound. With outbound telemarketing, a company representative contacts the prospective customer directly by phone. With inbound telemarketing, demand for the product or service is generated through other channels such as advertising, email, or direct mail. In response to messages delivered through these channels, the customer is motivated to contact the company directly regarding the product or service.
Companies that manage large volumes of calls typically use a call center, which is a centralized space where agents answer inbound calls and place outbound calls. The call center serves as the centralized location where customer information is collected or confirmed and then the customer is directed to the right product or service representative. With the explosion in the use of smartphones to search the web, consumers can direct dial from any web page that presents a phone number for contacting the company. Many inbound calls are routed to agents who are located offshore in India and other countries.
Car dealerships often use telemarketing in combination with online direct marketing tools to connect with buyers who show interest in a vehicle listed in the dealership’s online inventory. The dealership website may invite consumers to complete a form, after which a sales representative will call the consumer to set up a test drive appointment or answer questions about availability.
Telemarketing can be effective in cases where the consumer expects a phone call. The explosion of unsolicited phone calls from telemarketers, however, has led to a rise in regulation around this direct marketing tool. In 2003, the US government created the National Do Not Call Registry, which bans unsolicited telemarketing calls.4 Consumers must opt in and give permission to be called by a company. Businesses that do not comply with the law face a hefty fine for violations.
Direct-Response TV (DRTV)
Direct-response television marketing is a type of direct marketing that is designed to compel viewers to take some immediate action, such as calling a phone number or visiting a website presented during a television commercial. The commercials typically involve a persuasive demonstration of a product, after which consumers are provided with a toll-free number or a website to order. The television stations QVC and HSN are excellent examples of DRTV, selling everything from apparel to appliances.
Link to Learning: DRTV in Action
This movie clip from the film Joy starring Jennifer Lawrence as real-life entrepreneur Joy Mangano shows DRTV in action.
DRTV commercials often run 60 or 120 seconds but can be shorter. DRTV commercials that run for 30 minutes or longer are called infomercials. Dollar Shave Club has garnered 27 million views of its famous direct-response television commercial featuring founder Michael Dubin hilariously identifying all the problems with traditional shave products (see Figure 16.4). The commercial features the website domain several times and a clear call to action to the consumer to visit the site to learn more.
Infomercials often feature a spokesperson promoting the benefits of a product. In many cases, there is a persuasive demonstration of the product, and viewers are called to “act now.” Some of the most well-remembered infomercial products include the Snuggie, Magic Bullet, and Proactiv. A carefully executed commercial coupled with the right product can generate billions of dollars for companies. Proactiv, for example, which was rebranded as Alchemee in 2022, generated \$1 billion in sales in 2020 from its famous acne skin-care line.5
Because it offers the advantage of capturing customers in real time and because it’s easy to measure, DRTV continues to be an effective direct marketing tool.
Seminars
Seminars allow companies to share their expertise and knowledge related to a topic, issue, or industry. These can be done in person or virtually and are a great tactic for developing trust and building relationships with consumers. They have additional advantages that include building greater brand awareness and introducing new products or services, and they may ultimately lead to increased sales.
Trade Shows
Trade shows are exhibition events that provide companies the opportunity to present themselves and their products and services to industry peers. Trade shows are suited for the business-to-business (B2B) market and are sponsored and hosted by industry trade organizations. They are an excellent way for industry professionals to network and grow their businesses. They are also wildly popular. For example, one of the most popular trade shows, Consumer Electronics Show, or CES, attracts thousands of companies that showcase their latest technology. This trade show serves as an intersection for industry professionals in the health, gaming, and automotive spaces, and participants include tech companies such as Google, Microsoft, and E3, among others.
Companies that participate in trade shows can benefit in the following ways. First, trade shows allow company representatives to visit with existing customers to grow current sales and further solidify their partnership. They also give companies a chance to connect with and present to new buyers.
Every year, MailCon brings together marketing professionals, brands, and agencies to discuss the latest trends in email technology, strategy, and automation. Major brands like Wayfair, Girl Scouts of the USA, Ford Motor Company, and A&E Networks gather to network and learn about advancements in the email marketing space.6
Link to Learning: Digital Marketing
Digital marketing reaches customers where they are at—online. HubSpot answers some of the most common questions it gets about digital marketing in this article.
How Has the Digital Age Impacted Marketing?
The digital age has changed the way marketers engage with customers and build relationships. While the traditional channels of print, television, and radio certainly present advantages, the digital age has created opportunities for marketers to engage with consumers in a highly personalized and interactive way.
Online Direct Marketing Defined
While traditional forms of direct marketing center on engaging directly with consumers through channels like mail and television, online direct marketing uses a rich collection of digital tools to target individual consumers with an offer that requests a response or action. The online direct marketing tools covered in this section include website marketing, email marketing, content marketing, online video marketing, blogs, and online forums.
LendingTree is a great example of a fintech (financial tech) company disrupting the traditional banking industry. LendingTree has revolutionized the way consumers and banks participate in the lending process. It excels at matching consumers searching for financing with banks looking for qualified customers. It is LendingTree’s digital marketing tools that make this matching process possible.
A consumer who searches the web and lands on LendingTree’s website is invited to compare quotes and plans that are tailored to their age, income level, and location by filling out an online form. LendingTree then displays consumer-relevant plans and quotes based on their demographics and follows up with an email inviting consumers to view offers from financial institutions. If the customer is a Gmail user, consumers may then see digital ads later on sites like YouTube and in their Gmail inbox.
Direct Meets Digital: The Evolution of Direct Marketing with Technology
The explosion in internet usage and online shopping coupled with the evolution of digital technologies has resulted in the emergence of online direct marketing. While traditional forms of direct marketing remain important for engaging with consumers, the channel has evolved as technology has evolved. With 3.5 billion smartphone users worldwide, marketers recognize the value in engaging with consumers through mobile devices. In the United States alone, 65.6 percent of Americans report that they check smartphones 160 times a day.7
In response to the explosion in smartphones and internet usage, online direct marketing is getting a larger share of advertising spend. In 2020, advertisers spent \$139.8 billion on digital marketing, and that number is expected to grow to \$200 billion by 2025.8
Forms of Online Direct Marketing
There are several online direct marketing tools that can be used (see Figure 16.5). Let’s take a look at each tool in the following section.
Website Marketing
Website marketing is the promotion of a website that results in driving traffic or visitors to the site to learn more about the product or company or to make a purchase. The purpose of website marketing is to attract online shoppers who may be interested in a company’s product or service offering.
Developing a website is one of the most important steps a company can take to establish a digital presence online. Websites serve a variety of purposes. Some are designed to nurture consumers and guide them toward making a purchase while others are designed to facilitate transactions. For example, car manufacturers like Toyota and Honda use their websites to deliver details and options related to their product lines. Consumers can use interactive tools to change out features and colors based on their preferences; however, consumers would likely visit a dealership to make the actual purchase.
Amazon.com is designed to allow third-party sellers to share product details, reviews, and product comparisons. Its purpose is to facilitate a purchase transaction in which the consumer buys something directly from the site. Shopify has recently emerged as the “anti-Amazon” by offering sellers more than a dozen services ranging from e-commerce websites to inventory management and payment processing.
There are still other websites whose purpose is not transactional but that are designed to build community and engagement among customers. Bleacher Report’s website offers sports articles, game scores, and live sports streaming. Fans are invited to comment and engage with one another regarding the latest sports news. The website also offers the option of signing up for its newsletter delivered to consumers’ email inboxes. Whether it’s to communicate information, facilitate a transaction, or build a community, websites should be designed with a positive user experience (UX) in mind.
Email Marketing
Email marketing is a type of direct marketing that is highly personal and designed to build relationships with consumers. Marketers use email to communicate promotions about products and share relevant content. It offers the advantage of connecting companies with highly targeted consumers at a much lower cost than other channels. Email usage statistics are also impressive, making this channel attractive as an online direct marketing tool.
Email boasts over 4 billion daily users; 99 percent of people report checking their email on a daily basis.9 Given the low cost and high usage rate, email marketing can be a profitable way to connect with customers. Marketers generally send two types of emails: transactional emails and marketing emails. A transactional email is a type of email that is sent to customers following a commercial transaction, such as a purchase or a return. When online shoppers purchase athletic apparel from Dick’s Sporting Goods, they receive an email confirmation confirming the order.
Marketing emails are promotional in nature and typically involve a marketing offer. Old Navy sends marketing emails during major sales events. They feature relevant product categories based on past purchases and often include a coupon code or free-shipping promotion.
Buzzfeed provides another great example of a company that optimizes email marketing to reach subscribers. According to Campaign Monitor, it has created a collection of diverse and audience-catered newsletters that are tailored to the preferences of Buzzfeed’s subscribers.10 Emails feature relevant articles and funny GIFs that prompt subscribers to visit the site to read more. On average, subscribers who visit the site via email spend more time on the site than those website visitors who have come from other channels.
Regardless of their email marketing strategy, companies utilize email marketing platforms like Mailchimp to reach target audiences. Mailchimp is built for growing businesses, and in 2022 it launched a Super Bowl advertising campaign to promote its services.11 As a martech (marketing technology) company, it offers small businesses tools for guiding consumers through a customer journey to a purchase. Mailchimp’s automation tool, specifically, allows businesses to send email campaigns based on a consumer’s interaction with an email message. The result is a highly personalized email conversation between the small business and the customer.
Link to Learning: Mailchimp
Learn how Mailchimp’s CEO and cofounder, Ben Chestnut, built and grew the Mailchimp email platform in this podcast: NPR’s How I Built This with Guy Raz.
Check out the 2022 Super Bowl commercial with DJ Khaled here.
Email marketing is also known as permission-based marketing. Permission-based marketing requires that marketers get consent to send email and text messages to consumers prior to contacting them with a promotional message. Once a consumer opts in to receive an email or text message, they are given the option to opt out by clicking on an unsubscribe link or by reply texting a company to opt out of messages.
Consumers typically opt in to receiving emails when they place an online order so that they may receive order confirmation and shipping updates. In addition, consumers are also opting in to receive other value-added content, such as exclusive discounts, access to a webinar, a free trial, or some other type of value exchange.
Content Marketing
Websites, email, and other forms of online marketing are only as good as the content they carry. Content marketing involves creating and distributing content that is valuable and relevant to a company’s target customers. New York–based Dotdash Meredith is a good example of this. The company’s digital brands include Verywell, The Spruce, Byrdie, and others. Dotdash Meredith is a unit of Barry Diller’s IAC. Company policy: no pop-up ads!
As with other forms of direct marketing, content is about driving customers to take some desired action. Consumers would much rather consume a funny video clip, a highlight reel of their favorite athlete, and an inspiring quote or comment than see banner ads and pop-up ads. In order for content marketing to work, it must be useful, relevant, high quality, and engaging to the targeted audience.
When content is delivered through social media, blogs, and email, consumers have the opportunity to directly engage with the company and other content consumers. They can like, share, retweet, and mark as a favorite—all examples of actions taken in response to the content. Marketers can use the data created by these actions to perform sentiment analysis and generate other metrics. The challenge with content marketing is that it is constantly changing. Companies are tasked with constantly updating their content and continuing to tell stories that their audience wants to hear and engage with.
Online Video Marketing
Online video marketing involves creating videos that tell a story about a product, company, or brand that is designed to drive consumer engagement through activities such as liking, sharing, and retweeting. Video marketing is becoming increasingly popular as a marketing tool because the cost of creating video campaigns has dropped significantly in the last decade due to technological advancements. Biteable, for example, offers marketers a cost-effective way to create brand videos that are quick, simple, and customizable.
Along with the drop in cost to produce online videos, consumer demand for videos has increased. Because of this demand, Instagram, Facebook, and Twitter have pivoted to video-first platforms. Wyzowl’s annual State of Video Marketing Survey revealed in 2021 that online video watching has doubled since 2018 and that online marketers “feel positive about the return on investment offered by video more than ever as it continues to strongly influence traffic, leads, sales, and audience understanding.”12
Link to Learning: Wyzowl’s Survey Found on HubSpot
Read more about the key data points learned by Wyzowl in its 2022 survey. You might be interested to learn that 86 percent of businesses use video as a marketing tool, 94 percent of companies believe videos help customers better understand their product, and 99 percent of video marketers said they will continue using video. You can find the full report here. There’s a ton of interesting information!
Blogs and Online Forums
A blog is an online journal of interests, beliefs, or other topics published by a person, a group of people, or an organization. In its early stages, a blog was a personal journal that someone posted to the web. It’s since evolved into an online marketing tool that is typically a website or a webpage and serves a variety of purposes.
First, a blog’s purpose can be to share valuable and relevant information with targeted audiences. Ultimately, the goal is to attract visitors to the page or site and convert them to customers. In addition, marketers create blog content on sometimes a weekly or even daily basis so that consumers continue to visit the site or the page to access the new content. When the blog content is good, visitors will continue to engage with the articles produced by the company. Ultimately, this helps a company’s organic ranking on Google. In Google, your page or website will rank higher on the Google search results page as it grows in popularity and consumers click on it.
Blogs are also a great way to create and nurture online communities, or groups of people with similar interests connecting to one another online.
Customer relationship management company HubSpot is excellent at creating high-quality blog content for marketing and business professionals. It covers an array of professional topics, from marketing to human resources management to communicating effectively in the workplace. Its content ultimately drives visitors to its website, where they’ll find a suite of programs designed for marketing, sales, customer service, and operations.
Blogging can be an integral part of a content strategy as long as marketers dedicate time and resources to continue updating the content. Visitors appreciate fresh and relevant information, and delaying the delivery of high-quality content may mean a loss of visitor interest.
Link to Learning: Content Marketing Tools
Learn more about the types of content marketing tools marketers have to work with by reading this HubSpot article. Included are the types you’re probably more familiar with, like blogs and videos, but also discussed are the ones you may not have as much experience with like, white papers and case studies.
Advantages of Online Direct Marketing
There are several key advantages that make online direct marketing an attractive tool for marketers. First, online direct marketing is not restricted by geographical boundaries. The internet is readily available to most consumers globally, making it practical to market around the globe.
Second, online direct marketing is much less expensive than other forms of marketing when considering its global reach. Imagine how expensive it would be to send direct-mail catalogs to customers all over the world. Establishing an online presence by developing a website and creating video and blog content is relatively inexpensive compared to other forms of promotion.
Third, online direct marketing is easy to measure in terms of campaign performance. With advertising tools targeted to mass audiences, it’s difficult to attribute a sale to a particular television or radio commercial. With online direct advertising, marketers can track the performance of their campaigns based on consumers’ interaction with digital tools such as email, online videos, and a company’s website. For example, when Nike creates online video content that is posted on YouTube and its website, Nike marketers can track consumers’ engagement with that content, in addition to the consumer’s online journey. Online direct marketing reveals real-time insights into the effectiveness of campaigns compared to more traditional forms of promotion.
Fourth, online direct marketing is highly targeted. Marketers can carefully focus promotion efforts on very specific groups of consumers based on their geography, their social media channel preferences, and other variables. Online direct marketing also allows for retargeting, which occurs when consumers visit different websites but are shown similar ads based on their online consumer behavior.
Finally, online direct marketing allows for real-time interaction between brands and consumers. Consumers may start with a Google search and end with the completion of an online purchase. Throughout the online consumer buying process, marketers have the opportunity to engage with the consumer in real time.
Traditional direct marketing and online direct marketing offer a variety of benefits in connecting marketers to targeted consumers.
Careers In Marketing: Digital Marketer
Digital marketers build and implement a company’s online-related activities and sales. Review this job description and list of qualifications from Glassdoor for more details. There are several additional resources that will help you better understand the digital marketing job role and what it will take to get a job in this field:
• Ahrefs—A Source for Digital Marketing Tutorials: “How to Start a Career in Digital Marketing (Step-by-Step)”
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following best describes the difference between traditional direct marketing and online direct marketing?
1. Online direct marketing uses digital tools to individually engage with consumers and call them to take some desired action. Traditional direct marketing does not allow a quick call to action.
2. Traditional direct marketing is more effective than online direct marketing.
3. Online direct marketing allows marketers to target consumers based on factors such as their location, age, and income. Traditional direct marketing can also be based on demographic factors.
4. Traditional direct marketing channels do not include a call to action, and online direct marketing channels do.
2.
Which of the following best summarizes the cause for the emergence of online direct marketing as a promotion tool?
1. The explosion of internet usage, online shopping, and smartphone usage and the advancement of digital marketing technologies best explains the emergence of online direct marketing.
2. Consumers are spending less time watching movies and shows.
3. Traditional direct marketing tools have gotten too expensive and are no longer effective at engaging customers.
4. Traditional direct marketing doesn’t offer the same degree of message relevance that online direct marketing does.
3.
Which type of marketing involves creating and distributing content that is valuable and relevant to a company’s target customers?
1. Website marketing
2. Blog marketing
3. Email marketing
4. Content marketing
4.
Which form of online marketing is permission-based, meaning that consumers must consent to receiving online messages?
1. Website marketing
2. Blog marketing
3. Content marketing
4. Email marketing
5.
Which of the following represents an advantage of using online direct marketing tools?
1. Online direct marketing allows marketers to target consumers globally because of worldwide access to the internet.
2. Online direct marketing is highly targeted in that marketers can reach customers through a variety of digital channels that are inexpensive compared to other promotion tools.
3. Online direct marketing allows for easier measurement of ROI on campaigns.
4. All of these are advantages of online direct marketing. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.00%3A_In_the_Spotlight.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss social media marketing and its opportunities and challenges.
• Discuss mobile marketing and its opportunities and challenges.
Social Media Marketing
As discussed in the previous section, internet and digital technology usage have surged across the globe, creating opportunities for marketers to engage with consumers in real time. Social media marketing has emerged as a powerful online marketing tool as consumer time spent on these platforms (see Figure 16.6) has grown substantially over the last decade. A growing share of Americans report that they use YouTube and Facebook more than any other social media platform. In segments under the age of 30, the most popular platforms are Instagram, Snapchat, and TikTok.
Social Media Marketing Defined
Social media marketing is defined as using social media platforms to deliver content that drives engagement with your brand. Companies from PepsiCo to Home Depot to the pizza restaurant located in town use social media to connect with users, share content, and, ultimately, generate sales. Marketers can create brand profiles and sponsored content that they pay for.
Warby Parker uses Instagram to create high-quality content and showcase different styles of eyeglasses based on face shape. Users may click on the post, read and reply to comments, like it, mark it as a favorite, or share it on their own feed. If they are in the market for new eyewear, the social media post may drive them to the company’s website, where they can virtually try on different styles of eyeglasses and ultimately make a purchase.
Social media marketing offers some advantages and disadvantages. The advantages include that it is highly targeted, it allows for engagement with and among users, it is a great tool for driving visitors to a company’s website, and it is easily measured.
Uses of Social Media Marketing
Marketers recognize that social media presents an exciting opportunity to connect with consumers across a variety of platforms. Unlike some other forms of promotion, social media marketing allows marketers to precisely target audiences. Marketers can create social media campaigns that target demographic attributes such as gender, age, and location in addition to psychographic attributes such as interests and viewing behavior.
For example, Facebook allows marketers to upload a list of customers that includes the demographic and psychographic attributes of the company’s target audience. Facebook then creates what’s called a “lookalike audience” that matches those customer attributes to the attributes of Facebook users so that the company’s ads will show up in the feeds of the lookalike audience.
Social media marketing also creates the opportunity for users to engage with one another and company content. It’s an excellent vehicle for marketers to distribute their online video and blog content in addition to communicating promotional offers. Marketers can monitor engagement and participate in ongoing conversations with users who comment, like, and share content.
Harvard Business Review (HBR) provides a great example of how to use social media marketing effectively. HBR, a business management magazine published by the Harvard Business Publishing subsidiary of Harvard University, offers paid subscribers the latest research and articles on all things related to management.
During the pandemic, HBR gave people free access to all HBR content. The campaign ran on social media and resulted in increased traffic at the HBR website. This brings us to another important advantage of social media marketing. It can create traffic or visitors that link from the social media platform directly to the company’s website.
Finally, social media marketing is highly measurable. Online marketers can evaluate key engagement metrics such as clicks, likes, and shares and optimize their social media campaigns so that they achieve the goals they set. For example, posting at 1:00 p.m. EST on Facebook results in getting the most shares while posting content at 3:00 p.m. EST results in getting the most clicks.
A major disadvantage of social media marketing is that brands don’t have complete control over the message. Consumers can freely write comments that are harmful to a brand’s reputation. Amazon’s Jeff Bezos famously wished everyone a “Happy Earth Day” in a tweet that showed him dogsledding above the Arctic Circle in Norway. He received serious backlash from Twitter users who pointed out at the time that Amazon employees were underpaid and overworked.13
In addition to losing control over the message, social media marketing requires a great deal of resources, including time and money. Content is key to creating engagement, and continuous creation of new and engaging content requires resources. Social media pages and posts also need to be monitored for engagement. For example, companies that are active on social media have a plan for reviewing and replying to sometimes hundreds of comments. Fortunately, there are great online tools to help automate replies to comments.
Facebook
Facebook, whose parent company was rebranded as Meta in 2021, is the largest social media platform, with over 2.9 billion monthly active users and \$117.92 billion in revenue.14 These numbers make this platform attractive for reaching a diverse, global audience. Facebook is facing the challenge that a growing percentage of its users are baby boomers (born between 1946 and 1964) while teens are using other platforms, like TikTok and YouTube, more frequently.
In addition, Facebook has been scrutinized because of how the company uses personal data. Six in ten social media users report that they’ve observed and temporarily believed something they’ve read on Facebook that turned out to be false information.15
In addition, there’s a growing concern about the role that social media has played in dividing people. Fifty percent of users who are millennials say that Facebook fosters division, compared to only 38 percent of baby boomers.16
Facebook is still clearly the behemoth of social media platforms, and so long as it holds that position, marketers will continue to use it as a channel to deliver content and drive engagement with targeted customers.
Instagram
As a social media platform, Instagram’s growth has exploded over the last decade. While not as large as Facebook in terms of users, it still boasts 1 billion active users every month. Instagram attracts a younger demographic, mostly people under the age of 30, which makes it attractive for brands targeting this audience.17
The company previously known as Facebook purchased Instagram in 2012. The union of Facebook and Instagram under one corporate entity has provided synergistic benefits to users, companies included. First, social media allows users to cross-post on the two platforms. And second, this has the advantage of increasing reach and repetition of messages more efficiently.
From a social media advertising perspective, the integration of Facebook and Instagram allows companies to manage and monitor campaigns across the two platforms easily. Furthermore, companies that have leveraged these integrative features have enjoyed stronger campaign performances in terms of clicks, views, and website conversions.
Spotify uses Instagram Stories brilliantly during its #yearwrapped campaign that drops every December. Instagram Stories lets users post photos and videos that disappear after 24 hours. It’s become a very powerful sharing tool with more than 500 million users posting stories every day.
Spotify created a special webpage that presents visitors with their most listened to artists, songs, and other interesting insights related to their music habits over the year. Spotify gives visitors the option of sharing these highlights on other social platforms. This campaign has proved to be highly engaging, with more than 60 million Spotify users engaging with Spotify’s Instagram Story and 3 billion #yearwrapped playlists streamed as a result of the campaign.
LinkedIn
For business professionals seeking networking, partnership, and employment opportunities, LinkedIn proves to be an excellent social media platform (see Figure 16.7). LinkedIn boasts 722 million users, who are known as members. Among social media platforms, LinkedIn is considered the most trusted, with 73 percent of members agreeing that LinkedIn protects members’ privacy.18
LinkedIn Live is the platform’s live streaming feature, which allows companies to engage directly with community members. Vimeo leveraged the feature when it held a “Working Lunch” series. Using a seminar format, it brought together experts across the business, communication, and technology industries and interested members. The goal was to engage with the audience, provide relevant information, and drive use and engagement of the platform.
While not the largest social platform, LinkedIn most certainly serves as an important tool for connecting with business professionals in the B2B space.
Pinterest
With 478 million monthly users, Pinterest is a social platform that allows users to visually explore an endless array of ideas from recipes to home decor to crafts to personal style.19 Users can use the platform’s search bar to look for topics or people that interest them, which produces results related to search keywords.
For businesses, Pinterest offers a host of benefits as a social marketing tool. First, 97 percent of searches are unbranded.20 Simply put, consumers aren’t looking for brand-specific content when browsing the platform. This is music to the ears of companies that can place their ads in Pinterest feeds near relevant content. For example, a user may search for “image of vintage running shoes” on Pinterest, which would result in a host of profiles featuring content related to the search terms. A well-placed New Balance advertisement featuring its vintage 720 sneaker would be a strategic marketing move in this situation (see Figure 16.8).
Twitter
As a social platform, Twitter is a microblogging news and networking site where users typically post shorter messages known as tweets. After receiving complaints that 140 characters weren’t enough room to express ideas, Twitter expanded its character limit from 140 to 270 in 2017. It has approximately 238 million daily active users, with about 14.5 million living in the United States. It has seen steady growth in international appeal.21
Similar to LinkedIn, Twitter is a popular B2B digital marketing tool, with 67 percent of all B2B businesses using the platform to reach business customers.22 Twitter users have a high expectation that a company will respond to a tweet; therefore, marketers who choose this platform should be prepared to engage with users directly. Twitter's ownership and policy changes in 2022 led many people and companies to reconsider their relationship with the platform, but it will likely remain a major force in marketing and business for years to come.
Podcasts
Podcasts are often free, on-demand, downloadable audio recordings that cover a variety of topics and are typically made available on a weekly or monthly basis. Podcasts are distributed through applications such as Apple’s Podcasts, Google Podcasts, Spotify, and Audible, but they can also be published on a company’s website. Podcasting has been growing at a “hockey stick” rate—200 percent year-on-year growth.23 Recognizing a huge opportunity, Spotify acquired podcasting company Megaphone in 2020.24 The acquisition positions Spotify as the “go-to” platform for premium podcast content, which offers new opportunities for advertisers. In a world where people question information they are given, podcast hosts stand out because 52 percent of listeners trust advertising when endorsed by the host.25 The hosts can offer brand endorsements and approvals in addition to stories that they bring to life via audio. Listeners take in what the host says and then build it out in their own minds. Podcast creators leverage social media platforms to drive traffic to applications and sites where the podcasts can be played or downloaded.
Podcasts can be an effective digital marketing tool when marketers want to hyper target a niche audience with relevant topics. They are typically created to share educational information and often result in a good return on investment because of the value they create for loyal listeners.
eLearning company Harappa Education produces the Habits Matter podcast, which focuses on topics about learning and personal growth. Listeners are attracted to the series because they want to learn something new without the noise of a marketing message. Podcasts are effective at creating value, building relationships, and engaging target audiences in a subtle way.
Link to Learning: Social Media Strategy
Social media marketing can be complex because of the variety of platforms and new features being added all the time. Check out this guide from HubSpot on how to develop a social media strategy.
Also, check out the Habits Matter podcast. Hosted by Shreyasi Singh, the Habits Matter podcast explores humanity at work. Check it out here at Apple or here at Spotify.
Social Media Marketing: Opportunities and Challenges
When marketers are considering social media as a digital marketing tool, they need to weigh its opportunities and its challenges in order to determine if it’s the right-fit channel for reaching targeted customers.
The major opportunities of social media marketing include reaching global customers, increasing brand awareness, engaging with targeted customers, and increasing website traffic. First, social media connects companies to billions of users across the globe. Because of this reach, companies can connect with new and existing customers in profitable ways.
In addition, because of the billions of active users on social media, brands can increase awareness of their existence with targeted consumers. For example, a five-year-old swimsuit and beachwear company, Cupshe, had little to no brand recognition among US consumers until it launched campaigns on Facebook and Instagram. In 2020, the company boasted \$150 million in sales without a single storefront.26 Consumers were exposed to the brand via social media ads, which then drove them to the company’s website to browse styles and make purchases.
In addition to increasing brand awareness, social platforms help brands engage directly with consumers. Mass forms of promotion such as advertising only offer one-way communication from the company to the customer. Social media platforms allow for multidirectional communication between the company and users and brand communities.
Finally, social media drives traffic to company websites. Users see a sponsored advertisement in their news feed that is highly relevant to their interests and click on the content to learn more, browse inventory, and, ultimately, make a purchase.
The major challenge facing marketers who use social media to reach target audiences is that there is a growing distrust of social media platforms in terms of what they do with our private information. In addition, social media marketing requires dedicated campaign managers who can post fresh content frequently, monitor engagement, and respond to comments. The third disadvantage is that while multidirectional dialogue between consumers and the company is an advantage, the comments cannot be controlled. Users can tarnish the company’s brand name if they share negative experiences or opinions about the brand.
Link to Learning: What Goes Viral?
Why do some things go viral and others don’t? Learn from BuzzFeed’s publisher Dao Nguyen and her TED Talk on the tactics her team uses to make things go viral.
Integrated Social Media Marketing
Integrated social media marketing involves creating a clear, consistent, and synergistic message across all social media platforms. When consumers are presented with coordinated messages across social media platforms, brand awareness and purchase intention increase.
Mobile Marketing: Definition and Strategies
Mobile marketing is defined as the use of multiple digital marketing channels that are designed to reach consumers on their smartphones and tablets. Given the variety of digital tools that marketers use to engage with consumers, it’s important to discuss how mobile device use impacts digital marketing strategies. Usage of mobile devices to access the internet and applications has steadily increased over the last ten years.27 As mobile device technology and digital technology has improved, people are doing everything from refinancing their homes to buying cars online. Mobile device usage will continue to grow, and as consumers spend more time on mobile devices, marketers must adapt their strategies to meet consumers where they are.
There are currently 6.4 billion smartphone users worldwide, and usage is expected to continue to grow over the next decade.28 In 2022, US mobile advertising spend is expected to reach \$137.13 billion, where it was \$100 billion in 2021.29 Given these compelling statistics, companies must be prepared with an effective mobile marketing strategy. Marketing for mobile devices is not the same as marketing for desktops. Consumers expect a more personalized experience when they engage with brands on their smartphones.
Elements of a successful mobile marketing strategy should include responsive design, mobile-friendly emails, app development, and memorable URLs.
Link to Learning: US Mobile Advertising
To learn more about the predicted growth of mobile advertising in the United States, read this article from Oberlo. It states that US spend is expected to grow 14 percent to \$156 billion in 2023 and up to \$174 billion in 2024.
Responsive Web Design
Responsive web design means that when people visit your website via their mobile device, the menus and content display in a way that is easy to read and engage with. Users don’t need to pinch, expand, or scroll the screen to view content. Responsive web design became the standard in 2015 when Google announced that mobile-friendly websites would be prioritized over non-mobile-friendly designs in search results. Responsive web design is critical to ensuring that visitors have a good experience while navigating your website.
Mobile-Friendly Emails
Mobile-friendly emails are emails whose images, text, and links display in a user-friendly way when accessed via a mobile device. With 68 percent of emails being opened on mobile devices, responsive design is necessary to create a good user experience.30 Similar to responsive web design, email content needs to display on mobile devices in a way that is simple for the user to consume.
One way that email marketers can meet mobile-friendly standards is to ensure that subject lines are between 41 and 50 characters. Subject lines should capture attention and paint a benefit for the subscriber. In addition, mobile-friendly emails often contain a pre-header, which is the first line of text in your email. It provides context for what the email contains. Finally, emails should be concise with a clear and easy-to-find call to action. Many emails contain buttons that link email viewers directly to the company’s website. The button is typically rectangular and includes actionable language like “Get Started” or “Shop the Sale.”
Developing an App
For some companies, developing a mobile app is an important element in their mobile strategy. Because a shocking 90 percent of people’s mobile usage is on smartphone apps, marketers must consider the value in creating one.31
One benefit of developing a mobile app is that apps provide direct communication and engagement opportunities with customers at the touch of a button. Amazon’s app, for example, makes it easy to search for and purchase products from mobile devices. The alternative is for users to open their browser on their phone, type in the Amazon URL, and search directly from the mobile site. Apps make it convenient for consumers.
Short/Memorable URLs
An internet site’s address on the web is technically known as a uniform resource locator (URL). In the digital world, you could have a great website with great content and a strong social media presence, but visitors cannot reach your website without a well-constructed URL.
Having a shorter, memorable URL is an important marketing tactic for the following reasons. First, it’s easy for people to remember. Second, shorter URLs are easier to share, whether it’s through email, text, or social media. Finally, optimizing the length of a URL makes it much easier for Google to find and display in search results.
There are a number of applications, such as TinyURL and Bitly, that are capable of turning long URLs into shorter ones; however, the jury is still out on whether search engines perceive these URLs as trustworthy.
Mobile Marketing: Opportunities and Challenges
Mobile marketing presents clear opportunities for digital marketers. First, mobile device usage continues to grow as consumers stratify their time across various devices at once. In addition, mobile devices allow people to experience almost constant connectivity that ignores the boundaries that traditional marketing channels must observe, such as time and place. For example, Nothing Bundt Cakes’ store hours of operation might be 10:00 a.m. to 6:00 p.m. However, accessing its website to place an order can happen at any time of day from any location.
The shift in mobile usage behavior provides a number of opportunities for marketers to connect with consumers in a place where they are spending more and more time. Additionally, consumers are using mobile devices to conduct product research, view customer reviews, and interact with brands on social media platforms.
In addition to mobile marketing opportunities, this channel also presents challenges to digital marketers. The first challenge is finding the right mix of mobile channels to reach your target audience. For some companies, SMS texting makes sense because customers are open to receiving promotional messages via text. If the company has a mobile application, it may consider sending push notifications that alert users to important information when they aren’t engaging with the app. Understanding your target audience is key to determining which mobile tools make the most sense.
A second challenge with mobile marketing is measuring results. While companies can easily measure things like in-app purchases and emails opened and clicked, it’s more difficult for marketers to see whether someone has seen a push notification or in-app message.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following is an advantage of social media marketing?
1. Social media is highly targeted in its ability to reach segments of consumers who share common interests and demographics.
2. With social media, marketers have complete control of the message.
3. Social media is very easy to manage and requires few resources.
4. Social media is the best channel for the B2B market.
2.
Which of the following is a challenge that marketers face when using social media marketing?
1. Social media marketing does not allow companies to target multiple audiences at the same time.
2. Social media use is unpredictable, with users only logging in once or twice per week.
3. Companies do not have control over the message.
4. Social media does a poor job of driving traffic to websites.
3.
Which of the following is a characteristic of a good mobile strategy?
1. Mobile websites should have a responsive design so visitors have a good user experience.
2. Emails should be sent to consumers on a weekly basis in order to stay engaged with mobile users.
3. Avoid using push notification features to avoid overcommunicating with your users.
4. Measure whether or not a mobile device user has seen a push notification.
4.
When a company’s website adapts to whatever screen consumers are using and users don’t need to pinch, expand, or scroll the screen to view content, this is known as ________.
1. website design
2. responsive marketing
3. content marketing
4. responsive web design
5.
Which of the following represents a challenge for mobile marketing?
1. Mobile device usage is on the decline.
2. It’s challenging to measure mobile marketing campaigns.
3. Responsive design is difficult to implement.
4. People are using email less and less.
Marketing in Practice: National Geographic
National Geographic has over 220 million followers on Instagram, boasting the leading brand account on the site.32 It shares stunning images of people, places, animals, and natural landscapes from all over the world. As a visual storyteller, National Geographic captures some of the most awe-inspiring, unfiltered images that the world has ever seen (see Figure 16.9).
Instagram has served as an effective vehicle for sharing these images globally. National Geographic has utilized the platform to drive engagement with followers. Its famous “Wanderlust” social media campaign invites amateur photographers from around the world to post the best photographs they’ve taken while traveling.33 Followers use the #wanderlustcontest hashtag to connect with the National Geographic community of travelers. Its strategy to promote user-generated content was a great way to connect with followers and build continuous engagement.
In addition to its Wanderlust campaign, National Geographic uses Instagram and other social media platforms to share content that is central to the brand’s values. For example, on “The Endangered Species Day” and “The Oceans Day,” it pushes content related to wildlife and nature protection using powerful images and statistics.34
Through social media, National Geographic is able to share its passion for nature and wildlife with a community of like-minded people. As a tool, social media allows National Geographic to engage with followers in a personal way. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.02%3A__Social_Media_and_Mobile_Marketing.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss the role of marketing metrics in digital, online, social media, and mobile marketing.
• List and describe the metrics used to evaluate the success of online marketing.
Types of Online Marketing Metrics
While online marketing tools have numerous advantages over traditional tools, it’s important for marketers to pay close attention to metrics that indicate the performance of their online marketing campaigns. Metrics are goals that marketers are trying to reach through their campaigns, and they are typically quantitative in nature. For example, companies measure the performance of their social media campaigns by measuring how many likes, shares, or comments are posted in response to the content. While each online marketing tool has its own set of metrics, we’ll focus on the following tools.
Website Traffic
Website traffic is the total number of visitors to a company’s website. For some companies, website traffic can help move consumers further along the sales funnel and closer to making a purchase. A sales funnel is a visual representation of the customer journey from product awareness to product purchase. For e-commerce sites specifically, online marketers want to increase traffic to their website, which represents the top of the sales funnel, where most consumers will stop. The number of consumers will eventually dwindle until there is an actual purchase, which represents the narrow, lower part of the funnel (see Figure 16.10).
Traffic by Source
Monitoring website traffic by source means paying attention to the site from which the website traffic came. For example, social media is famous for generating traffic to companies’ websites. Online marketers can track this information by attaching a piece of tracking code to links on social media pages and other sources to assess where the visitor came from. In addition to social media, traffic sources can be email, paid search, organic search, paid social, and affiliates.
Paid search is a type of digital advertising where marketers pay search engines like Google and Bing to place their ads in sponsored spots at the top or bottom of a search engine results page (SERP). A SERP (Search Engine Results Pages) is the list of search results that displays on a search engine’s page after someone enters key search terms into a search query box. Say, for example, a consumer is looking for a local company to investigate and fix a leak in their ceiling. That customer would likely visit Google and type in the search terms “plumbers near me.” Google then displays the SERP featuring sponsored companies in top positions on the page. Companies bid on key search terms like “fix leaky roof” in an auction with competitors. If their bid is high enough, they will secure a top position on Google’s search results page. In turn, when users click on that sponsored add, they are directed to the company’s website or landing page.
Organic search refers to the list of websites on a search results page that have not been paid for by marketers. Search engines use algorithms to deliver search results that are relevant to the key search terms that a visitor has entered. When someone is searching for a local plumber on Google and they click on an organic search listing, the company that appears organically in those search results does not pay for the traffic that visits its website.
Paid social is similar to paid search in that marketers pay social media companies to display sponsored digital advertisements to targeted customers on their platform. Social media users who click on a sponsored social advertisement are then directed to the company’s website or landing page.
Affiliates are people or companies that earn a commission for driving traffic to another person’s or company’s website where they make a purchase. CJ Affiliate, formerly known as Commission Junction, provides affiliate marketers with a marketplace to connect with brands who pay affiliates for driving traffic and purchases online.
Conversions
Simply put, conversions happen when a company turns a visitor into a customer. When a consumer purchases a LEGO set on the company’s website, that’s a conversion. When a new user signs up for TikTok, that’s a conversion. Conversions are important in measuring the success of online marketing campaigns and the consumers’ purchase experience.
Bounce Rate
Bounce rate is a metric that online marketers use to measure what percentage of visitors visit the site, view one page, and then leave. Bounce rates can be examined for each page of your website. Online marketers want to aim for a bounce rate that is lower than 40 percent. Higher bounce rates indicate issues with pages, including the time it takes for them to load in a visitor’s browser.
Search Trends
Search trends are data points that indicate how frequently a term is searched. Researching search trends provides insight into who a company’s customers are and what they are currently interested in. Google Trends is a free tool that online marketers can use to gather this information. Monitoring search trends has some predictive benefits to online marketers, who can recommend changes to products, advertising, and budgeting based on what consumers are searching for. For example, marketers utilize keyword tools offered by companies like Semrush to gain insights into customer search activity. Semrush provides customers with information on the value of popular search terms.
New versus Returning Visitors
New visitors, or new users, are people who are just learning about your website. A new visitor is someone who is visiting your website for the first time. Returning visitors are visitors or users who have been to your website before. Analyzing new and returning user metrics provides online marketers with a sense of how effective the company is in attracting new visitors compared to returning visitors. If there’s an increase in new visitors, online marketers may be able to conclude that they are successfully attracting new customers via the online marketing tools they are using.
Average Session Duration
A session is defined as a collection of interactions that occur on a company’s website. For example, if someone searches for Nike soccer cleats on Google, they’ll likely click on a landing page that takes them to the Nike website’s page related to soccer footwear. While on the page, the visitor may then click to browse different styles and colors and maybe watch a video of a famous athlete playing in the cleats. The visitor may then decide to make a purchase by selecting their size and clicking on a CTA (call-to-action) button such as “Add to Cart.” This collection of activities equates to a session. Online marketers examine session duration as a way to measure engagement. If someone visits your shopping cart page after adding an item but then leaves within a few seconds (known as shopping cart abandonment), that may indicate issues with that page.
Page Views
Page views is a metric related to how many total pages have been viewed on your website. Websites typically have a home page, which is where visitors land when they type in your main URL. But depending on the company, its website could have many pages in addition to the home page. For example, e-commerce sites have pages that allow visitors to browse products. There might be review pages for each product and pages dedicated to blogs or articles about featured products. There’s likely to be a customer support page and a terms and conditions page. The possibilities are almost endless. Online marketers use page views as a metric to gauge the success of their website pages.
Most Visited Pages
In analyzing page views, online marketers can gain important insights, such as which pages are most visited. If they identify content on their website that attracts a larger number of views, they can attribute those page views to a traffic source, such as social media or a blog.
Social Engagement
Social engagement relates to the number of actions that social media users take in direct relation to your company, brand, or product. Social engagement can be measured by the number of likes, shares, retweets, and comments made by account followers.
Click-Through Rate
When users visit Google and begin searching for something they are interested in, Google returns what are called search results. This is the list of solutions or answers to the search terms a user entered in the Google search bar. Some companies pay to appear at the very top of that search results page. As noted above, this is known as paid search. When users see the ad, this is known as an impression. The click-through rate (CTR) is the percentage of people who click on your ad. Measuring CTR indicates how successful their search advertisement is in attracting users to click. The ads are linked to a landing page, where the consumer is presented with additional information that is designed to lead them to a purchase. A high CTR leads to more traffic and ultimately conversions.
Cost per Click
Search engines like Google and Bing generate revenue by charging companies that pay for search ads to appear on search result pages. The cost per click (CPC) is the cost companies pay search engines for each click that a search advertisement receives. This cost is based on the keywords that a company bids on. Simply put, there are competitors in the auction who are willing to pay a certain amount to appear on the search results page when a user enters certain keywords. Depending on how competitive the auction is, CPC can fluctuate, and online marketers analyze CPC to ensure they don’t overpay to have their search ads display.
Let’s suppose that you wanted to purchase a Tampa Bay NFL jersey. You are interested in finding one at the lowest price possible. You’re also interested in the team’s home jersey. You may type in the search engine bar: Tampa Jersey in white. Retailers like Fanatics and NFLshop.com will appear at the top of the search results page next to the word “Ad.” If NFLshop.com appears first, it won the auction over the search keywords you entered.
Online marketers set limits on how much they are willing to bid on certain keywords. If they bid too low, they lose the auction and may not get the impressions they need. If they bid too high, they risk overpaying for their search advertising. They should identify their goals and bid accordingly.
Cost per Acquisition
Cost per acquisition (CPA) is also known as cost per action or cost per conversion. It relates to the aggregate or cumulative cost of acquiring a customer. CPA can be measured by channel or campaign. The conversion could be a sale, a form completion, or a click.
The CPA formula is:
$CostperAcquisiton(CPA)=DollarsSpentonCampaignNumberofConversionsCostperAcquisiton(CPA)=DollarsSpentonCampaignNumberofConversions$
For example, let’s look at CPA for a paid search campaign. Fanatics uses paid search to reach customers interested in buying athletic apparel. Let’s assume that Fanatics runs a search campaign for one month that costs the company \$20,000. The campaign was responsible for driving over 1 million visits to the website and 32,000 conversions. 32,000 conversions at \$20,000 would result in a CPA of \$0.63, meaning that each customer conversion cost the company \$0.63.
$CostperAcquisiton(CPA)=20,00032,000=0.63CostperAcquisiton(CPA)=20,00032,000=0.63$
This calculation can be somewhat misleading, however, because it fails to account for the resources spent creating the ad and managing the search campaign. Nevertheless, online marketers monitor CPA because it helps them measure the effectiveness of their online marketing strategies. The lower the CPA, the more effective the campaign.
Marketing Dashboard: Targeted Advertising
As a consumer, have you ever wondered why you see certain advertisements on social media but not others? The answer is targeted advertising. Targeted advertising allows marketing professionals to specify a target audience of their choosing. For example, you may see advertisements for winter boots if you have recently initiated a search with those terms. At the same time, a friend might see advertisements for winter tires for the same reason.
Targeted advertising can be expensive because it is tailored to a marketer’s exact specifications. Therefore, marketing professionals calculate the cost every time a prospective customer clicks on a targeted ad through their website. This cost-per-click metric shows us how much the marketing professional pays every time a prospect clicks on an ad.
Cost per click has a role in search engine marketing as well. For example, if our advertisement is served up on a search engine results page (SERP) and a prospective customer clicks on that advertisement, the marketing team must pay the search provider.
As savvy marketers, we know that not every click results in a purchase. So, we have to be careful not to invest more in clicks than our profitability allows. We also need to consider the average revenue and profit per order and the customer lifetime value when determining the efficacy of a targeted advertising campaign.
The formula for cost per click is the total cost for the digital campaign/number of clicks.
$Cost per Click=Total Cost of Digital CampaignNumber of ClicksCost per Click=Total Cost of Digital CampaignNumber of Clicks$
Give the cost-per-click calculation a try for yourself. What is the cost per click of each of the four campaigns for a pet store?
Campaign Total Campaign Cost Number of Clicks
Dog Food \$12,000 18,100 clicks
Cat Food \$10,000 20,200 clicks
Aquariums \$7,000 19,050 clicks
Bird Feeders \$5,500 5,000 clicks
Table 16.1
Answer
Solution
Dog food: \$0.66/click
Cat food: \$0.50/click
Aquariums: \$0.37/click
Bird feeders: \$1.10/click
What additional information would we need to know to determine whether the cost per click for each product is a good investment?
Answer
Solution
Average revenue and profit per order, percentage of people who click through who make a purchase, and/or customer lifetime value
Let’s suppose that Najja found our pet store website on a targeted ad, clicked through, and placed a \$70 order for bird feeders that had a 10 percent profit margin for our pet store. Was the click-through rate a good investment?
Answer
Solution
Yes. The pet store profited \$7 on the single purchase at a click-through rate of just \$1.10. In addition, Najja may purchase more in the future, making the click-through rate an even better investment.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following best describes why online marketing metrics are important?
1. Online marketing metrics help marketers understand whether or not their products and services create value for consumers.
2. Online marketing metrics are an important part of understanding the factors that influence consumer behavior.
3. Online marketing metrics help marketers measure the effectiveness of marketing managers.
4. Online marketing metrics help marketers measure the performance of their online marketing campaigns.
2.
An online automotive magazine is running a social media campaign to increase paid subscriptions. Which of the following would be an example of a conversion on its website given the campaign’s goal?
1. A visitor uses the search tool on the website to search “vintage European cars.”
2. A visitor enters their email address to receive updates.
3. A visitor enters their payment information and contact information and clicks on “place order.”
4. A visitor downloads the app on their mobile phone.
3.
The Warton Hotel is running an online marketing campaign and would like to measure the percentage of people who only visit its site one time. Which online marketing metric would be most helpful to the hotel in this situation?
1. Counting new and returning customers who visit the site
2. Counting page views
3. Examining the bounce rate
4. Counting unique users
4.
Which of the metrics could be used to measure the performance of a social media campaign?
1. Social engagement
2. Page views
3. Bounce rate
4. Cost per click
5.
Jax’s Sushi House wishes to compare DoorDash’s and Google’s performance in driving traffic to the restaurant’s website. Which of the following explains why Jax’s Sushi House wants to compare sources?
1. Measuring traffic by source provides insight to online marketers about the effectiveness of sources that best drive traffic to a company’s website.
2. Measuring traffic by source allows marketers to measure the effectiveness of the online shopping cart experience.
3. Online marketers can determine the effectiveness of their home page by examining traffic by source.
4. Evaluating traffic by source means looking at the total numbers of visitors to a website and comparing it to the total number of visitors from a source. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.03%3A__Metrics_Used_to_Evaluate_the_Success_of_Online_Marketing.txt |
Learning Objectives
By the end of this section, you will be able to:
• Describe ethical issues with respect to digital marketing and social media.
• Explain why ethical issues exist.
Privacy, Transparency, and Awareness
While digital marketing tools and social media provide online marketers with effective ways to engage with customers, build relationships, and drive consumers toward a purchase, there are ethical issues that marketers must consider when utilizing these tools.
First, because of the highly targeted capabilities of digital and social media, companies have access to large amounts of personal data, including name, email address, phone number, as well as personal interests, social and political views, and shopping behavior. Consumers are increasingly concerned about data privacy. In a recent survey by KPMG, 86 percent of the respondents have a growing concern about data privacy, and 78 percent fear the amount of data being collected.35
Given this growth in distrust of how personal data is handled, some companies have responded with updated policies designed to be more transparent about how data will be used. Seventy-five percent of consumers polled reported that they want increased transparency.36
In 2021, Apple released features for iPhone and iPad users that allow consumers to have stronger control of how their data is used.37 Using pop-ups, Apple device users will be able to allow or disallow companies to track their activity across apps and the websites they link to. This move by Apple resulted in some back-and-forth commentary by Meta’s Mark Zuckerberg and Apple CEO Tim Cook. Tech companies like Facebook and Google depend on being able to target the advertising on their applications to users using personal data. Giving greater privacy control to iPhone users presents a threat to the core of their business models.
Social media platforms in particular mine personal data and then use it to sell advertising space on news feeds of consumers who match the demographics and psychographics of a company’s target market. With nearly 71 percent of social media users taking the time to check their privacy settings on social media, it’s clear that this issue is front and center for a majority of users.38 Companies can respect the privacy of their users by being transparent about what data they collect and how they use it.
Tracking Consumer Data
The reality is that it’s not just social media companies and search engines that track consumer data. A majority of companies use tracking codes to follow consumers and data about them as they navigate the web. Zoho, a productivity and collaboration app, reported that in the B2B space, about 72 percent of businesses do not inform customers that they are being tracked by third parties.39
The Use of Client Reviews
Client reviews involve feedback that a customer or client posts directly to a platform that can accessed by consumers during the buying process. Companies that use client or customer reviews include Amazon.com, Wayfair, and Lands’ End. Customers rate their experience with the product typically by assigning stars and commenting on their satisfaction.
Reviews can be helpful to consumers during the search phase of the buying process because reviews provide a real-world glimpse into the favorability of a product. For example, Wayfair invites customers to post pictures of items like sofas and end tables once a customer has styled the room. This provides shoppers a real-life view of the product, its color, and its size, among other things.
Beyond the reviews on e-commerce sites, Google serves as a major player in the customer review space. Consumers often rely on Google reviews when deciding on whether to hire a local business. In addition to Google, consumers can find reviews for travel on Tripadvisor, restaurant reviews on Zomato, and reviews of software programs on G2.
Marketers recognize the power of customer reviews as a digital promotional tool, as consumers report that they perceive reviews as more credible than messages created by the company itself.
Companies with a Conscience: Apple’s Taking Big Steps to Protect Privacy
In January 2022, Apple took one of its most impactful steps toward protecting the privacy of iCloud users, the iCloud Private Relay (see Figure 16.11).40 When enabled on Apple devices, this feature hides a user’s IP address from the websites they visit, essentially masking a user’s entire online footprint.
The privacy feature is a game changer in the digital marketing space, as companies like Meta and Google depend on seeing a consumer’s online journey to learn more about who they are and what interests they have. Tracking online activity allows companies to serve users with relevant marketing messages and offerings.
In addition to the privacy relay, Apple also released “Hide My Email,” which allows Apple device users to enter a unique email address on websites without sharing their actual email address.41 Emails that are sent to a randomly generated address are then forwarded to a user’s inbox, thereby hiding a user’s actual email address.
Finally, Apple has updated its Mail app such that it prevents marketers from tracking whether or not someone has opened an email.42 Email marketers measure the percentage of people who open marketing emails to determine their level of engagement and the effectiveness of the email.
Apple appears to be taking consumer privacy to another level. By offering a collection of privacy-centric features, it is equipping consumers with tools to protect their personal information and navigate the web unseen.
Check out Apple’s website to learn more about iCloud Private Relay. Also read about it in this Wired article.
16.05: Chapter Summary
Direct, online, and social media marketing include a mix of useful tools that help marketers engage with targeted consumers in a way that is personalized and is designed to drive the audience to follow through on the desired marketing action. With the explosion in internet and mobile device usage coupled with advancements in digital technology, online marketing tools have been developed to help marketers meet consumers in the digital space. These tools are capable of connecting online marketers to carefully targeted individuals. With the development of these tools come ethical issues related to privacy. As consumer concern for privacy protection grows, companies will need to adapt their privacy policies to be more transparent about how they use consumer data. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.04%3A__Ethical_Issues_in_Digital_Marketing_and_Social_Media.txt |
Example and Directions
Words (or words that have the same definition) The definition is case sensitive (Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages] (Optional) Caption for Image (Optional) External or Internal Link (Optional) Source for Definition
(Eg. "Genetic, Hereditary, DNA ...") (Eg. "Relating to genes or heredity") The infamous double helix https://bio.libretexts.org/ CC-BY-SA; Delmar Larsen
Glossary Entries
Word(s) Definition Image Caption Link Source
affiliates people or companies that earn a commission for driving traffic to another person’s or company’s website where they make a purchase
blog an online journal of interests, beliefs, and other topics published by a person, a group of people, or an organization
bounce rate a metric that online marketers use to measure what percentage of visitors who visit the site, view one page, and then leave
call center a centralized space where agents or representatives answer inbound calls and place outbound calls
catalog marketing also known as direct mail order and is one of the oldest forms of promotion, which typically includes a variety of products often vividly displayed in a high-gloss magazine-like format
click-through rate (CTR) the percentage of people who click on an online ad
client reviews involve feedback that a customer or client posts directly to a platform that can accessed by consumers during the buying process
content marketing creating and distributing online content that is valuable and relevant to a company’s target customers
conversions happen when a company turns a visitor into a customer
cost per acquisition (CPA) also known as cost per action or cost per conversion, relates to the aggregate or cumulative cost of acquiring a customer and can be measured by channel or campaign
cost per click (CPC) the cost companies pay search engines for each click that a search advertisement receives, which is based on the keywords a company bids on
direct marketing using communication tools that directly engage with individual consumers for the ultimate purpose of calling them to take some marketing action
direct-mail marketing a type of direct marketing that involves marketers sending mail directly to people’s homes or places of business; for example, catalogs and postcards
direct-response television marketing a type of direct marketing that is designed to compel viewers to take some immediate action such, as calling a phone number or visiting a website presented during a television commercial
email marketing a type of direct marketing that is highly personal and designed to build relationships with consumers
impression when users see an online ad
integrated social media marketing involves creating a clear, consistent, and synergistic message across all social media platforms
marketing emails emails that are promotional in nature and typically involve a marketing offer
mobile marketing using multiple digital marketing channels that are designed to reach consumers on their smartphones and tablets
mobile-friendly emails emails whose images, text, and links display in a way that is easy to read when accessed via a mobile device
new visitors people who are first visiting your website, also known as new users
online direct marketing uses a rich collection of online tools, such as websites and email, to target individual consumers with an offer designed to compel consumers to take some action, such as visit a website or make an online purchase
online video marketing involves creating videos that tell a story about a product, company, or brand that is designed to drive consumer engagement through activities such as liking, sharing, and retweeting
organic search the list of websites on a search engine results page that have not been paid for by marketers
page views a metric related to how many total pages have been viewed on your website
paid search a type of digital advertising where marketers pay search engines like Google and Bing to place their ads in sponsored spots at the top or bottom of a search results page
paid social a type of digital marketing advertising where a company pays a social media company to display a digital advertisement to targeted customers on its platform
podcasts often free, on-demand, downloadable audio recordings that cover a variety of topics and are typically made available on a weekly or monthly basis
responsive web design designing a website that is configured to adapt to any device, making it easy for visitors to read and interact with its features
returning visitors visitors or users who have been to your website before
sales funnel a visual representation of the customer journey from product awareness to product purchase
search trends data points that indicate how frequently a term is searched
seminars a tool that allows companies to share their expertise and knowledge related to a topic, issue, or industry; can be done in person or virtually
SERP (Search Engine Results Page) the list of search results that displays on a search engine’s page after someone enters key search terms into a search query box
session a collection of interactions that occur on a company’s website
social engagement relates to the number of actions that social media users take in direct relation to your company, brand, or product
social media marketing using social media platforms, such as Facebook, Instagram, LinkedIn, and Twitter, to deliver content that drives engagement with your brand
telemarketing a type of direct marketing that involves a company representative placing or answering customer phone calls with the intention of guiding the consumer toward making a purchase
trade shows exhibition events that provide companies the opportunity to present themselves and their products and services to industry peers
traffic by source means paying attention to the site from which the website traffic came
website marketing The promotion of a website that results in driving traffic or visitors to the site to learn more about the product or company or to make a purchase
website traffic the total number of visitors to a company’s website | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.06%3A_Key_Terms.txt |
1 .
The Association of National Marketers (ANA) acquired the Data & Marketing Association (formerly the Direct Marketing Association (DMA)). This organization has several arms. One of them is the dmaconsumers.org. Visit the website, and see what services it has to aid consumers.
2 .
Choose three people that you know, each from a different generation. Explain the concept of online, social media, and mobile marketing. Ask the following questions: “Do you engage with these forms of marketing?” “Have you purchased anything from one of these forms?” “Do you have any concerns about using any of the marketing strategies discussed?” Then, explain whether anyone’s answers surprised you.
3 .
When considering the privacy issue, where does the responsibility fall? Is it with the business, or is it with the consumer? Is it both? How can a consumer guard themselves? What can a company do to make sure it is practicing ethical marketing?
4 .
The main goals of consumer protection laws and regulations are to protect consumers’ privacy and identity and to protect consumers from unfair or deceitful actions. Research the following regulation and law to familiarize yourself with them: the Telemarketing Sales Rule and the CAN-SPAM Act.
16.08: Critical Thinking Exercises
1 .
Compose a paragraph (150–200 words) using all of the following terms as they relate to direct, online, social media, and mobile marketing. The goal is to prove you understand the meaning of each term.
2 .
List the positive and negative value of each of these forms of marketing: direct mail, social media, mobile, content and telemarketing. Think about products, messages, and delivery systems.
3 .
Now consider the target market for direct mail, social media, mobile, content marketing, and telemarketing. Does the chosen form of marketing present challenges in growing the target market? If so, how can those challenges be met and overcome?
16.09: Building Your Personal Brand
Goal-setting is the development of an action plan designed to motivate and guide an individual, group, or organization to reach a goal. There are several models of goal setting; one of the popular ones is SMART goal-setting. SMART stands for goals that are specific, measurable, action-oriented, realistic, and time-bound.
Consider a goal you might set for yourself that’s SMART. For example, if your goal is to intern at a marketing firm ,you might establish the following SMART goals:
• Specific: Create a list of possible companies you want to target for an internship, and indicate why.
• Measurable: Quantify the number of contacts at each company you plan to make in a week, and map those to calendar dates.
• Action-oriented: Develop a plan for reaching out to and making appointments with those contacts.
• Realistic: Is what you’re setting reasonable when you consider your work schedule, schoolwork, personal responsibilities, etc.? Set goals that are achievable.
• Time-bound: Consider all of the steps, and decide how much time it will take you to complete this goal.
Now set yourself two goals around building your personal brand. Is there a skill you wish to learn or a website you want to develop? Whatever your goals are, be sure to consider the SMART goal-setting model as you develop them.
16.10: What Do Marketers Do
Check out the Association of National Advertisers (ANA) website, and scan the wealth of information available. It offers a content library, newsstand, marketing futures, blogs, and podcasts. Throughout this information, you will learn more about many aspects of current trends, future opportunities, and simply what it is that marketers are doing now. Being educated on the many associations and the information available can inspire you to look at marketing careers in a different light.
Navigate to the Content Library, then the Media Channels section. (In order to see the link to the Content Library, you need to hover over “Resources” at the top of the page.) From this section, review the various pieces of content available, and choose one to read. After reading, write a two-paragraph summary on what you learned, what you found most interesting, and why. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.07%3A_Applied_Marketing_Knowledge-_Discussion_Questions.txt |
Publix
Founded in 1930, supermarket chain Publix started with one store in Winter Haven, Florida. It now has over 1,200 stores throughout the Southeast. The company was founded on the promise of superior customer service. With unwavering dedication to quality and value, Publix is now one of the 10 largest-volume supermarket chains in the country.
Publix is employee-owned, and the pride and dedication of its employees shows in the daily interactions with customers and the communities it serves. Walk into any Publix grocery store, and the spacious aisles and displays provide for ease and access. The brightly lit shelves and soft music make for a pleasant shopping experience. With a wide selection of quality products and its own Publix brand, customers are typically delighted with the availability of premium and well-priced items.
A hallmark of the Publix shopping experience is the checkout. Its friendly Publix cashiers and abundance of grocery baggers make shopping a pleasure. No matter how big or small an order might be, the baggers are always eager to help customers out to the car with their groceries.
As the company worked to develop the superior in-store shopping experience, consumer preferences for grocery shopping began to change. Amazon, a leader in online shopping, bought Whole Foods. Adding to its already “everything store” approach, Amazon was now able to deliver groceries within a two-hour window.
In 2016, Publix began a pilot with Instacart. Instacart is an online ordering and delivery platform, partnering primarily with grocery and drugstore chains nationwide. Publix had plans in place to launch Instacart with all Publix locations by 2020.
When COVID-19 began raging throughout the United States and economies were shuttered, demand for grocery delivery was high. Publix and Instacart rallied to meet the need. Each Publix location was tasked with getting its merchandise uploaded on its website, and Instacart was quickly hiring employees to shop for and deliver groceries to homes across its market area.
Using a mobile app, Publix consumers continue to use Instacart to shop for grocery delivery. Through the robust Publix website, consumers are able to place orders for party trays, bakery items, and whole-meal catering solutions. Publix regularly posts updates on food recalls and highlights of its sustainability efforts. Consumers who opt in can join the Publix Club to receive emails with coupons and weekly discounts on groceries.
Publix has an active social media presence. With over 3 million Facebook followers, loyal consumers often comment on their good finds, grocery deals, and favorite products. Publix provides its followers with favorite recipes and new products.
Through Instagram, Publix shares photos of some of its food products as well as ways it supports its communities and helps with environmental sustainability issues. Customers regularly like and comment on the Instagram posts featuring Publix food items and holiday meal ideas.43
To learn more about these companies, visit the Publix website and the Instacart website.
Case Questions
1 .
Describe the ways Publix is utilizing its website to connect with customers.
2 .
In what ways can consumers engage with Publix through digital media?
3 .
What are some of the methods Publix can utilize to determine success with its digital efforts?
4 .
How did Publix use digital resources to respond to consumer needs during the COVID-19 pandemic? | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.11%3A_Closing_Company_Case.txt |
1. “Number of Active Subscribers of HelloFresh and Blue Apron from 2016 to 2021,” Statista, accessed February 13, 2022, https://www.statista.com/statistics/...ers-worldwide/.
2. Tom Ryan, “Does Direct Mail or Email Deliver Greater Results for Retailers?,” RetailWire, March 25, 2019, https://retailwire.com/discussion/do...for-retailers/.
3. Jonathan Z. Zhang, “Why Catalogs Are Making a Comeback,” Harvard Business Review, February 11, 2020, https://hbr.org/2020/02/why-catalogs...ing-a-comeback.
4. “National Do Not Call Registry FAQs,” Consumer Advice, Federal Trade Commission, May 2021, https://www.consumer.ftc.gov/article...-registry-faqs.
5. Anne Stych, “Proactiv Rebrands, Moves from Acne into Other Areas of Skincare,” Bizwomen, American City Business Journals, January 21, 2022, https://www.bizjournals.com/bizwomen...ther-area.html.
6. “About Us,” MailCon, last modified December 21, 2021, https://mailcon.com/about/.
7. Deyan Georgiev, “67+ Revealing Smartphone Statistics for 2022,” Tech Jury, October 14, 2022, https://techjury.net/blog/smartphone...atistics/#gref
8. CJ Bangah, “What Is on the Horizon for Digital Advertising in 2022 and Beyond?,” LinkedIn, October 22, 2021, https://www.linkedin.com/pulse/what-...ond-cj-bangah/.
9. Katrina Kirsch, “The Ultimate List of Email Marketing Stats for 2022,” The HubSpot Marketing Blog, HubSpot, updated January 20, 2022, https://blog.hubspot.com/marketing/e...arketing-stats.
10. Andrea Wildt, “5 Brands Crushing It with Email Marketing and Automation,” The Digital and Email Marketing Blog, Campaign Monitor, May 29, 2019, https://www.campaignmonitor.com/blog...ng-automation/.
11. “Watch DJ Khaled & How QuickBooks + Mailchimp Help Small Businesses in Super Bowl Campaigns,” Chhattisgarh News, accessed February 13, 2022, https://world360news.com/en/watch-dj...bowl-campaigns.
12. Adam Hayes, “What Video Marketers Should Know in 2022, according to Wyzowl Research,” The HubSpot Marketing Blog, HubSpot, January 26, 2022, https://blog.hubspot.com/marketing/s...eting-new-data.
13. Chris Matyszczyk, “Amazon CEO Jeff Bezos Showed Off His Exciting Vacation on Twitter. What Happened Next Wasn’t Pretty,” Inc., April 23, 2018, https://www.inc.com/chris-matyszczyk...nt-pretty.html.
14. Mansoor Iqbal, “Facebook Revenue and Usage Statistics (2022),” App Data, Business of Apps, updated January 19, 2022, https://www.businessofapps.com/data/...ook-statistics.
15. Chris Raymond, “So What Do You Think of Facebook Now?,” Consumer Reports, March 15, 2019, https://www.consumerreports.org/soci...ok-now-survey/.
16. Raymond, “What Do You Think?”
17. Dominique Jackson, “Instagram vs. Facebook: Which Is Best for Your Brand’s Strategy?,” Sprout Blog, Sprout Social, June 30, 2019, https://sproutsocial.com/insights/in...m-vs-facebook/.
18. Christina Newberry, “38 LinkedIn Statistics Marketers Should Know in 2021,” Hootsuite, January 12, 2021, https://blog.hootsuite.com/linkedin-...stics-business.
19. “All about Pinterest,” Pinterest Help, Pinterest, accessed February 13, 2022, https://help.pinterest.com/en/guide/...bout-pinterest.
20. “Pinterest Demographics: Find Your Audience,” Pinterest Business, Pinterest, accessed February 13, 2022, https://business.pinterest.com/en/audience/.
21. “Number of Monetizable Daily Active Twitter Users (mDAU) Worldwide from 1st Quarter 2017 to 3rd Quarter 2021,” Statista, accessed February 13, 2022, https://www.statista.com/statistics/...ers-worldwide/.
22. Ying Lin, “10 Twitter Statistics Every Marketer Should Know in 2021 (Infographic),” Oberlo Blog, Oberlo, January 25, 2021, https://www.oberlo.com/blog/twitter-statistics.
23. Damian Radcliffe, “Why Podcasting Is on the Rise: 8 Trends Publishers Cannot Ignore,” What’s New in Publishing, last modified December 17, 2020, https://whatsnewinpublishing.com/why...cannot-ignore/.
24. “How Spotify Is Strengthening Our Investment in Podcast Advertising with Acquisition of Megaphone,” For the Record, Spotify, November 10, 2020, https://newsroom.spotify.com/2020-11...-of-megaphone/.
25. “Podcasts and the Next Level of Influence,” Spotify Advertising, Spotify, March 2019, https://ads.spotify.com/en-US/news-a...-of-influence/.
26. Maile McCann, “How Cupshe Built a \$150 Million Swimwear Business by Embracing Both DTC and Amazon,” Modern Retail, Digiday Media, August 30, 2021, https://www.modernretail.co/startups...tc-and-amazon/.
27. Ashley Wilson, “Top Mobile Marketing Challenges and How to Overcome Them,” CRM and Technology Blog, Technology Advisors, June 30, 2021, https://www.techadv.com/blog/top-mob...-overcome-them.
28. Kateryna Hanko, “35+ Must-Know Phone Usage Statistics for 2022,” Clario Blog, Clario Tech, April 8, 2022, https://clario.co/blog/phone-usage-statistics/.
29. “US Mobile Advertising Growth (2019–2024),” Statistics Library, Oberlo, updated February 2022, https://www.oberlo.com/statistics/mo...rtising-growth.
30. “7 Essential Tips to Creating Mobile Friendly Emails,” The Digital and Email Marketing Blog, Campaign Monitor, May 21, 2019, https://www.campaignmonitor.com/blog...ly-email-tips/.
31. Pietro Saccomani, “People Spent 90% of Their Mobile Time Using Apps in 2021,” Mobiloud Blog, MobiLoud, last modified March 1, 2022, https://www.mobiloud.com/blog/mobile...obile-websites.
32. “National Geographic’s Instagram Accounts Reach 200 Million Followers,” National Geographic Partners, May 28, 2020, https://nationalgeographicpartners.c...ion-followers/.
33. Tasmin Oxford, “National Geographic Inspires Wanderlust with Its Latest UGC Campaign,” Marketing, Reuters Events, September 17, 2015, https://www.reutersevents.com/market...t-ugc-campaign.
34. Nat Geo Wild (@natgeowild), “Today is #EndangeredSpeciesDay. Every year on the third Friday in May, #ESDay recognizes and support national efforts to protect our #endangeredspecies,” Instagram photo, May 15, 2015, https://www.instagram.com/p/2uQN2swzXH/.
35. Lance Whitney, “Data Privacy Is a Growing Concern for More Consumers,” TechRepublic, TechnologyAdvice, August 17, 2021, https://www.techrepublic.com/article...ore-consumers/.
36. Whitney, “Data Privacy.”
37. David Price, “iOS 15 Latest Version, Problems & New Features for iPhones,” Macworld, August 18, 2022, https://www.macworld.com/article/675...or-iphone.html.
38. Peter Suciu, “There Isn’t Enough Privacy on Social Media and That Is a Real Problem,” Forbes, June 26, 2020, https://www.forbes.com/sites/petersu...-real-problem/.
39. “Zoho Privacy Survey Finds 62% of Businesses Aren’t Telling Customers about Third-Party Ad Trackers Collecting Their Data,” Business Wire, December 15, 2020, https://www.businesswire.com/news/ho...ing-Their-Data.
40. “About iCloud Private Relay,” Apple Support, Apple, July 11, 2022, https://support.apple.com/en-us/HT212614.
41. “What Is Hide My Email?,” Apple Support, Apple, January 31, 2022, https://support.apple.com/en-us/HT210425.
42. Rob Kaczanowski, “How Apple’s Mail Privacy Changes Affect Email Open Tracking,” Postmark Blog, Postmark, November 9, 2021, https://postmarkapp.com/blog/how-app...-open-tracking.
43. Mike Miller, “Publix Supermarket Makes Shopping and Road Tripping a Pleasure,” Florida Back Roads Travel, March 24, 2022, https://www.florida-backroads-travel...permarket.html; Todd Jones, “A Message about Coronavirus (VOVID-19) from Publix CEO Todd Jones,” Publix Press Release, https://corporate.publix.com/newsroo...ssage-from-ceo; Russell Redman, “Publix Rolls Out 15-Minute Grocery Delivery via Instacart,” SN Supermarket News, April 28, 2022, https://www.supermarketnews.com/onli...very-instacart | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/16%3A_Direct_Online_Social_Media_and_Mobile_Marketing/16.12%3A_References.txt |
Have you ever had a great idea for a new food product? If so, do you have any idea where you would sell it to reach your target customers? Unlike traditional grocery retailers, Whole Foods specializes in selling high-quality natural and organic foods. Getting the green light to sell through its stores requires manufacturers to follow strict quality standards, including adherence to Whole Foods’ banned ingredient list.
Founders Dave Anderson and Bill Glaser of Outstanding Foods and maker of PigOut, a vegan, bacon-flavored chip snack, recognized that in order to reach vegans and nonvegans with a plant-based, bacon-flavored chip, they need to retail at outlets that would attract such consumers.1
After testing their product, they opted for a nationwide launch and distribution strategy. Using a broker network, they selected distribution channels that aligned with both natural and mainstream grocery stores. This strategy would help secure the national target market coverage they were looking for. The product strategy of natural ingredients gave Outstanding Foods the green light it needed to meet Whole Foods’ strict food standards. Through their partnership, Whole Foods and Outstanding Foods are able to create and deliver value to their vegan customer base who appreciate access to food products that are tasty and bring delight.
17.01: The Use and Value of Marketing Channels
Learning Objectives
By the end of this section, you will be able to:
• Describe the use of marketing channels.
• Identify the different types of marketing channels.
• Discuss how marketing intermediaries add value to products.
What Are Marketing Channels?
In addition to identifying ways to create value for consumers, marketers must also decide how to distribute market offerings. In this section, you’ll explore the important role that marketing channels play in delivering value to targeted customers.
A marketing channel is a system of people, organizations, and activities that work together to make goods and services available to consumers to purchase. Along the marketing channel, ownership of these goods and services is transferred from one channel member to the next. The goal is to create and deliver value to the final consumer by distributing these goods and services. The final consumer is the end user of a good or service. It includes grocery store shoppers, movie stream viewers, app users, vacation-takers, and many more.
Link to Learning: Distribution
To learn more about how the distribution of products works and the decisions marketers must consider when choosing the right marketing channel, watch the Channels of Distribution in Marketing: 8 Distribution Channels to Consider video.
Marketing Channels (Distribution Channels) Defined
It’s not enough for companies to create, price, and promote products and services that deliver value. A company must also decide where and how consumers can access and purchase the company’s market offering. Market offerings can include tangible goods, services, experiences, digital products, ideas, and information. All market offerings require a marketing or distribution channel to reach consumers.
Think of a channel like a stream or a river that carries a market offering to the consumer. Distribution describes how a company makes its market offering accessible for purchase. Local companies that sell to a smaller, more geographically concentrated set of consumers have a more simplified marketing or distribution channel compared to global companies.
The film industry provides a great example of the distribution decisions that marketers must make. Before a production company releases a new movie, it must decide which channels are best for distributing the movie to consumers. In today’s market, movie producers have a slew of distribution options, including Netflix, HBOMax, and YouTube, to name a few. They also have the option of distributing through traditional movie theaters, such as AMC or Regal. Regardless of the marketing channel they pursue, their goal is to distribute their movie to the right customers at the right place and at the right time. Production companies will choose the marketing channel that is most efficient at helping them achieve this goal.
Marketing Channels for Consumer Products
Companies that use intermediaries to deliver value to consumers have a variety of marketing channel options. There are four major types of intermediaries: agents or brokers, distributors, wholesalers, and retailers (see Figure 17.2).
An agent or broker is someone who acts as an extension to the manufacturer. While they never take possession of the product or service they represent, they earn a commission or collect a fee for facilitating the transaction between the customer and the manufacturer. Auto insurance agents, for example, may sell Geico or Allstate auto insurance policies to consumers. The agent serves as a representative who answers questions, gathers information, and provides a quote on behalf of the insurance company.
A distributor takes ownership of the product and tends to align itself closely with a manufacturer. For example, Coca-Cola uses distributors who contract to distribute only Coca-Cola products, not PepsiCo products.
Wholesalers are similar to distributors in that they take ownership of products; however, they buy a variety of products in large quantities and bulk-break for the purpose of distributing an assortment of products to retailers in a quantity aimed at meeting the needs of end users or consumers. Let’s examine how the different types of intermediaries depend on one another. AstraZeneca manufactures prescription medications that are made available to consumers by way of pharmacies such as CVS and Walgreens. Pharmacies are retailers in the marketing channel because they sell a wide variety of consumer products, from toothpaste to milk to medications.
Before AstraZeneca’s medications reach retail pharmacies, they are purchased in bulk by wholesalers who partner directly with AstraZeneca. Wholesalers are an integral part of the marketing channel because they package and handle medications and manage the logistics of delivery to retail pharmacies. This creates value for the customer in that the right quantity of medications arrives at retail pharmacies safely and in good condition.
The fourth type of intermediary is the retailer. Retailers also take ownership of the product, and their sole focus is on reaching the end user or customer directly. They purchase a wide variety of products in smaller amounts that meet the wants and needs of consumers. Retailers include companies like Rite Aid, Walmart, Target, and Hallmark.
Intermediary Functions
The intermediaries’ role is critical, and they perform a variety of functions (as shown in Table 17.1) that create value for other members in the marketing channel.
Intermediary Functions
Transactional: Buying, selling, and temporary risk-bearing
Logistical: Handling, packing, inventorying, and transporting
Facilitating: Financing and information sharing
Table 17.1 Intermediary Functions
Let’s examine the three functions: transactional, logistical, and facilitating.
Transactional Functions
Intermediaries perform a variety of transactional functions that improve the efficiency of the channel. Transactional functions involve the buying, selling, and risk-bearing that accompany the movement of products along the marketing channel. Companies share the risk of ownership by temporarily possessing products before selling them to another channel member.
Imagine if a small bakery made the best oatmeal raisin cookies and decided to distribute them to consumers using local restaurants in the city. The bakery sells to the restaurant, who then sells to the customer. Temporary risk-sharing, in this scenario, means that at first the bakery assumes the risk in the making, storing, and transporting of the cookies, but that risk transfers to the restaurant once the restaurant buys the cookies. The restaurant then assumes ownership and responsibility for selling the cookies, which may involve placing them someplace customers can see them.
The transactional functions of buying, selling, and risk-bearing help add value in the marketing channel because the system allows for channel members to work together to move a product offering to consumers in an efficient and effective way.
Logistical Functions
In addition to transactional functions, intermediaries also perform logistical functions, which involve handling, packing, inventorying, transporting, warehousing, and ensuring the security of products as they make their way to the customer. In the earlier bakery example, the bakery must ensure the cookies are fresh and tasty in order to continue supplying restaurants with a product that consumers desire. In order to ensure that cookies meet the wants and needs of customers, both the bakery and the restaurant must ensure the product is handled safely in the marketing channel. That might mean selecting a trucking company that secures the cookies during transport to restaurants as well as packaging them so that freshness is sealed and quality is maintained.
Facilitating Functions
In addition to transactional and logistical functions, intermediaries also help in the facilitation of the purchase of products and services. Facilitating functions involve activities such as financing and sharing information with members of the marketing channel. Intermediaries may provide financing to one another and to the end user to help move the product along the channel. Financing involves one channel member allowing another channel member to pay over time.
In the bakery example, pretend that the restaurant purchases \$12,000 in cookies each year. Instead of the bakery requiring the restaurant to pay for the order in full at the beginning of each year, it allows the restaurant to pay \$1,000 a month over a 12-month period. This benefits the restaurant in that a large amount of capital isn’t tied up in its cookie order payment but instead is spread out over time. While some companies require payment in full, others permit payment installments over time. The terms of payment are explicitly stated at the start of the buying and selling relationship between companies.
Intermediaries also share information that can be used to improve marketing decisions. Intermediaries often share key data such as consumer feedback on a product or service, the shopping behavior surrounding that product or service, and historical purchase trends. The facilitating functions that intermediaries perform ultimately help marketing channel members make better distribution decisions and, in some cases, financially support the movement of these products and services in the name of delivering value to customers.
How Intermediaries Add Value to Customers
Intermediaries play a critical role in adding value to customers. They specialize in aspects of distribution that manufacturers don’t wish to specialize in. They create efficiencies in the marketing channel by reducing transactions, sharing important information among partners, and matching the right quantity of the right product to customer demand. While manufacturers focus on creating value for customers, intermediaries focus on delivering that value.
Dove manufactures millions of units of body wash, bar soap, dry spray antiperspirant, and hair products. In turn, it sells large quantities of these products to wholesalers, who after buying in bulk, break these large quantities down into smaller assortments that are then sold to retailers. This allows consumers to buy a variety of products in smaller amounts. They can visit a Target, a CVS, or the Amazon website and purchase three bars of soap, one bottle of shampoo, and one bottle of conditioner.
Without intermediaries, customers would need to buy directly from every manufacturer producing the desired product. Imagine grocery shopping without intermediaries. Instead of shopping at one or two grocery retailers for bread, milk, cereal, fruit, and ice cream, shoppers would need to buy from individual manufacturers, making shopping extremely time consuming and difficult.
Intermediaries add value by reducing the number of transactions between companies and customers. As illustrated in Figure 17.3, there are nine transactions without intermediaries and five transactions with the use of intermediaries. Consider the inefficiencies if companies had to directly transact with individual consumers.
Providing Needed Information about Products and Services
Intermediaries share pertinent information about the products and services that move through the distribution channel. More specifically, intermediaries gather, analyze, and communicate information to other distribution partners to improve the effectiveness and efficiency of the channel. This flow ultimately helps marketers plan and optimize the distribution channel so that consumers get the right products and services at the right place and at the right time.
Adjusting for Discrepancy of Quantity
As intermediaries move products and services from manufacturers to consumers, they offer the valuable service of accumulating and bulk-breaking. Bulk-breaking is when an intermediary takes a large quantity of a manufacturer’s product and breaks it down into smaller units to be distributed to retailers based on the consumer demand. Consumers desire to purchase in smaller quantities from retailers. Wholesalers buy in bulk from producers and break the bulk into the right size quantity for retailers, who ultimately meet the needs of consumers who want an assortment of products in small quantities.
Accumulating relates to intermediaries buying in bulk from different manufacturers. When buying in bulk, it is beneficial to the manufacturers because the risk is passed from manufacturers to intermediaries. The United States produces hundreds of millions of bushels of apples, oranges, and peaches each year.2 These types of produce require different types of climates and care and are therefore grown in different states across the country. Wholesalers play a critical role in buying an assortment of this product in bulk from these producers and ensure that they are sold to retailers in the right quantity to meet the needs of consumers.
Together these activities allow intermediaries to offer retailers the right number of products to offer consumers, based on demand.
Adjusting for Discrepancy of Assortment
Intermediaries also add value by adjusting for the discrepancies of assortment between the manufacturer and the consumer. Discrepancy of assortment is the difference between the variety of products that a manufacturer produces and the variety that consumers want to purchase. Adjusting for discrepancy of assortment occurs when an intermediary buys from manufacturers, then regroups products into different assortments based on what consumers are demanding from retailers.
While manufacturers generally produce large quantities of one or a few types of products, consumers demand small quantities of an assortment of products. For example, when visiting the grocery store, consumers demand an array of different products in small quantities. Depending on the size of their household, consumers are generally shopping to meet the needs of one or a few people; therefore, they value the ability to buy a variety of products in smaller quantities. Intermediaries mitigate these differences by matching supply assortment to demand assortment.
Providing Credit to Customers
Intermediaries also provide credit to customers. Consumers can hardly check out at a cash register without being asked if they would like to sign up for a credit card. By extending credit to customers, retailers from Dick’s Sporting Goods to furniture retailer Wayfair give customers the chance to spend now and pay over a period of time with interest.
While providing credit to customers is often accompanied by special email offers and direct mail coupon codes, the corresponding interest rates are often high. Nevertheless, providing credit to customers can create brand loyalty and provide retailers with insight into consumer purchases.3
Careers In Marketing: Distribution Management
Distribution managers determine when, where, and how much of a product is distributed. Learn more about the job role and what it entails in this video.
Michigan State University provides insightful information on this career, including a sample job description, roles and responsibilities, salary, education, and training. When looking at your skill development and what you may need in order to obtain a job, check out ZipRecruiter’s website. It indicates that while there are several skills needed in this job role, compliance and customer service are the most common. Read more about the needed skills on the Zip Recruiter website.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
A(n) ________ is a group of people, organizations, processes, and activities that work together to deliver products and services to the consumer.
1. wholesaler
2. manufacturer
3. intermediary
4. marketing channel
2.
A(n) ________ is someone who acts as an extension of the manufacturer. While they never take possession of the product or service they represent, they earn a commission or collect a fee for facilitating the transaction between the customer and the manufacturer.
1. retailer
2. wholesaler
3. distributor
4. agent
3.
Without intermediaries, the number of transactions between the total number of manufacturers and the total number of consumers would ________.
1. decrease
2. stay the same
3. increase
4. decrease temporarily
4.
What do intermediaries do to add value in the marketing channel?
1. They perform important activities that manufacturers are not experts at performing.
2. They increase the price of products and services for customers.
3. They increase the amount of time it takes for products and services to reach consumers.
4. They make improvements to the product so that it functions better.
5.
As intermediaries move products and services from manufacturers to consumers, what key services do they offer?
1. Pricing and promoting across geographical areas
2. Surveying customers to ensure they are satisfied with their product or service experience
3. Competing with one another to reduce prices for consumers
4. Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.00%3A_In_the_Spotlight.txt |
Learning Objectives
By the end of this section, you will be able to:
• Identify the types of marketing channels that exist for consumer products.
• Describe the types of marketing channels that exist for business/industrial products.
• Discuss vertical, horizontal, multichannel, and omnichannel marketing systems.
Types of Marketing Channels
When determining the most effective and efficient way to reach consumers with products, companies have two options. Companies can either sell and distribute their products directly to consumers, known as a direct channel, or they can partner with intermediaries who can assist with the distribution, known as an indirect channel.
Direct Channel: From Producer to Consumer
In some cases, manufacturers decide that a direct marketing channel makes sense. A direct marketing channel does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers. When consumers purchase pizza from their locally owned and operated pizza shop, the distribution of that pizza passes from the restaurant directly to the consumer. There are no intermediaries between the pizza shop and the customer.
Indirect Channels: From Producer to Intermediary to Consumer
An indirect channel involves the utilization of one or more intermediaries to distribute a market offering to consumers. Continuing with our pizza shop example, if a local pizza shop offered pizza that was delicious enough to package, freeze, and sell through local grocery stores in the frozen food aisle, that pizza shop would be adding an indirect channel of distribution.
In some cases, manufacturers or producers sell to retailers without the use of wholesalers or distributors, called the producer to retailer to consumer channel. A local Ace Hardware, for example, sells fishing lures made by the local scout troop. The troop purchases the supplies necessary to make the lures then sells them to Ace Hardware, which sells them to customers.
With producer to wholesaler to retailer to consumer—a more complex marketing channel—multiple types of intermediaries are needed. Procter & Gamble, the maker of Crest, Gillette, and Pampers, relies on an intricate network of intermediaries composed of wholesalers and retailers that work interdependently to ensure the right mix and quantity of products reach consumers. Consider all the places a consumer can purchase Procter & Gamble products all over the world.
For some industries, the distribution network is complex, and agents represent the manufacturer in marketing channel negotiations. Health insurance agents, for example, represent major insurance carriers such as Aetna and Blue Cross by providing consumers with information about health plans in their state. In these situations, the agent does not take ownership of the product like other intermediaries but rather is paid a fee by the insurance carrier.
For companies with a diverse product category that spans the globe, indirect channels of distribution make the most sense. Procter & Gamble sells hundreds of different products across many product categories worldwide. Indirect channels are necessary in such cases. Figure 17.4 illustrates the difference between a direct and indirect channel of distribution for consumer products.
Marketing Channels for Business/Industrial Products
The business-to-business (B2B) market is comprised of companies who buy from and sell to other companies. In the B2B space, businesses are not distributing to final consumers but rather to other businesses. Companies in the B2B market buy, sell, and use materials, resources, and technology from one another to create products, where a business is the final consumer or destination.
Within this market, there are agents, brokers, distributors, and wholesalers who specialize in moving industrial products along the marketing channel to the final business consumer. Figure 17.5 illustrates an example of a distribution channel for business products.
Direct Channel: From Producer to Business/Industrial User
Much like the business-to-consumer (B2C) space, when a company sells products or services directly to a final consumer or end user, the B2B marketing channel can be direct without the use of intermediaries. The direct channel is typically used when the nature of the product is complex, is expensive, or requires intensive resources to move the product from the manufacturer to the business customer. Airplane manufacturers like Boeing and Airbus produce and sell aircraft directly to airlines like Delta Air Lines and American Airlines, who then offer flights to consumers. Given the expense and complexity of distributing airplanes, the direct channel makes the most sense.
Indirect Channels: From Producer to Intermediaries to Business/Industrial User
Industries often rely on the expertise of intermediaries to reach business users with their products and services. The advantages of the indirect channel in the business-to-business (B2B) space are similar to those in the business-to-consumer (B2C) space. For some industries, intermediaries perform important functions along the business marketing channel that they themselves are not experts in. Let’s explore the different indirect marketing channels.
With producer to industrial distributor to business/industrial user channels, car manufacturers like Toyota and Honda rely on tens of thousands of different parts, which are manufactured by parts producers. Producers are companies that supply the raw materials that manufacturers need to create consumer products. Parts producers such as the car seating and E-Systems engineering company Lear rely on distributors to move their products and technology to automobile manufacturers. Using a distributor allows Lear to focus on its center of excellence—researching, designing, and building innovative seating technology solutions for vehicles.
Agents in the B2B space represent companies who produce industrial products and services and serve as an intermediary between the producer and the business user. The value of the agent is similar in the B2B space as it is in the B2C space. Agents add value by addressing product- or service-related questions and concerns. They typically earn a commission or a fee off the sale of the industrial product.
For more complex industrial marketing channels with global business users, producers will work with agents who partner directly with distributors to move products. For example, the automobile industry relies on agents and distributors to reach business users. According to Global Fleet, the largest fleet vehicle management company in the world, of the 313 million vehicles driven in the United States and Canada, about 9 million are corporate cars.4 Element Fleet Management, based out of Toronto, Ontario, manages corporate vehicle fleets across the United States, Canada, and Mexico. Companies whose operations reach global markets typically rely on a much more complex channel that involves multiple layers of intermediaries to distribute products and services to business customers.
Other Marketing Systems
Manufacturers or producers along with their intermediary channel partners work in a system to move products and services to consumers. There are four major system types: a vertical marketing system, a horizontal marketing system, a multichannel marketing system, and an omnichannel marketing system. We’ll explore each of these systems next.
Vertical Marketing System
A vertical marketing system (VMS) is a system in which companies in the marketing channel work together in a coordinated, collaborative, and customer-centric way. Unlike conventional systems, vertical marketing systems are less concerned with their profit margins and have a laser-like focus on working together to deliver value to consumers.
A VMS is unique in that all members of the marketing channel work as one unified group. Producers, wholesalers, and distributors share the common goal of creating and delivering value to consumers. In contrast, a conventional system is one in which each intermediary works as a distinct company, each trying to maximize profits at the expense of other channel members. VMS has grown in popularity over the conventional system because it results in fewer channel conflicts and increased customer value.
Link to Learning: Marketing Systems
To learn more about how marketing systems work, check out these videos:
• What Is a Channel System?
• What Is a Vertical Marketing System?
In Figure 17.6, observe the structural differences between the conventional marketing system (part A) and the vertical marketing system (part B). In the conventional model, the manufacturer sells to wholesalers, who then sell to retailers, who then sell to consumers. In the vertical marketing system, channel members are working together as strategic partners to distribute products to consumers.
There are three types of vertical marketing systems: corporate, administered, and contractual (see Figure 17.7). In a corporate VMS, one member of the distribution channel owns the other members. For example, Walmart manufacturers its own private label brand of beauty and health products under the name Equate. Walmart not only controls the manufacturing of products under the brand but also owns and operate the wholesaler that distributes Equate-branded products to Walmart stores all over the world. Walmart reduces risk by owning and thus controlling the various channel members in its VMS. The corporate VMS approach allows for a unified system of creating and delivering customer value.
In an administered VMS, there is no ownership of channel members. However, there is one member who is large and powerful enough to coordinate and manage the distribution activities of other channels members. For example, Procter & Gamble manufacturers 65 brands in over 10 product categories. Given its size and power, it requires a high level of cooperation among wholesalers and retailers.
In a contractual VMS, there are independent companies that have joined together by contract for a mutually beneficial purpose. Each company operates independently of the others but integrates its activities to achieve its goals. An example of a contractual VMS is a franchise organization, such as Chipotle or McDonald’s, in which the companies contract with a wholesaler to distribute products to the franchisees.
Horizontal Marketing System
In a horizontal marketing system, unrelated companies partner to offer products and services in a shared space. For example, J.Crew and New Balance have partnered together for the last decade to sell a unique line of New Balance–branded sneakers that can only be found on J.Crew’s website. In a horizontal system, companies partner to leverage the value they create for customers in a collaborative way.
Multichannel Marketing System
A multichannel distribution system is where a single company sets up multiple distribution channels to reach customers. For example, Nike has brick-and-mortar stores across major cities. Customers can visit the store, try on shoes and apparel, and make a purchase. In addition to physical stores, Nike also distributes its shoes and apparel through its online store Nike.com, through e-tailers like Amazon.com, and through other brick-and-mortar stores like Kohl’s and Foot Locker.
Omnichannel Marketing System
An omnichannel marketing system is a multichannel approach whereby companies give consumers a variety of ways to purchase, receive, and return products. For example, in addition to purchasing products online and in-store, Dick’s Sporting Goods offers customers a variety of options for receiving a product. Consumers can buy online and pick up in-store. They can also buy online from one of the store’s kiosks and have it delivered to their home or some other location. Omnichannel marketing systems are designed to offer consumers a seamless buying experience, which further creates and delivers value.
Link to Learning: Omnichannel
To learn more about an omnichannel marketing system, check out these videos:
• Ted Talk: Omnichannel: Retail (R)evolution
• Teredata: Omni-Channel Retailing
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
A(n) ________ marketing channel does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers.
1. indirect
2. direct
3. omnichannel
4. multichannel
2.
A(n) ________ marketing channel partners with intermediaries including distributors, wholesalers, agents, or retailers to sell and distribute its products.
1. omnichannel
2. indirect
3. multichannel
4. vertical channel
3.
In the B2B or industrial space, manufacturers or producers sell products and services aimed at reaching a(n) ________ end user.
1. consumer
2. agent
3. business
4. wholesaler
4.
In a(n) ________, one member of the distribution channel owns the other members.
1. administered vertical marketing system
2. corporate vertical marketing system
3. horizontal marketing system
4. multichannel marketing system
5.
What is the difference between multichannel and omnichannel marketing systems?
1. Multichannel marketing systems are designed primarily for online distribution.
2. Omnichannel marketing systems are designed primarily for in-store distribution.
3. Omnichannel marketing systems are more flexible and seamless in how consumers can buy and receive products and services.
4. Multichannel marketing systems are more flexible and seamless in how consumers can buy and receive products and services. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.02%3A__Types_of_Marketing_Channels.txt |
Learning Objectives
By the end of this section, you will be able to:
• Identify the factors that influence channel choice in distribution.
• Describe the different types of target market coverage.
• Discuss the buyer requirements influencing channel choice.
• Explain the product-related factors influencing channel choice.
• Describe the cost factors influencing channel choice.
Target Market Coverage
Target market coverage is defined as having the resources and capabilities to reach and serve consumers in a company’s target market. Companies of all sizes must determine precisely how they will reach consumers with their products and services. Smaller companies tend to focus on smaller, more local markets, while larger companies must meet the consumer demand of larger, even global markets. A company’s decision about which channel is best for meeting the needs of consumers involves a number of considerations.
The first factor that plays an important role in channel choice is target market coverage. Companies must analyze the size of their target market and their budget and ensure they have the appropriate coverage. For example, a small local bakery may only target towns in its area; therefore, its target market coverage is rather small. Kohlberg & Company, the owner of the Sara Lee and Thomas’ brands, on the other hand, reaches global consumers and therefore requires far greater market coverage.
Depending on the size of their target market and the products and services they sell, companies must decide between an intensive, selective, or exclusive distribution strategy.
Intensive Distribution
Intensive distribution is a strategy that entails distributing a company’s market offering through all possible intermediaries. With an intensive distribution, a consumer is able to find a company’s product virtually everywhere. Intensive distribution makes sense for products that compete in a competitive market where consumers can easily choose an alternative if a company’s product isn’t available.
Coca-Cola and Kraft, for example, use intensive distribution so that consumers around the world can access their products everywhere and anywhere they’d shop for food and beverages.
Selective Distribution
Selective distribution is a strategy that includes choosing more than one, but fewer than all possible intermediaries to distribute a company’s market offering. Companies choose selective distribution when they don’t need the expansive coverage that intensive distribution provides but still need to reach their target market at specific retail outlets. Large appliance companies such as Whirlpool and General Electric use selective distribution by making their products available through their dealer networks and at selective large retailers like Lowe’s and Home Depot.
Exclusive Distribution
In direct contrast to an intensive distribution strategy, some companies intentionally use an exclusive distribution strategy. Exclusive distribution is a strategy that involves allowing a limited number of intermediaries to distribute a company’s market offering. Luxury brand Rolex, for example, allows a limited number of retailers to sell its luxury watches. The exclusivity of these retailers reinforces Rolex’s distinctive position of being a luxurious, hard-to-get brand.
Fulfillment of Buyer Requirements
In addition to determining target market coverage, companies must also consider a channel’s ability to fulfill the requirements of buyers. Consumers have specific product and service expectations that must be fulfilled in order to satisfy their wants and needs. For example, when consumers purchase bottled water, they expect the bottle to be filled to the top, the cap to be sealed before opening, and the water to taste fresh and clean. With these buyer requirements in mind, companies who make bottled water must ensure that they work with channel members who are able to fulfill these buyer requirements because these requirements are critical to the perception of consumer value.
Information
Companies who recognize that buyers require information to make a decision between competing products may work with channel members who can provide these services. Consumers with limited knowledge of a product, for example, may be more likely to purchase that product after an in-store demonstration, for example. Grocery retailers like Whole Foods will often host in-store demonstrations of new food products for shoppers to sample (see Figure 17.8). Providing this service makes Whole Foods a desirable channel partner for start-up food brands looking to break into a highly competitive market. In another example, Ace Hardware may be a perfect channel partner for a new brand of tools because of Ace Hardware’s reputation for being “the helpful place.” Working with a channel member who can provide the service of in-store demonstrations creates value for the consumer and thus is a factor in determining channel choice.
Convenience
In some cases, buyers demand convenience and will only purchase products and services that are in close proximity to where they live, work, or shop. Companies must consider whether their target customers value convenience. For example, buyers shopping for chewing gum likely value convenience much more than buyers shopping for skis. Companies whose buyers require convenience should choose retail outlets that are convenient and hassle-free.
Variety
Companies must also consider how their target market values variety. Imagine walking into a pet supply store and only seeing one type of pet food. Buyers generally have a desire to choose from a variety of competing products. Petco and PetSmart recognize that consumers appreciate variety in everything from pet food to pet supplies such as toys, leashes, and bedding. For companies who compete in a crowded market where buyers have many options, selecting outlets that offer a variety of similar and competing products makes the most sense.
Pre- or Post-Sale Service
Pre-sale service entails all the activities that help a buyer make a purchase decision, while post-sale service entails all the activities that help a buyer recognize the value of the product. A pre-sale service can be observed at a car dealership where shoppers are invited to test-drive a vehicle and apply for financing. Post-sale service in this same example would be the offering of vehicle services, such as free oil changes and tire rotations for the life of the vehicle.
For some companies, the service that’s provided before and after the sale is critical to customer-perceived value. Customer-perceived value is the overall perception that a consumer has about a company, brand, or product and is measured by what the consumer is willing to pay in return for the features and benefits in the market offering. Companies that sell large appliances and furniture, for example, understand that consumers value haul-away services. For example, for an additional fee, Lowe’s offers customers the option of having their old appliance hauled away and their new appliance installed. These complementary services are important because they add value to the customer’s product experience (see Figure 17.9).
Product-Related Factors
In addition to target market coverage and requirements of the buyer, there are product-related factors that can influence channel decisions. Product-related factors include things like unit value, perishability, and the bulk and weight of a product. These factors can influence the distribution decisions that companies make (see Figure 17.10).
Unit Value
A product’s unit value, or the price that a company charges for one unit or item, can influence channel length decisions. Channel length relates to the number of intermediaries in the marketing channel. For example, products with high unit values, such as cars, boats, and airplanes, will have a much shorter distribution channel than nonperishable products, such as crackers, bandages, and tissues, which have a low unit value. Because of the complexities and costs of moving heavy or awkward products, companies seek a shorter distribution channel to mitigate these factors. There are companies that specialize in moving more expensive and complex products.
Perishability
Perishability relates to the likelihood that a product will spoil, decay, or expire if not used in a timely manner. A product’s perishability also influences channel decisions. For example, orange-juice maker Tropicana’s marketing channel looks much different than Nabisco’s Ritz Crackers’ channel. Because orange juice must be kept cold throughout the distribution process, Tropicana makes channel decisions that allow it to protect the integrity of the product throughout the distribution process. Working with channel partners who are experts at storing, handling, and moving perishable products is one of the most important factors for companies who manufacture perishable products.
Alongside unit value, perishability can also influence channel length. Companies marketing perishable goods such as milk, cheese, and meat products require a shorter distribution channel because these products have a limited shelf life.
Bulk and Weight
Much like a product’s unit value, the bulk and weight of a product influence channel length. The bulk and weight of a product is the density and heaviness of one unit of product. Companies that sell larger and heavier items are more likely to use a direct or short distribution channel to avoid issues that arise when too many intermediaries handle a product. For example, because hot tubs or personal spas are bulky and heavy, they are more prone to product damage during distribution. Furthermore, there are typically fewer intermediaries between the manufacturer and the customer in order to mitigate the high costs associated with distributing hot tubs.5
Standardization
The standardization of a product also impacts channel decisions. Products that are standardized have no differences in how they are manufactured. Standardized products are uniform and consistent. Agricultural products, such as grain and corn, are standardized. Consumers are unable to tell the difference between these products because of their standardization. Standardized products have a longer channel length than customized products. Customized products are adapted depending on the customer’s needs. They typically require a shorter distribution channel. Companies must consider the impact of standardization before making channel decisions.
Technical Nature of a Product
Products sold in the tech space are typically more complex and often require an onboarding process. For example, the customer-relationship management firm Salesforce offers companies a cloud-based application that allows it to manage millions of contacts or people as they move along the sales cycle from lead to prospect to customer. Products with a technical component often have a short channel length, meaning there is no intermediary between the company and the business consumer. They are distributed directly to business consumers (or B2B) because of the onboarding, implementation, training, support, and maintenance aspects of the product. Companies that use Salesforce have access to a customer relationship management expert who ensures that the program is being used and managed effectively in order for the customer to get the most out of the product.
Product Life-Cycle Stage
A product’s life-cycle stage may also impact channel decisions. Product life cycle refers to the various stages that a product goes through from its introduction phase, to its growth and maturity phase, and in some cases to its decline phase. For example, during the introduction phase of a product’s life cycle, where profits and consumer knowledge of a product are low, companies may make more conservative channel decisions. As the product enters the growth stage, companies may expand distribution to meet consumer demand. As the product enters the maturity stage and ultimately the decline state, a company must ensure that its distribution strategy aligns with its changing consumer demand.
Profitability
The profitability of a channel can also influence channel decisions. Profitability relates to the amount of money that stands to be gained after a company pays its expenses. A simple way to calculate profitability is to subtract these expenses from the revenue generated.
Companies must evaluate not just the revenue generated by working with channel partners but also the channel member’s ability to operate profitably. Channels that are not able to manage distribution costs effectively are less attractive for companies seeking to earn a profit. Companies ultimately have an obligation to be profitable, and choosing channel partners that help them achieve their overarching goals is more desirable than those who cannot.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following overarching factors can impact channel choice in the distribution of products and services?
1. Target market coverage, fulfillment of buyer requirements, and profitability
2. Intensive, selective, and exclusive distribution
3. The technical nature of the product and its fixed and variable costs
4. The profitability of the channel and its members' abilities to meet consumer needs
2.
ABC Toys desires to distribute products across global markets. It is likely using what type of distribution strategy?
1. Exclusive
2. Selective
3. Unlimited
4. Intensive
3.
Total Appliance offers buyers installation services for refrigerators, dishwashers, washers, and dryers for \$50. In addition, it also offers buyers a free annual tune-up of any major appliance purchased through its retail outlet. Which buyer requirement does Total Appliance fulfill?
1. Variety
2. Post-sale service
3. Pre-sale service
4. Convenience
4.
MilkyIce markets ice cream products through grocery retailers in the United States. Which of the following product-related factors would have the biggest impact on MilkyIce’s channel choice?
1. Standardization
2. Bulk and weight
3. Perishability
4. Unit value
5.
Which overarching factor involves analyzing the revenues and costs associated with a channel?
1. Unit value
2. Fixed costs
3. Variable costs
4. Profitability | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.03%3A__Factors_Influencing_Channel_Choice.txt |
Learning Objectives
By the end of this section, you will be able to:
• Describe how channel members are selected.
• Explain how channel members are managed and motivated.
• Discuss how channel conflict is handled.
• Summarize the metrics used for channel member evaluation.
Selecting Channel Members
After a manufacturer has evaluated its distribution channel options, it now needs to select the right channel members and manage and motivate them to operate effectively and efficiently. In addition, the manufacturer must also address any conflicts that may arise in the marketing channel. A channel member, also known as an intermediary, is a company that works in a network with other companies to help move products from manufacturers to final consumers. Channel members perform a variety of important tasks that collectively create value for the consumer.
The channel members that a company selects depends entirely on the company’s evaluation of the channel member alternatives. Manufacturers should examine each channel member’s years in business and experience carrying product lines. They should also evaluate each member’s reputation and its profitability. PetVivo, maker of biomedical devices for pets, selected Vetcove to distribute a device for pets with osteoporosis. Because PetVivo needed to reach veterinary hospitals and clinics across all 50 states, Vetcove was the right choice because of its experience serving over 13,000 veterinary hospitals and clinics. Its expertise and reputation were attractive characteristics for PetVivo.6
Managing and Motivating Channel Members
After channel members have been selected, manufacturers must continuously manage and motivate members to work together to achieve their collective goals. It’s similar to a partnership or relationship where companies depend on one another to marshal the product along the marketing channel.
The qualities of an effective channel relationship include collaboration, transparency, and cohesion. When members work together toward a common goal of delivering value to the consumer, the channel is more effective. Companies like L’Oréal and Procter & Gamble must work harmoniously to build mutually beneficial relationships with their distribution network because it's critical to meeting the needs of their consumers. Failure to do so could be detrimental to channel members if customer value declines because of conflict.
In addition to managing relationships, manufacturers must also find ways to reinforce channel member performance. Manufacturers can provide incentives, such as bonuses and other types of rewards, when channel members meet the manufacturer’s goals. In addition to incentives, manufacturers can also listen to and support channel members by providing them with helpful sales materials, product samples, and the right messaging.
Evaluating Channel Members
Manufacturers must systematically evaluate channel member performance to ensure that each member is meeting standards. Failure to evaluate performance can lead to inefficiencies in the channel and a decline in customer-perceived value.
Handling Channel Conflict
Sometimes channel members experience conflict during the distribution process. Channel conflict is when companies in the distribution channel have disagreements due to a competitive versus collaborative mindset. For example, a channel member may cause conflict because its focus isn’t on creating value but on driving down costs at the expense of the customer. This could create conflict in the channel if channel partners and ultimately consumers are impacted by an excessive profit orientation.
Vertical Conflict
A vertical conflict is a conflict that exists between different levels of a vertical channel. When the goals of manufacturers, wholesalers, and retailers aren’t aligned in the marketing channel, the customer will ultimately suffer, either by paying more for a product or experiencing a product shortage.
Disintermediation is the process of removing an intermediary from a marketing channel. It occurs when manufacturers have discovered an opportunity to sell directly to end users or final consumers. It can also occur if a manufacturer pivots from its traditional distribution strategy to something completely different. In a classic example, the birth of Apple iTunes essentially put traditional outlets for purchasing music out of business. In another example, traditional movie theaters are experiencing disintermediation as streaming services like Netflix and HBOMax are releasing new films that 10 years ago would have been released only in theaters.
Horizontal Conflict
A horizontal conflict is when there is disagreement among firms at the same level in the marketing channel. For example, Holiday Inn has a variety of locations in New York City. If one Holiday Inn drives its prices down to outcompete its partners, that could cause conflict among the other Holiday Inn locations that perceive it as stealing customers through pricing tactics.
The Use of Metrics in Evaluating Channel Members
In order to evaluate channel performance, companies use key metrics including inventory turnover rate, order accuracy rate, time to ship, total units in storage, and percentage of on-time shipments. By monitoring these metrics, companies can assess their performance and make adjustments as needed. Figure 17.11 presents key metrics used in evaluating channel member performance. Let’s look at each of these more closely.
Inventory turnover rate is a metric that measures how quickly inventory is turned over or sold. Trader Joe’s faced a dilemma with the COVID-19 pandemic as consumers stocked up on nonperishable goods like pasta and rice. As consumer demand increased, Trader Joe’s supply warehouses were virtually empty as they waited for new inventory to come in. When metrics fall outside what a company considers normal or acceptable, it can then make adjustments, such as introduce new products to fill demand as in the case of Trader Joe’s.7
Order accuracy rate is an important ecommerce metric. It measures the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors. If you’ve purchased a pair of sneakers and the wrong size arrives at your home, this constitutes order inaccuracy. These errors can be costly to companies, who then need to process, fulfill, and send another order.
Time to ship, also known as order cycle time, is the length of time from when a customer places an order to when it reaches them. Amazon has redefined consumer expectations related to shipping. With high expectations that purchased items will arrive quickly, online shoppers say that delivery time influences their purchase decision. The time-to-ship metric is a useful tool to measure how quickly a manufacturer can get its products through channel members to consumers.
Total units in storage is a metric used to evaluate warehouse efficiency. This is a real-time metric that changes as items are sold and leave the warehouse and new inventory moves in. This metric also provides insight into warehousing and inventory costs as well as the number of SKUs, or stock-keeping units, a warehouse is managing at any given time. SKUs are unique numbers assigned to every single product in a warehouse.
The total number of orders is an important metric. The total number of orders is the sum of all orders that a company received in a given time period. It provides insight into consumer demand and helps manufacturers to plan accordingly. For seasonal products like winter coats and pumpkin-flavored cookies, the total number of orders may fluctuate throughout the year. Evaluating the total number of orders over time helps manufacturers watch for fluctuations and plan accordingly.
Percentage of on-time shipments is a metric used to evaluate how well a channel member meets its promise of delivering goods on time. This metric is especially important to industries that market perishable goods like meat and dairy. Imagine if the Greek yogurt manufacturer Chobani (see Figure 17.12) worked with an intermediary that only met its delivery date 50 percent of the time. This would directly impact the shelf life of the product at the retail level and cost everyone in the channel money.
Alongside time to ship, measuring average delivery days looks at the average number of days it takes shipping carriers to deliver purchased goods to consumers. This is important to consumers who value the timely delivery of products purchased online. Manufacturers may choose to work with a company like Amazon because of its core competency of fulfilling and delivering products to consumers relatively quickly.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
XYZ Appliance is evaluating wholesalers to determine which one would be the right match for its distribution strategy. Which of the following wholesalers would be the best match for XYZ Appliance?
1. Wholesaler A is brand new to the large appliance market.
2. Wholesaler B has 20 years of experience in wholesaling food products and is the most expensive.
3. Wholesaler C has five years of experience in the large appliance market, has a solid reputation, and is profitable.
4. Wholesaler D has two years of experience in the small appliance market and is the cheapest.
2.
DirectDocumentaries is a streaming service that provides subscribers with access to documentaries. It currently works with three production companies that it continuously manages to ensure timely production and delivery of new documentaries. Which of the following scenarios is an example of good channel management?
1. Production Company A distributes its documentaries through DirectDocumentaries but has also set up an additional domain on the web to distribute directly to viewers. DirectDocumentaries does not know about this additional streaming outlet.
2. Production Company B has only been operating for one year. DirectDocumentaries is skeptical about Production Company B’s capabilities so shares limited information with it. DirectDocumentaries offers little to no support in Production Company B’s development.
3. Production Company C is a powerhouse, producing 30 to 40 documentaries a year. DirectDocumentaries and Production Company C work closely together to ensure that documentary releases occur at strategic times. They also openly share information about what’s working and what’s not. They have a common goal in reaching customers with innovative ideas.
4. Production Company D is rarely happy. It feels that DirectDocumentaries favors other producers and rarely features its productions on a subscriber’s homepage. Production Company D has complained several times.
3.
________ occurs when manufacturers cut out intermediaries and sell directly to end users or final buyers. It can also occur if a manufacturer pivots from its traditional distribution strategy to something completely different.
1. Horizontal conflict
2. Vertical conflict
3. Intermediary conflict
4. Disintermediation
4.
Which of the following is a key metric that assesses the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors?
1. Order accuracy rate
2. Inventory turnover rate
3. Total number of orders
4. Average delivery days
5.
________ measures the length of time from when a customer places an order to when it reaches them.
1. Average delivery days
2. Time to ship
3. Inventory turnover rate
4. Total number of orders | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.04%3A__Managing_the_Distribution_Channel.txt |
Learning Objectives
By the end of this section, you will be able to:
• Define supply chain management (SCM).
• Explain the role of marketing in supply chain management.
• Describe the various functions of supply chain management.
Supply Chain Management (SCM) Defined
A supply chain is the entire process of distribution from acquiring the raw materials needed to make products to delivering final goods to consumers. Companies with high-performing supply chains recognize that it starts with a customer-centered mindset. All activities must be managed with the end goal of creating and delivering value to the target consumer.
Supply chain management (SCM) is the process of managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.
The Role of Marketing in Supply Chain Management
Marketing plays an integral role in the management of the supply chain. Marketing entails creating and delivering products that meet the needs of customers all while building relationships through customer engagement. Companies ensure that they deliver on their value proposition to consumers through the features and benefits of the product itself. Ensuring fulfillment of a company’s value proposition starts with working with the right suppliers who provide the materials and ingredients to help companies fulfill their promise.
For example, Dave’s Killer Bread (DKB) has positioned itself as the maker of “the best bread you’ve ever tasted, power-packed with organic whole grain nutrition.” The promise to consumers starts with selecting suppliers who are certified organic and who can consistently deliver high-quality ingredients. DKB’s promise to consumers starts as far back as the grains selected by DKB’s suppliers.
Functions of Supply Chain Management
Supply chain management has five major functions. These include purchasing, operations, logistics, resource management, and information workflow (see Figure 17.13). Good supply chains perform these functions in a way that meets the wants and needs of final consumers efficiently.
Purchasing
Purchasing is the process of buying materials needed to manufacture products. These materials are purchased from suppliers, who must be able to deliver them in accordance with the manufacturer’s timeline. Therefore, the manufacturer’s companies and suppliers must communicate and coordinate to ensure timely delivery of materials.
For example, Ben & Jerry’s ice cream flavor Mint Chocolate Chance has cream, skim milk, sugar, egg yolks, white flour, cocoa powder, soybean oil, and vanilla extract, among other ingredients. Ben and Jerry’s must forecast the number of ingredients it needs to purchase so that these amounts match the demand for this particular flavor. The company, in turn, assesses things like total number of orders and inventory turnover for its Mint Chocolate Chance product to help forecast the quantity of ingredients it will need from suppliers.
Operations
Operations is everything a company does on a day-to-day basis to run a company. Before a company purchases the needed materials and begins production, it must forecast demand for its products. Forecasting involves anticipating or projecting how many units of a product will be sold during a given period. Accurate forecasting must align with inventory management and production schedules to ensure that the company is operationally positioned to manufacture the right amount of product to meet the needs of consumers.
Logistics
Logistics is a function that involves the coordination of all supply chain activities, such as warehousing, inventory management, and transportation. Companies along the supply chain must communicate effectively to ensure that products reach consumers in a timely and efficient way in the precise form that the consumer expects. For example, when consumers eat McDonald’s French fries, they expect the fries to taste a certain way. Suppliers and intermediaries along the channel work together to ensure that those expectations are met. Good logistical management helps ensure this.
Resource Management
Resource management is the planning, organizing, and controlling of resources. Resources include the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption. Effective supply chain management requires the right allocation of these resources to the right supply chain activities to optimize the entire system.
Information Workflow
Information workflow is a supply chain management function that relates to what and how information moves between members of the supply chain. If information doesn’t flow effectively or communication is poor, the entire process can suffer as a result of disruptions, delays, and mistakes. Employing a systematic approach to sharing information across the supply chain ensures that the right companies have the right data to make the right decisions at the right time.
Link to Learning: Supply Chain Management
To learn more about how supply chain management works, review the following article and video: IBM and Supply Chain Management.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
________ entails managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.
1. Logistics
2. Integrated logistics management
3. Supply chain management
4. Warehousing
2.
Which of the following best demonstrates the role that marketing plays in supply chain management?
1. In order for companies to deliver on their value proposition to consumers, they must ensure that the activities and members in the supply chain share the common goal of delivering value to consumers.
2. Companies need to raise the price of their products with the supply chain in mind so that they earn a profit.
3. Companies must market their products to supply chain members in order to win partnership with them.
4. Companies should only work with supply chain members who can save time and money in the distribution of products. Savings are most important to customers.
3.
Companies that manufacture goods rely on raw materials to produce the products they sell. This describes the function of ________.
1. inventory management
2. supply chain management
3. transportation
4. purchasing
4.
________ include(s) the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption.
1. Purchasing
2. Logistics
3. Forecasting
4. Resources
5.
________ is a supply chain management function that relates to what and how information moves between members of the supply chain.
1. Information workflow
2. Forecasting
3. Logistics
4. Resource management | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.05%3A__The_Supply_Chain_and_Its_Functions.txt |
Learning Objectives
By the end of this section, you will be able to:
• Define and describe logistics.
• Explain the functions of logistics.
• Describe logistics information management.
• Describe integrated logistics management.
• Characterize third-party logistics (3PL) providers.
Logistics Defined
An important function of the supply is logistics, which includes all the activities involved in the flow of products from manufacturers to consumers. Logistics is the planning, organizing, and controlling of the movement of raw materials and ultimately finished goods from manufacturers to final consumers.
For example, the logistics involved in getting orange juice to consumers includes a variety of activities, such as packing and transporting. It is critical that there is a coordinated effort between all channel members involved in that process. The functions or purpose of logistics is explored next.
Functions of Logistics
Getting products from manufacturers to final consumers requires the coordinated efforts of all channel members. These efforts require an understanding of key activities that need to occur as products flow through the marketing channel. The major functions of logistics explored next include warehousing, inventory management, and transportation.
Warehousing is the stocking, maintaining, and controlling of products while they await the next step in their journey to the final consumer. Warehousing requires receiving and storing new stock, picking and packing ordered items, and shipping products off to their next destination. Depending on the product, warehousing may also involve maintaining control of the warehouse’s temperature to ensure that perishable goods or food that needs to be held at a certain temperature don’t spoil.
Inventory management is a function that involves identifying the type of inventory and how much a company has on hand at any given time. Managing inventory is a critical logistics function because it ensures that there isn't too much or too little on hand.
Transportation is the physical movement of products by either road, water, or air (see Figure 17.14). Companies must determine which method or methods of transportation make the most sense given the nature of the product, the location of the target market, and costs associated with each method. Transportation also involves all the activities such as the generation of shipping documents, the calculation of delivery time, and the need for additional resources like technology or special equipment. For example, an ice cream manufacturer would need to ensure that the transportation methods it selects to distribute its products are temperature controlled to maintain the integrity and safety of the products.
There are three factors that companies must consider in selecting a mode of transportation. First is the product itself. Products that are hazardous, perishable, or problematic to handle may impact transportation methods. Location is a second factor that can impact the mode of transportation. Companies must consider shipping origin, which is the location where the product is shipping from. They must also consider the shipping destination, or the location where the product must land. A company transporting products from China to the United States, for example, needs to select transportation methods that allow it to move products over large bodies of water. The third factor impacting transportation methods is any special considerations related to time or urgency. Companies need to consider how quickly they need products moved from origin to destination. There are a variety of transportation methods available, including trucking, rail, water carriers, air carriers, or some combination of these.
In Table 17.2 different modes of transportation are presented along with their relative speed of delivery, cost, and accessibility. Accessibility means how readily available or convenient the mode of transportation is. For example, trucking is an accessible mode of transportation because of the strong road infrastructure in the United States. Let’s compare the different modes of transportation based on these characteristics.
Trucking or road transportation makes the most sense for companies that are transporting between destinations that are connected by land. It is highly accessible, meaning that trucking is readily available to companies looking for a low-cost mode of transportation.
Rail is a second mode of transportation that is best suited for moving goods in cases where speed of delivery is not urgent and low transportation costs are important. Similar to rail, water carriers offer an even slower mode of transportation at an even lower cost than rail, making it a popular mode for moving consumer goods from China to the United States.
For some companies, more than one mode of transportation is needed. Multimodal transportation involves companies using two or more types of transportation to move goods from origin to destination. For example, Apple may use air to ship iPhones to European airports but then trucks to continue the journey in getting iPhones to warehouses or distribution centers and retailers.
Mode Speed Cost Accessibility
Trucking Moderate Low High
Railroads Slow Low Moderate
Water Carriers Very slow Very low Moderate
Air Carriers Fast Very high Low
Digital Very fast Very low Very High
Table 17.2 Modes of Transportation and Relative Factors
Logistics Information Management
For a supply chain to be effective, manufacturers, suppliers, channel members, and customers need useful logistical information that can help them make informed decisions. Logistics information management is the recording and reporting of useful information that channel members can analyze and validate during the process of moving products.
Channel members use a system to access and manage logistics information in real time. This information allows members to develop demand forecasts, where they predict what and how much consumers will demand in the future, which in turn helps them to make decisions about how much raw materials and other supplies they need to meet consumer demand.
Integrated Logistics Management
Integrated logistics management means that every element of logistics works cohesively to ensure that products flow from manufacturer to final consumer in an efficient and effective way. Companies must first begin by defining the objectives of logistics management. For example, in the procurement and distribution of agricultural products, the supply chain might collectively set objectives that everyone along the chain commits to. They may, for example, set objectives to minimize costs, meet delivery times 95 percent of the time, and communicate openly and honestly about product availability and product flow in a consistent and systematic way. Or they may strive cohesively to manage inventory more effectively to reduce the possibility of shortage or surplus.
Whatever objectives they set for the supply chain, each member strives to integrate its activities and information with the activities and information of other members to ensure cohesive and synergistic handling of products for the ultimate purpose of meeting the wants and needs of the consumer.
Third-Party Logistics (3PL) Providers
A third-party logistics provider is a company that is contracted by a channel member to handle one or more of the functional areas of logistics. 3PL providers can be warehouses, distribution centers, or fulfillment centers that have expertise in managing certain logistical activities.
The advantages of working with 3PL providers is that logistics is their core competency, it is less expensive to outsource, and they offer flexibility. Owning warehouses and trucking systems requires a great deal of capital. Companies would much rather work with a 3PL provider than assume the financial risk of owning and operating their own transportation and warehousing systems.
Imagine if pet food maker Purina had to purchase its own warehousing and trucking business to store and move its goods all over the United States. It would be very costly and require a large capital commitment. In addition, 3PL providers offer the advantage of strategic location. They often market themselves as being located in the precisely right zones that a supply chain needs to reach targeted consumers.
The downside of using 3PL providers is the loss of control. Manufacturers are essentially turning over logistics responsibilities to other companies, who assume control of communication and interaction with suppliers. To combat this, manufacturers should continuously analyze performance metrics and communicate with 3PL providers.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
________ makes the most sense for companies who need to transport products quickly.
1. Trucking
2. Air transportation
3. Rail transportation
4. Water transportation
2.
________ is the planning, organizing, and controlling of the movement of raw materials and ultimately finished goods to end consumers.
1. Supply chain management
2. Logistics
3. A marketing channel
4. Transportation
3.
Which of the following best explains the importance and use of logistics information?
1. Companies use logistics information to sell to other companies that target similar consumers.
2. Companies use logistics information to market additional products to consumers.
3. Companies use logistics information to develop demand forecasts, conduct supply planning, and optimize supply chain effectiveness.
4. Companies rarely use logistics information to guide decision-making.
4.
________ ensures that every element of logistics as part of the entire supply chain is part of a system that works cohesively to ensure that the wants and needs of final customers are met.
1. A marketing channel
2. Information management
3. Integrated marketing communication
4. Integrated logistics management
5.
Which of the following explains why companies would use a third-party logistics (3PL) provider to distribute products?
1. 3PL providers have the expertise, flexibility, and cost efficiencies that manufacturers do not possess in logistics.
2. 3PL providers understand how to promote a product more effectively than a company does.
3. 3PL providers own warehouses to help store and manage inventory.
4. 3 PL providers own and operate their own transportation system. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.06%3A__Logistics_and_Its_Functions.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss the issue of the carbon footprint versus the speed of shipping.
• Discuss the issue of sourcing sustainably.
Carbon Footprint versus the Speed of Shipping
As companies strive to deliver the right products to the right customers at the right time, they are faced with the competing interest of protecting the environment in which they operate.
Link to Learning: Environmental Responsibility in the Supply Chain
To learn more about environmental responsibility in the supply chain, watch the following video: Value, Speed, Environmental and Societal Impact – HP’s Supply Chain.
Sustainability is a company’s effort to reduce its impact on the environment as products move from source procurement through production through distribution to final consumers. Companies that practice sustainability balance their goal of speedy delivery with a commitment to reducing their carbon footprint. While traditional marketing channels focus on speed and cost, a sustainable channel also factors in goals aimed at mitigating the harm the supply chain causes to both humans and the environment.
Sourcing Sustainably
Sustainable sourcing is the process of considering suppliers’ social, ethical, and environmental performance. The benefits of sourcing sustainably are improved reputation, brand protection, and an opportunity to attract new consumers and reach new markets. When a company claims it sources sustainably, it means that it is both transparent and ethical regarding the raw materials it uses in its products. It is not only transparent and ethical in its sourcing of materials but also environmentally conscious about its manufacturing process.
The shoe company Allbirds has sought to use natural instead of petroleum-based synthetic materials, which is what a majority of footwear is made from. By 2025, it aims for 75 percent of its shoes to be sustainably sourced using both natural and recycled raw materials.8
Companies with a Conscience: Allbirds
For decades, the footwear industry has missed the opportunity to look to Mother Nature for more sustainable footwear materials. Tim Brown, the founder of Allbirds, believed it was time to think differently (see Figure 17.15). With most shoe companies using petroleum-based raw materials, Brown sought to think more sustainably about offering a shoe that was both comfortable and environmentally friendly. Along with Joey Zwillinger, a product engineer and renewables guru, Brown developed a revolutionary wool fabric designed for footwear. Allbirds uses SweetFoam, a shoe sole material made from plant-based leather. To increase the durability of the shoe, it also uses recycled synthetics where needed, which helps extend the life of the product. It is continuously researching and developing ways to innovate around the sustainable sourcing of shoe materials with the goals of not only doubling the lifetime of its products but also reducing its carbon footprint related to raw materials by 25 percent in 2025.9
Sustainability is at the core of everything Allbirds does. While it is certainly interested in offering consumers a comfortable shoe, it also cares deeply about the process and materials involved in making that shoe comfortable.10
17.08: Chapter Summary
In this chapter, the functions and benefits of marketing channels are explored. Marketing channels play an important role in moving products from manufacturers to final consumers. Channel members, also known as intermediaries, specialize in specific activities that help the flow of products. They play a transactional role by bringing manufacturers and consumers together. They also help with the logistical distribution of products by sorting, storing, and bulk-breaking so consumers can purchase what they want in the desired quantity. Finally, they facilitate the flow of goods by doing things like offering consumers credit to make purchases. Channel members can include manufacturers, wholesalers, distributers, retailers, agents, brokers, and ultimately final consumers.
In addition, the types of marketing systems are also explored. Vertical marketing systems can include corporate, administered, and contractual. In addition, some companies use a horizontal, multichannel, or omnichannel marketing system. Factors that dictate the type of channel a company chooses include target market coverage and the selection of an intensive, selective, or exclusive distribution channel.
Fulfillment of buyer requirements such as information, convenience, variety, and service pre- and post-purchase are also important determining factors. In addition, product-related factors such as perishability, product life-cycle stage, value, and the technical nature of a product are also to be considered when choosing a marketing channel. Lastly, the profitability of the channel is a huge consideration given that companies aim to operate efficiently while delivering value to consumers.
Selecting, managing, and motivating channel members require a strategy to handle channel conflict. Evaluating channel members requires the use of metrics and includes inventory turnover rate, accuracy rate, the time it takes to ship, units that have to be stored, number of orders processed in a given period of time, the percentage of on-time shipments, and the average number of delivery days.
The functions of supply chain management include purchasing, operations, logistics, resource management, and information workflow. Any or all of these functions can be outsourced. The decision requires careful consideration and evaluation of the cost/benefit ratio. The functions of logistics, such as warehousing, inventory management, and transportation, can also be outsourced.
Finally, the ethical issues in supply chain management were discussed. They include carbon footprint vs. the speed of shipping and sourcing sustainably. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.07%3A__Ethical_Issues_in_Supply_Chain_Management.txt |
Example and Directions
Words (or words that have the same definition) The definition is case sensitive (Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages] (Optional) Caption for Image (Optional) External or Internal Link (Optional) Source for Definition
(Eg. "Genetic, Hereditary, DNA ...") (Eg. "Relating to genes or heredity") The infamous double helix https://bio.libretexts.org/ CC-BY-SA; Delmar Larsen
Glossary Entries
Word(s) Definition Image Caption Link Source
accumulating relates to intermediaries buying in bulk from different manufacturers
adjusting for discrepancy of assortment occurs when an intermediary buys from manufacturers, then regroups products into different assortments based on what consumers are demanding from retailers
administered VMS one type of vertical marketing system where there is no ownership of channel members but instead one member who is large enough to coordinate and manage the distribution activities of other channels members
agent a type of intermediary who acts as an extension to the manufacturer
bulk and weight the density and heaviness of one unit of product
bulk-breaking occurs when an intermediary takes a large bundling of a manufacturer’s product and breaks it down into single units to be distributed to retailers based on the retailer’s order
business-to-business (B2B) a market comprised of companies who buy from and/or sell to other companies
business-to-consumer (B2C) a market comprised of companies that manufacture and sell products or services directly to a final consumer or end user
channel conflict disagreements between companies in the marketing channel due to a competitive versus a collaborative mindset
channel length relates to the number of intermediaries in the marketing channel
channel member (intermediary) a company that works in a network with other companies to help gets products from manufacturers to final consumers
contractual VMS independent companies that have joined together by contract for a mutually beneficial purpose
corporate VMS when one member of the distribution channel owns the other members
customer-perceived value the overall perception that a consumer has about a company, brand, or product and is measured by what the consumer is willing to pay in return for the features and benefits in the market offering
direct channel when companies sell and distribute their products directly to consumers
direct marketing channel when a manufacturer does not use intermediaries but rather involves the manufacturer distributing its market offering directly to consumers
disintermediation the process of removing an intermediary from a marketing channel
distribution the process of making products and services available and accessible to consumers to purchase
distributor a type of intermediary that takes ownership of the product and tends to align itself closely with a manufacturer
exclusive distribution a strategy that involves allowing a limited number of intermediaries to distribute a company’s market offering
facilitating functions activities such as financing and information sharing in the marketing channel
final consumer the end user of a good or service
horizontal conflict when there is disagreement among firms at the same level in the marketing channel
horizontal marketing system a group of unrelated companies that offer products and services in a shared space
indirect channel involves the utilization of one or more intermediaries to distribute a market offering to consumers
intensive distribution a distribution strategy that entails distributing a company’s market offering through all possible intermediaries
inventory management a function that involves identifying the type of inventory and how much a company has on hand at any given time
inventory turnover rate a metric that measures how quickly inventory is turned over, or sold
logistical functions the handling, packing, inventorying, transporting, warehousing, and ensuring the security of products as they make their way to the customer
logistics the coordination of all supply chain activities, such as warehousing, inventory management, and transportation
marketing channel system of people, organizations, and activities that work together to make goods and services available to consumers for use
multichannel distribution system where a single company sets up multiple distribution channels to reach customers
omnichannel marketing system multichannel approach whereby companies give consumers a variety of ways to purchase, receive, and return products
order accuracy rate a metric that measures the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors
percentage of on-time shipments a metric used to evaluate how well a channel member meets its promise of delivering goods on time
perishability relates to the likelihood that a product will spoil, decay, or expire if not used in a timely manner
post-sale service all activities provided by a company that reinforce the value of the product or service for the buyer
pre-sale service all activities provided by a company that help a buyer make a purchase decision
producer a company that supplies the raw materials that manufacturers need to create consumer products
producer to retailer to consumer channel when manufacturers or producers sell to retailers without the use of wholesalers or distributors
product life cycle the various stages that a product goes through from its introduction phase, to its growth and maturity phase, and in some cases to its decline phase
purchasing the process of buying materials needed to manufacture products
retailer a type of intermediary where retailers take ownership of the product and their sole focus is on reaching the end user or customer directly
selective distribution a strategy that includes choosing more than one, but fewer than all possible intermediaries to distribute a company’s market offering
standardized products that have no difference in how they are manufactured
supply chain a network between a company and its suppliers to produce and distribute a specific product to the final buyer
supply chain management all members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers
sustainability a company’s effort to reduce its impact on the environment as products move from source procurement through production through distribution to final consumers
sustainable sourcing the process of considering suppliers’ social, ethical, and environmental performance
target market coverage resources and capabilities needed to reach consumers in a company’s target market
third-party logistics (3PL) provider a company that is contracted by a channel member to handle one or more of the functional areas of logistics; often warehouses, distribution centers, or fulfillment centers that have expertise in managing certain logistical activities
time to ship also known as order cycle time, the length of time from when a customer places an order to when it reaches them
total number of orders the sum of all orders that a company received in a given time period
total units in storage a metric used to evaluate warehouse efficiency that changes as items are sold and leave the warehouse and new inventory moves in
transactional functions buying, selling, and risk-bearing that goes along with the movement of products along the marketing channel
unit value the price that a company charges for one unit or item
vertical conflict a conflict that exists between different levels of a vertical channel
vertical marketing system companies in the marketing channel that work together in a coordinated, collaborative, and customer-centric way
warehousing the stocking, maintaining, and controlling of products while they await the next step in their journey to the final consumer
wholesaler similar to distributors in that they take ownership of products; buys products in large quantities for the purpose of distributing an assortment of products to retailers | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.09%3A_Key_Terms.txt |
1 .
What are the methods used to evaluate channel members? Why is this important?
2 .
Explain the various forms of marketing systems. What factors go into the decision regarding which system is best suited to the given organization?
3 .
Target market coverage is broken down into intensive, selective, and exclusive distribution. Evaluate which form of coverage works for what category of products, why, and give an example of each form.
4 .
List the different forms of transportation for moving goods. What are the positives and negatives for each form? Can you think of a way to reduce the risk?
17.11: Critical Thinking Exercises
1 .
Create a strategy for managing channel conflict within a marketing channel.
2 .
Considering what we have learned in the last several years about supply chain interruption, along with what we have covered in this chapter, what are some of the strategies that a company can use to reduce risk?
3 .
Evaluate alternatives and incentives that companies/marketers can offer customers to manage the speed of shipping while reducing the carbon footprint.
17.12: Building Your Personal Brand
Consider what sustainability and social responsibility mean to you. How do they impact your life and your activities? Is it in a positive, negative, or neutral way?
Let this information guide you in creating your authentic self. Develop your awareness of the ways that you can support the movements that speak to you. For instance, if you have strong beliefs in helping to create a cleaner environment, find activities that support that. Think clean stream, neighborhood beautification, or teaching children recycling, all the while making sure that you are genuine in upholding those concepts in your life. The list of opportunities is multilayered and unlimited.
Write 200–400 words outlining your personal brand as it relates to sustainability and social responsibility. How is your personal brand impacted by these concepts now? With these concepts in mind, how would you like your personal brand to evolve?
17.13: What Do Marketers Do
Contact one of the following businesses and ask to speak to a person in the supply chain or logistics department. You might have to go through several people to actually get to the one that can best answer your questions. The goal with this exercise is to ask questions regarding the logistics in these companies to better understand the complex process. Every logistics department is involved in the movement of goods (the coming and/or going), but they vary in how they go about it.
• A local warehouse
• UPS
• FedEx
• An Amazon.com warehouse (they have multiple layers that you can contact as well as their logistics partner program)
• A trucking company
When you speak to the professional, be prepared with questions that will help you understand this position. Here are a handful of questions to get you started:
1. What is your job title and function?
2. How would you describe your department?
3. How did you obtain your position?
4. What skills, background, or degree are needed to do this type of work?
5. What are the main challenges faced by the department in the job?
6. Are you aware of differences in how you run your operations versus a similar company? If yes, can you outline examples?
17.14: Marketing Plan Exercise
Complete the following information about the company and products/services you chose to focus on as you develop the marketing plan throughout the course. You may need to conduct research in order to obtain necessary information.
Instructions: Using the Marketing Plan Template file you created from Marketing and Customer Value assignment and expanded upon in Strategic Planning in Marketing, Market Segmentation, Targeting, and Positioning, Marketing Research and Market Intelligence, Products: Consumer Offerings, Pricing Products and Services, and Integrated Marketing Communications, complete the following section of your marketing plan:
• Marketing Strategy: Distribution
Submit the marketing plan to your instructor for grading and feedback. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.10%3A_Applied_Marketing_Knowledge-_Discussion_Questions.txt |
Global Containers & Custom Packaging Inc.
It happens without much thinking—you go online, click on the item, add it to your cart, pay for it, and then wait for it to arrive, usually in just a few days. And although you don’t give it much thought, there is a lot going on when making a purchase. It may appear that the product “just arrives” at your location, but it’s not quite that simple. The manufacturer must decide how to best ship the product, whether it be by truck, ship, air or some combination of all three of them. Also, depending on the size of the company that is purchasing the product and the size of the order of the product, it might make a stop at a wholesaler before ending up on retail shelves or in your mailbox.
One company that is working “behind the scenes” to ensure that your package arrives intact and on time is Global Containers and Custom Packaging. Global Containers and Custom Packaging is a full-service logistics company. It offers logistics and warehouse management, packaging distribution, and quality inspection and sorting.11
Strategically headquartered along the US-Mexico border in El Paso, Texas, Global Containers and Custom Packaging offers local packaging distribution services that provide value and solutions to the retail and maquiladora market. Customers include companies like Amazon.com, Hewlett Packard, Honeywell, Align Technology (the makers of Invisalign system for straightening teeth), and ASO (a leader in consumer first-aid products).
Started in 2009, the company was founded to provide a full-service logistics solution. José Ochoa, one of the company’s founders, started off as an industrial engineer and saw a need for a full-service logistics solution offering a high level of customer service. Some of the solutions that the company offers are just-in-time inventory management, report management, flexibility in hours (it will receive a truck or ship a product after hours or on the weekend with no extra cost to the client—a service that is practically unheard of in this industry), traceability of consumption behavior, and coming soon, accepting crypto payments.
Managing all of the pieces of a logistics solution can be tricky, especially in an environment with unprecedented shipping delays. Global Containers and Custom Packaging takes a proactive approach in managing its clients’ business—it will advise customers on upcoming delays on products that it doesn’t currently have in inventory. By staying in constant contact with the client, it has been able to keep delays and bottlenecks because of missing items to a minimum. All this is accomplished while the industry has seen shipping delays skyrocket.
It’s not surprising given the company’s proactive approach to managing delays, offering superior customer service and comprehensive offerings, that it has received the prestigious Bridge Accelerator Award, an award focused on businesses that are looking for ways to grow and innovate in the Paso del Norte region.12
Case Questions
1 .
Is the marketing channel a direct channel or indirect channel in this case? Why?
2 .
Global Containers and Custom Packaging provides trucking shipping solutions primarily between Mexico and the United States. What are the six factors impacting the choice of channel? Which have the most important impact in this case?
3 .
What are the main product-related factors that have an impact on the choice to ship products via truck from the United States to Mexico?
4 .
Name the different supply chain management levels that Global Containers and Custom Packaging provides.
17.16: References
1. “Outstanding Foods: Taking This Little Pig-Free Bacon Chip to Market,” BeyondBrands, accessed March 27, 2022, www.beyondbrands.org/work/outstandingfoods.
2. “Apples,” Agricultural Marketing Resource Center, Iowa State University, revised September 2021, https://www.agmrc.org/commodities-pr.../fruits/apples.
3. Latoya Irby, “How Store Credit Cards Are Different from Regular Credit Cards,” The Balance, Dotdash Meredith, updated November 21, 2020, https://www.thebalance.com/store-cre...t-cards-960146.
4. Daniel Bland, “Largest Vehicle Fleet Management, Leasing Players in North America,” Global Fleet: The Executive Network, Nexus Communications, updated July 7, 2021, https://www.globalfleet.com/en/leasi...-north-america.
5. Technavio, Hot Tub Market Growth, Size, Trends, Analysis Report by Type, Application, Region and Segment Forecast 2020–2024, August 2021, https://www.technavio.com/report/hot...ustry-analysis.
6. “Petvivo Holdings, Inc. Announces Distribution of Its Veterinary Medical Device, SpryngTM, by Vetcove, Inc.,” Yahoo! Finance, Yahoo, January 5, 2022, https://finance.yahoo.com/news/petvi...123000670.html.
7. Jennifer Strailey, “Trader Joe’s Talks Supply Chain, TP and a Return to Normalcy,” Winsight Grocery Business, Winsight, May 4, 2020, https://www.winsightgrocerybusiness....eturn-normalcy.
8. “Killer Breads,” Dave’s Killer Bread, accessed June 1, 2022, https://www.daveskillerbread.com/products.
9. “Renewable Materials,” Allbirds, accessed May 31, 2022, https://www.allbirds.com/pages/renewable-materials.
10. Allbirds, “Renewable Materials.”
12. “The Bridge Accelerator—Binational Supplier Development Program,” https://www.tecma.com/the-bridge-acc...pment-program/ | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/17%3A_Distribution-_Delivering_Customer_Value/17.15%3A_Closing_Company_Case.txt |
It is no surprise that retailing has changed over the years. In the 1980s and 1990s, big-box retailers such as Walmart began opening stores in small towns and forcing local mom-and-pop shops out of business. In the 2000s, with the rise of Internet shopping, more brick-and-mortar retailers closed their doors. The COVID-19 pandemic resulted in another wave of retail closures. While future prospects for a number of retail operations appear bleak, many retailers—both new and established—are finding innovative ways to attract customers back into the stores.
Precycle is a grocery store in the Bushwick neighborhood of Brooklyn, New York. In order to differentiate her store from other local shops, Precycle owner Katerina Bogatireva decided to focus her efforts on serving a niche market of consumers who are committed to protecting the environment. Shoppers at Precycle can find a wide variety of spices, fruits, grains, pastas, toothbrushes, and many household basics. But what shoppers won’t find at Precycle is plastic. Bogatireva opened the store in an effort to reduce the amount of plastic that is used in retailing. All the items in Precycle are not only free from plastic and sold in bulk, they are locally sourced.1
Similar types of stores have been popping up throughout the United States. Consumers are more and more aware of the ongoing problem that plastic creates for our oceans and general environment. Additionally, more consumers are becoming locavores, people who purchase food that is locally grown.2 Local and more traditional brick-and-mortar retailers are ideal to meet these consumer demands. Post-pandemic, we may see increased numbers of brick-and-mortar retailers responding to these new consumer demands. Only time will tell.
18.01: Retailing and the Role of Retailers in the Distribution Channel
Learning Objectives
By the end of this section, you will be able to:
• Define retailing.
• Discuss the functions of retailers in the distribution channel.
Retailing Defined
When marketers plan their distribution strategies, they must determine which channel is best suited to get their goods and services into the hands of consumers. A distribution channel is a set of businesses that move the product or service from the manufacturer to the end user or buyer.3 Figure 18.2 outlines the most common types of distribution channels for consumer goods. These businesses, often called intermediaries, play important roles in the distribution of goods and services. Intermediaries are companies that act as liaisons between the buyer and seller. These companies can take on a variety of roles to facilitate the transfer of products and services from a manufacturer to the end user. The path that a product or service takes from seller to buyer, including the intermediaries, is called the distribution or marketing channel. The length of the channel—short or long—will depend on many factors, including the product itself.
When you first glance at Figure 18.2, it might seem logical for producers to simply provide goods and services directly to the consumer. Imagine that you were thirsty and wanted a cold can of Pepsi. However, you did not have any at home, and retailers did not exist. How would you get your Pepsi? Well, without retailers, you would have to rely on either going directly to the closest Pepsi bottling plant or requesting a Pepsi employee to deliver a can to your home. Can you imagine how costly that would be for PepsiCo? Now imagine doing that for every single product you wish to purchase. Obviously, this seems implausible—and almost laughable. While many companies have traditionally utilized longer channels to distribute their products, companies today often use more direct (shorter) channels or multiple channels. When a manufacturer utilizes multiple channels to distribute its product, it’s known as an omnichannel strategy. Amazon, for example, uses multiple distribution channels. Some products are sold directly to the consumer, while other products come from independent retailers, who then fulfill the order.
Consider another example: You are planning a trip with your friends. You have found a Marriott hotel that suits your needs. You may choose to book directly with Marriott through its website or reservation phone number. Alternatively, you may choose to book through a third party, such as Hotels.com, or even by calling your travel agent. Marriott is utilizing multiple channels for its service, so it is utilizing an omnichannel distribution approach.
Today, even social media plays a role in the distribution channel. Looking at the above example, Marriott might consider utilizing social media as yet another point of contact for the organization’s employees and customers to interact. Customers can often book a room and receive customer service directly through the company’s social media platforms.4 As you will learn later, the choice of which distribution channel to use depends largely on the type of product and the manufacturer’s strategy.
Regardless of how many channel members are included in the distribution channel, retailing is the final stop in the channel before products and services reach the consumer. Retailing is the process of selling goods and services to consumers. As it relates to the distribution channel, retailers do not often manufacture the goods being sold. Rather, retailers buy products from the manufacturing firms or wholesalers and resell them to the consumer. While the number of traditional brick-and-mortar retail establishments has declined drastically over the past few decades, retailers remain an important part of the distribution channel. Retailing entails all activities involved in selling the goods and services to the consumer; in other words, retailers have their own marketing mix plan to accomplish their goals. Because retailing is the final link between the manufacturer and consumer, retailers have as much incentive to sell products as those who produce the product.
The Functions of Retailing in the Distribution Channel
Retailing has many important functions in the distribution channel. Consider Target, a general-merchandise retailer with stores in all 50 states and the District of Columbia, as well as locations across the globe.5 Target offers a wide variety of consumer goods in each of its large brick-and-mortar locations. In addition to what we, as consumers, see when shopping at Target, there are many other important functions for Target and other retailers in the distribution channel (see Figure 18.3). Let’s look at these functions in detail.
Provide Assortment
Retailers provide assortment for consumers. Assortment simply refers to the number of options in a given product category or the number of products offered. Consider the Pepsi beverage example from earlier in the chapter. What if you weren’t sure which drink you wanted? Rather than go directly to a Pepsi bottling plant, you decide to go to Target where you will find an assortment of drink varieties and brands to choose from.
Target also offers a wide variety of other products. So, while you are there, you decide to purchase your drink and some home furnishings and groceries. The assortment of brands and products in general gives the consumer options and convenience—something most consumers value in their busy lives.
Many large retailers also offer their own brand of products. This allows the company to provide competing options to consumers at different price points, typically lower than the name brands. For example, Walmart offers various name brands of acetaminophen, one being the more popular brand Tylenol and the other a lower-priced, comparable product labeled Great Value. By providing multiple purchase options, the retailer is able to target more than one consumer market.
Buy in Bulk
Because retail establishments are often large and have ample storage, they are able to purchase and sell items in bulk. Consider the quantity of one product, such as Pepsi 12-packs, that Target has on its shelves. In addition, the store has stock in the back room for when the shelves are empty. Target’s ability to buy in bulk allows it to serve a large number of consumers at any given time.
From a broader standpoint, consider the number of Pepsi 12-packs that the entire Target store network purchases in a given week. Target’s ability to purchase such large quantities allows it to negotiate lower prices with PepsiCo (and other channel members). In turn, retailers can provide consumers with lower prices than if the consumer purchased directly from Pepsi.
Store Inventory
The ability of retailers to hold inventory allows them to quickly restock shelves or, in the case of Internet retailers, get the product shipped quickly. This allows consumers the convenience of being able to get an item as quickly as possible.
Provide Convenience to Consumers
Retailers provide a considerable amount of convenience to consumers. Consider the distance from your home or work to your closest retailer. For most consumers, retailers are within a few miles. This proximity makes retailers convenient. The process of choosing a retail location for development has become somewhat of a science in recent decades. There are companies that specialize in partnering with retailers to determine the best locations for store placement. To determine locations, things like traffic patterns and demographics are collected and analyzed.6
A second service that retailers provide is convenient hours of operation. Consider Walmart, which has locations that are open 24 hours, or grocery stores that are open on Thanksgiving morning for last-minute food purchases.
Retailers also allow consumers to more closely evaluate a product for purchase. For example, some consumers would much rather purchase clothing items from a brick-and-mortar retailer rather than online because they can feel the texture of the cloth and try the item on to determine if it fits and looks good.
Providing Services to Customers
Most retailers provide services to consumers that are not a core product offering. For example, you can purchase groceries and household essentials at retailers such as Walmart or Kroger, but you can also purchase stamps, buy a lottery ticket, refill your prepaid phone minutes, drop off mail, and in some locations get a haircut or an eye exam and deposit a check at the bank.7 With the convenience of multiple services, retailers make other tasks more convenient for consumers.
While there is an added value to the consumer to have all these services in one location, it’s also a benefit to the retailers. For example, the hair salon located inside Walmart has the added benefit of the higher foot traffic inside the store. Since so many consumers are already in the store, they may be more apt to stop in for a haircut. Furthermore, while hair salon owners or individual stylists pay rent on the space inside Walmart, they don’t have the overhead that might come with a standalone building. The advantage of this partnership for Walmart is that it receives additional income through the rent paid by the hair salon. The company also may build consumer loyalty since it is providing its consumers with additional convenience by offering these services.
Collecting and Providing Feedback
An important factor in any distribution channel is that of member relationships. Remember that all parties in the distribution channel have a stake in one another’s success. Because retailers are the last link between the product and the consumer, they have a unique opportunity to collect feedback from customers and share that with other channel members. This can take many different forms. For example, if you use a loyalty card at your favorite grocery retailer, your purchases are tracked. The data collected is a wealth of information that informs a retailer’s strategy and decisions. For example, the company may use the data to inform the type of promotions to run or coupons to offer.
Retailers also provide customer feedback to their channel partners. This feedback can let suppliers know the demand for products and if products are being offered at the right time and the right place. If products are not selling well in a retail establishment, the retailer and channel partners can look to customer feedback to determine the issue and resolve it.
Careers In Marketing: Distribution
There is much to consider with distribution channels. Learn more about the distribution channel types, impact of the digital age, and choosing a distribution channel and read examples of making distribution channels work in this article. Learn in this article how to use distribution to a sales advantage. And while we want everything to run smoothly, it rarely does all the time. Learn about how things could go wrong and options for managing these situations.
Now that you’ve had a chance to understand what distributors do, does a career in distribution interest you? There are several types of jobs in distribution. Do your research and learn about the types. Start by reading this article to learn the differences between a distribution manager, industrial production manager, and a purchasing manager. You will learn about the needed degree of study, necessary skills, potential job growth, and median salary. Run a Google search on distribution careers, and you’ll be shown numerous job postings. This is a great way to gain insight into the career specifics with multiple companies.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Channel members that generally do not manufacture goods but rather buy them from another channel member and sell them to the consumer are said to be practicing ________.
1. manufacturing
2. wholesaling
3. retailing
4. inventory
2.
Which of the following is NOT a function of retailing?
1. Buying in large quantities and selling to other businesses for the purpose of reselling them to consumers
2. Providing assortment and variety of products
3. Holding inventory
4. Providing convenient location and store hours
3.
As a new entrepreneur, you are deciding whether to offer your customers a loyalty card that is linked digitally to technology. Which function of retailing would you be engaged in?
1. Providing services to consumers
2. Holding inventory
3. Providing convenient location and hours of operation
4. Providing consumer communication
4.
A company that utilizes more than one channel in its distribution is using which type of strategy?
1. Direct channel
2. Direct-to-consumer channel
3. Omnichannel
4. None of the above is correct.
5.
Schwan’s Company prepares frozen foods to be delivered to the door of the consumer. Which of the following is the most likely distribution channel for Schwan’s?
1. Manufacturer – Agent – Wholesaler – Retailer – Consumer
2. Manufacturer – Retailer
3. Manufacturer – Consumer
4. Manufacturer – Wholesaler – Retailer | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.00%3A_In_the_Spotlight.txt |
Learning Objectives
By the end of this section, you will be able to:
• Characterize various store retailers.
• Characterize various non-store retailers
Retailers, in some form or another, have been around for most of human history. As early as 800 BCE in ancient Athens, Greece, businesspeople sold their goods in developed markets at the city’s center.8 Throughout history, this type of business has grown and become more specialized based on the needs of customers and the ability we now have to travel fairly easily. Today, retailers are often defined by their product lines—a group of products that are related to one another. Retailers are broken into two main categories, store or non-store retailers, which are further broken into retail types. Retail types are defined by their product lines. See Table 18.1 for a breakdown of retail types, the typical product focus for that retail type, and examples of retailers that fall into that type.
Retail Type Product Focus Example
Store Retailers
Specialty Store Single product line AutoZone
Department store Wide variety of product lines JCPenney, Kohl’s
Supermarket Multiple product lines; focused mostly on grocery with limited services Publix, Kroger, Save A Lot
Superstore Combination of supermarket and department store Target, Walmart
Convenience Store Limited range of everyday items 7-Eleven, Speedway
Category killer Very large superstores with wide product lines within a category Best Buy, Lowe’s, Home Depot, Staples, Office Depot
Discount store Broad range of products with few or no services Dollar General, Dollar Tree, Family Dollar
Off-price retailer Brand name overstock, irregulars, and closeouts T.J.Maxx, Ross
Factory outlet Overstock or over-manufactured brand-name items, usually clothing; typically in a mall setting with other factory outlets Sawgrass Mills Factory Outlet, Indiana Premium Outlets, Osage Outlets; Hanes Outlet, L.L.Bean Outlet
Warehouse club Bulk items at discount for paid membership Sam’s Club, BJ’s, Costco
Non-store retailers Vending machines, direct-mail catalogs, television home shopping online, telemarketing, direct selling
Automatic vending Unmanned with very limited product line located in places store retailers are not Snack and beverage machines in a hospital waiting room
Direct mail and catalogs Limited product lines advertised through the mail Tiffany & Co.’s Blue Book, L.L.Bean, Fingerhut
Television home shopping Limited product lines advertised on television Home Shopping Network, QVC
Online retailing Can be wide or limited product lines of products offered for sale via the Internet Amazon
Telemarketing Very limited product line sold via the telephone
Direct selling Very limited product line sold by salespeople who are very knowledgeable about the product and sell directly to a business or end user; used in B2C, but more often in B2B
Kirby Vacuums (B2C)
Publishing companies (B2B)
Technology companies (B2B)
Table 18.1 Types of Retailers
Store Retailers
Retailers tend to be the easiest of the channel members to identify because we see them everywhere we go, both in person and online. A store retailer is a traditional brick-and-mortar establishment where products are displayed for customers to purchase. Store retailers can be categorized in many ways based on their strategy mix, which includes a combination of store hours, location, product assortment, and prices.9
As the number of store retailers has decreased significantly over the years due to their higher operating costs, some companies have found more innovative ways to provide their products in a similar setting. For example, Amazon Go is a store retailer that allows customers to shop in-store, but has eliminated the use of cashiers (and long lines). As customers choose the products they want, the automated store keeps track of the purchase and charges the customers when they exit the store.10
Specialty Stores
Specialty stores focus on selling a single type of product or a single product line. The employees of specialty stores are often very knowledgeable about the products they sell and offer high levels of customer service. For example, when you need a new battery in your car, you may head straight to AutoZone, a retailer specializing in vehicle parts. When you arrive, an associate will be able to assist you in choosing the correct battery for the make and model of your car, and sometimes, they may be able to install it for you.
Department Stores
Department stores are typically larger than specialty stores and have separate areas or departments for similar product lines. For example, areas could include shoes, kids’ clothing, housewares, and so on. Each compartmentalized area may mimic the look and feel of a specialty store to make for a more intimate experience, but often the sales associates are not highly trained in each area. For example, Kohl’s, a department store chain in the United States, has separate departments containing women’s fashion, shoes, kitchenware, and toys.
Supermarkets
A supermarket is defined as a store that mostly focuses on a product mix of grocery items but also carries household and personal items and offers limited services. One example is Publix, an employee-owned supermarket chain that opened in 1930 and has nearly 1,000 stores in the southeastern United States.11 Publix’s average retail size is roughly 32,000 square feet, and more than 50 percent of its shelves are dedicated to grocery items. The other 50 percent consists of cleaning items, toiletries, over-the-counter medicines, beer/liquor, and personal hygiene products. Like most supermarkets, Publix also offers a deli, a bakery, hot food bars, a pharmacy, some apparel, and sometimes even pool supplies, toys, and other nonfood items.
Convenience Stores
Named for their convenient location, a convenience store is a small retail business that stocks a limited range of everyday items, such as groceries, snacks, soft drinks, tobacco, toiletries, and lottery tickets (see Figure 18.4). In the United States, convenience stores are most often linked to gas stations. Convenience stores offer consumers the convenience of stopping to fill up their tank and running inside for a few essential items without having to drive to a supermarket or other retailer. The first convenience store in the United States opened in Texas in 1927 and later became known as 7-Eleven. In 2020, there were approximately 150,000 convenience stores in the United States.12
Superstores
Superstores are very large retailers that have characteristics of both supermarkets and department stores (see Figure 18.5). Like supermarkets, they sell a wide range of grocery items. But they also have considerable space dedicated to nonfood departments, as do department stores. Target operates 1,927 retail stores in the United States. Some of its stores are considered superstores, where consumers can purchase not only (nearly) everything on their grocery list, but also clothing, household goods, electronics, toys, and sporting equipment.
Category Killers
Category killers are large superstores or big-box retailers that are bigger, cheaper, and more convenient than other types of stores. Because of their sheer size, they have the advantage of buying products in very large quantities, which gives them a strong negotiation position for the price they pay to distributors. In turn, they can then offer discounted prices to consumers. These stores are called category killers because they often put nearby specialty stores out of business. Home Depot and Lowe’s are considered category killers because of their exhaustive inventory selection and low prices. The popularity of this big-box format means that smaller hardware stores may find it difficult to compete.
Discount Stores
During the 2008 recession, many retailers began closing their doors. But Dollar General was one retailer that saw exponential growth during this time.13 Dollar General and competitor Dollar Tree are discount stores—stores that sell a broad range of products at lower prices than competitors. While discount stores offer lower prices and often less variety than competitors, they often also offer fewer services and little customer service. As inflation put pressure on household budgets in 2022, shoppers from a range of income levels turned to dollar stores to save money on everyday necessities.
Link to Learning: Dollar Stores and the Community
Learn more about the impact dollar stores have on the community and commerce. It’s not always positive. Experts speak in this video about the potential negative impact and issues.
Off-Price Retailers
Retailers that provide high-quality, name-brand goods at deeply discounted prices are considered off-price retailers. These retailers often purchase brand names that are irregular, closeouts, overstock, and off-season. While these retailers offer goods within more than one product line, often consumers cannot be guaranteed to find the same brand or item(s) in a store twice. T.J.Maxx, one of the largest clothing retailers in the country, utilizes this strategy. The company’s buyers purchase over-ordered or over-manufactured products from distributors at deeply discounted prices. This merchandise is then offered to the consumer at lower prices than can be found in department stores.
Factory Outlets
In some ways, factory outlets are similar to off-price retailers (see Figure 18.6). The goods found in factory outlets are typically over-manufactured and sold at lower prices. However, factory outlet goods are sold directly from the manufacturer rather than through a third party. Many clothing manufacturers have factory outlets, which are typically clustered together in a factory outlet mall, a space where numerous factory outlets are located. For example, you may see Coach, Gap, or Lands’ End stores in outlet malls. Sawgrass Mills Factory Outlet, located in Sunrise, Florida, is the largest factory outlet mall in the United States. It houses over 350 factory outlet stores, including Adidas, LEGO, and Zales.14
Warehouse Clubs
Warehouse clubs (see Figure 18.7) are a type of retailer that sells goods in bulk at discounted prices to members only. Shoppers must first become members of the warehouse club before they are allowed to purchase. Costco and Sam’s Club are two of the largest warehouse clubs in the United States, and both offer a limited variety of perishable and nonperishable goods. Warehouse clubs operate out of enormous, no-frills, low-cost facilities that resemble warehouses.
Non-store Retailers
Non-store retailers are those retailers that operate outside of the traditional brick-and-mortar location. There are six main types of non-store retailers, and we will examine each in the following sections.
Automatic Vending
Also referred to as vending machines, automatic vending is the use of an electronic device that dispenses a product (see Figure 18.8). There is no direct human contact in the transaction. Traditionally, automatic vending machines would dispense items such as potato chips, candy, and soft drinks. However, more recently, companies have found automatic vending to be successful with other items, from cell phones to hot meals to automobiles. Carvana is an automatic vending non-store retailer. Using Carvana, consumers can purchase their cars online, complete with financing, and pick up their vehicles at one of its vending machines or have it delivered with little or no human interaction needed. Debuting its 27th car vending machine in Atlanta, Georgia, in 2020 Carvana now has a location that is 12 stories high and holds 43 vehicles.15 The company unveiled its first car vending machine in 2012, taking automobile shopping—and automatic vending—to a whole new level!
Direct Mail and Catalogs
Direct mail involves solicited or unsolicited advertising of products and services to prospective customers through the mail (Figure 18.9). Direct mail and catalogs are likely the oldest form of non-store retailing. The first mail-order catalog in the United States was Tiffany & Co.’s Blue Book in 1845.16 The company still uses catalogs in addition to store retail locations, and the catalogs feature some of the rarest diamonds and jewels in the world. A more popular mail-order catalog that began in the 1800s was the Sears Roebuck and Co. catalog, the “big book,” which came to feature hundreds of pages of products offered by the company; the last was published in 1993. With the rise of the Internet, catalogs and direct mail are not as prevalent in marketing today, but it is still a retailing strategy that works for many companies.
Television Home Shopping
Another example of a non-store retailer is television home shopping. Television home shopping primarily targets women over the age of 40 and is a business practice in which products or services are sold via television. There are some cable network stations that are dedicated solely to home shopping 24 hours a day, 7 days a week. One example is QVC, which stands for Quality, Value, and Convenience. The company was founded in 1986 and purchased its rival Home Shopping Network (HSN) in 2017. It generated \$14.1 billion in profits in 2018.17 The 2015 Hollywood movie Joy, starring Jennifer Lawrence, showcases real-life entrepreneur Joy Mangano and the power of QVC as a non-store retailer.
Similar to online shopping, consumers can order products directly from a company via telephone or the Internet. Unlike the Internet and direct-mail catalogs, however, viewers can see the product being demonstrated or modeled in real time. While QVC hosts are demonstrating products, control room employees are able to monitor sales in real time as they are placed.
Online Retailing
Online retailing allows consumers to search and purchase products remotely over the Internet. Although the Internet’s public birthday is debatable, online retailing started shortly thereafter. Though Amazon (started by Jeff Bezos in 1995 as a book retailer) was not the first online retailer, its inception prompted thousands of companies to follow suit. In 2021, US consumers spent \$5.4 trillion at online retail stores, a figure that is expected to increase. It is anticipated that, by 2023, online shopping will make up 22 percent of retail sales across the globe.18
Telemarketing
Telemarketing is the attempted sale or marketing of goods and services to potential customers via telephone. The telephone has been used as a sales tool since shortly after its invention. The 1970s, however, was the decade when technology became advanced enough that call centers—a centralized location or department that handles calls from customers—became an economical way of contacting potential customers. Over the next few decades, telemarketing became a staple in marketers’ strategies. But this resulted in consumers being annoyed with these calls and a rise in scamming calls, particularly those targeting the elderly. In 1991, the Federal Trade Commission (FTC) addressed this problem with new rules for telemarketers, but it was not until 2003 that the Do Not Call Registry was created.19 Even with these changes, legitimate and non-legitimate telemarketing finds its way onto phones. While many (legitimate) companies still utilize this form of non-store retailing, telemarketing is generally used (and more widely accepted) in business-to-business (B2B) settings.
Direct Selling
Direct selling is selling products and services directly to the consumer in a non-retail setting. Direct selling typically consists of a salesperson attempting to sell a product or service to a potential customer at their residence or place of employment. This practice was very popular in the 1950 and 1960s when women were often stay-at-home mothers and/or homemakers. Salespeople would bring the product—a vacuum, for example—to the consumer’s home and demonstrate its benefits in an attempt to make a sale. With the rise of two-income families and the Internet, direct selling is not used frequently today in the consumer market. It is, however, still a widely used practice in B2B. However, it remains effective for some companies, such as Kirby, which still sends salespeople door-to-door to sell its vacuums.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
After class, Drue realized that the cafeteria was closed, so instead he purchased a candy bar and soft drink from a vending machine. Which type of retailing did Drue utilize?
1. Factory outlet
2. Automatic vending
3. Warehouse club
4. Direct mail
2.
Of the following, which retailing strategy would be most appropriate for customers who are neither tech-savvy nor able to shop at store retailers?
1. Automatic vending
2. Television home shopping
3. Warehouse clubs
4. Online retailing
3.
After school, Adrian decides to stop at the local Costco. Unfortunately, the store won’t allow him in unless he first purchases a membership. Which type of retailer has Adrian entered?
1. Factory outlet
2. Warehouse club
3. Discount store
4. Superstore
4.
Retailers providing high-quality goods at discounted prices are called ________
1. superstores
2. discount stores
3. off-price retailers
4. warehouse clubs
5.
Some manufacturers operate their own retail locations; when they are left with excess inventory, they often provide these to what type of retail locations?
1. Factory outlets
2. Warehouse clubs
3. Department stores
4. Discount stores | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.02%3A__Major_Types_of_Retailers.txt |
Learning Objectives
By the end of this section, you will be able to:
• Describe how pricing affects retail strategy decisions.
• Explain how location is a factor in retail strategy decisions.
• Discuss the importance of retailer communications.
• Explain how merchandise affects retail strategy decisions.
Retailing Strategy Decisions
Retail marketers and other retail business leaders need to determine which retail strategy will work best for the products they sell. Recall that retailers often buy in bulk, break down that bulk into smaller units, and sell to the end consumer. As you may also recall, value refers to a perceived worth of a product based on its service, price, and utility provided. As marketers are determining the optimal strategy for the products and services being offered, value again becomes an important factor.
The three most important items to consider in retail strategy that factor directly into value are pricing, location, and merchandise (see Figure 18.10). Because retailers sell goods and services often produced by another company, communication with channel members is another important topic. Let’s look at retail strategy decisions more closely.
Retail Pricing
Retailers will determine the price for their product based on many factors, including their cost to purchase the product, shipping, storing, and other overhead expenses associated with the business. For store retailers, overhead expense is typically much higher than it is for online retailers considering the brick-and-mortar location, decoration of the store, storage, employee salaries, shrinkage (loss due to spoilage and theft), and other factors. The goal of the retailer, just like any for-profit business, is to make money; therefore, retailers must consider not only their own cost of doing business, but what consumers are willing to pay for the products and services they sell.
Markup
Markup is the additional amount added to the price retailers purchase goods for. Often conveyed as a percentage, markup is the retail selling price minus the initial purchase price, divided by the initial purchase price, times 100. Here is the formula:
$\text { Markup Percentage }=\left(\frac{\text { Selling Price }- \text { Purchase }}{\text { Price }}\right) \times$
For example, say you manage a footwear retailer. You are interested in selling a new line of tennis shoes that you purchase for $50 a pair. You decide to sell these new sneakers to consumers for$75 a pair. What is your markup?
Your markup is 50%, as shown here:
$\text { Initial Markup }=\left(\frac{\ 75-\ 50}{\ 50}\right) \times 100=50 \%$
The easiest way many retailers choose a markup is to use a strategy that doubles the wholesale price, known as keystone pricing. Generally speaking, retailers tend to mark up prices somewhere around 50%. However, this can vary greatly from industry to industry. For example, retail grocers have a markup of around 15%, while clothing is generally marked up anywhere from 100% to 300%.20
Original and Maintained Markup
There is a difference in markup from when it’s originally set to what is actually realized when the product sells. Using the shoe retail business example, you determined your markup is 50%. This is known as the original markup, the markup that you have decided upon at the onset of placing the shoes for sale, which includes the original price to purchase the shoes and the cost of the shoes to the consumer. Using the above shoe store example, your original markup percentage is 50%.
What price the product actually sells for is considered the maintained markup. In your shoe store, let’s say you anticipated selling 100 pairs of shoes this month, but you only sold 75. As such, your original markup has been decreased. The maintained markup is the actual markup realized on the product that is sold to the consumer. It is the difference between the cost of goods sold and the actual retail price of the goods when sold. It is based on actual sales, not planned sales.
Markdowns
Maintained markup also accounts for markdowns, which were not factored into the original markup. A markdown is a price decrease for a product that is at the end of its life cycle or season. Markdowns assist retailers in selling through inventory by increasing temporary demand for products through a lower-price offering. If there is low demand for the 25 pairs of tennis shoes remaining in your inventory, you may consider marking them down to $60, then again to$50, and so on. Ideally, markdowns will, at the very least, cover the wholesale cost of the goods. Markdowns lower the maintained markup and the retailer’s gross profit.
Gross Margin
Gross margin refers to the actual sales dollars received (net sales) minus the cost of goods sold. It is the amount of profit made before deducting selling, general, and administrative cost and is calculated as a percentage. Let’s say that you sold 75 pairs of shoes at $80 but had to mark down the remaining 25 pairs to$50 a pair. To determine your gross margin, you calculate net sales and deduct the cost of goods sold. Here is the net sales formula:
75 pairs of shoes $\times \ 80=\ 6,000$ in net sales
25 pairs of shoes $\times \ 50=\ 1,250$ in net
$\text { Total net sales }=\ 6,000+\ 1,250=\ 7,000 \text {, }$
The cost of goods sold (COGS) calculation is as follows:
$\text { COGS }=100 \text { pair of shoes } \times \ 40=\ 4 \text {, }$
The gross margin calculation is as follows:
$\text { Margin }=\ 7,250 \text { total net sales }-\ 4,000 \text { cost of goods sold }=\ 3,250 \times 100 \%=32.5 \%$
Store Location
An age-old saying in retailing and real estate is that the three most important variables in choosing where to establish a business are location, location, and location. If consumers cannot find or easily access a store retailer, they will not spend their time looking but instead will take their business elsewhere.
Retailers will look at location selection from many angles, including how far away a competitor is located, how many of the same store (for chain stores) are within a certain driving distance, how many miles the average consumer would have to drive to reach the location, and how easy it is to access the location. For example, if you live in a smaller, rural town, there may be a regular Walmart but not a Walmart Supercenter. Why? Consider the population size of your town, the number of competitors, and how close the nearest Walmart Supercenter is located. Retailers such as Walmart know exactly the distance consumers are willing to drive to do their shopping. Perhaps there is a Walmart Supercenter within the distance they know consumers are willing to drive, so they have no need to add one to your town.
In determining location, retailers also must decide if their business is better suited to a freestanding location, a business district or strip mall, or another type of location. Let’s examine several types of locations.
Link to Learning: Success in Small Towns
With the rise of large retailers such as Walmart, smaller mom-and-pop stores have struggled to compete in the last few decades. In small towns and rural areas, this has presented an economic problem. However, some retailers are finding new success in locating in these areas. Watch this clip on how Dollar Stores is finding its niche in towns where many other retailers have closed their doors.
Central Business District
A central business district (CBD) is the commercial and business center of a given city or town (see Figure 18.11). While it is usually centrally located, its chief characteristic is its proximity to the largest number of people. Manhattan is the world’s largest central business district. One of New York City’s five boroughs, Manhattan is home to dozens of neighborhoods and hundreds of businesses, tourist attractions, and retail establishments. It has the highest retail rent in the world.21 In smaller towns and cities, these downtown areas slowly started to decline with the growth of larger nearby cities. However, many cities are now working hard to restore their downtown and town square areas and turn central business districts into thriving areas once again.
Regional Shopping Centers
Regional shopping centers, commonly referred to as shopping malls, offer general merchandise or fashion-oriented products and services (see Figure 18.12). They are enclosed buildings with access to retailers through a common walkway. Most regional malls have one to four anchor stores—large, well-known department stores—and numerous smaller specialty stores, as well as restaurants and activities. This blend of shopping and entertainment is sometimes known as retailtainment. For example, the Mall of America, located in Minneapolis, Minnesota, houses not only department and specialty stores, but also numerous restaurants, a cinema, an aquarium, and a theme park.22
Regional shopping centers typically service consumers who live anywhere from 5 to 15 miles away.23 Regional shopping centers are becoming scarcer due to retailers moving into strip malls, an increase in Internet shopping, and the effects of the COVID-19 pandemic. It is not unusual to see regional shopping centers primarily deserted (sometimes called “zombie malls”) or transformed into non-retail office space.
Strip Malls
Strip malls are classified by an attached row of retail stores offering both products and services (see Figure 18.13). Consumers enter stores from outside the building, and unlike in regional shopping centers, there is no internal walkway that links storefronts.24 Rather, there is a sidewalk running in front of and connecting the individual stores. Strip malls often service neighborhoods within one mile of their location, and stores are generally the same size as one another.
While strip malls are as old as regional shopping centers, they did not become more popular than regional centers until the late 1990s. The biggest draw to strip malls for consumers was that they did not have to walk through an entire regional shopping center to reach one store, yet could shop at multiple stores if desired. Department stores, factory outlets, and off-price retailers are often found in strip malls, along with specialty stores, service-oriented retail businesses, and restaurants.
Freestanding Retail Location
Freestanding retail locations are those store retailers that are not attached to any other retailer or establishment. Freestanding locations are more prevalent in smaller, less-populated areas (due to space). Gas stations, convenience stores, and superstores often occupy freestanding locations because they do not need anchors to pull consumers in. Freestanding locations are often less expensive to buy or lease as they are not anchored to established prime retail. In addition, retailers that choose a freestanding location often have fewer restrictions on design of the location, unlike those required of strip mall operators. On the other hand, these locations lack the foot traffic that may be gained from other types of retailers.25
Aside from the physical location of the retailer, decisions about exactly how the store is laid out and where products will be shelved is equally important. When you enter a grocery store, for example, you may note that the customer service center is often toward the front, allowing quick access to the services provided. You may also note that the milk, one of the most-purchased products in grocery stores, is often located in the back of the store. If it is purchased so frequently, why put it in the back? Most likely consumers will grab a few other items on their way to or from the back of the store, increasing the dollars spent.
Even the atmosphere of the retail location has been studied by retailers over the years. What does it smell like? What is the temperature? What music is playing? How is it decorated? Each of these considerations plays an important overall role in developing a retailing strategy based on the target market.
Omnichannel Marketing
Omnichannel marketing refers to an integrated approach and cooperation by the various channels to ensure a consistent brand message to customers.26 Consider Starbucks and its mobile app. The Starbucks mobile rewards app is designed for customers to have a similar experience to that of walking inside the store or even visiting its website. Utilizing an omnichannel strategy provides many advantages to both the consumer and company that might be otherwise more difficult to achieve. Omnichannel marketing provides increased access to products and improved brand visibility and allows for more personalization. This provides customers with a consistent experience with the brand regardless of where they experience it.
Customers continue to look for ways to order products online, particularly as the world became more accustomed to purchasing from home during COVID-19 lockdowns. This has required the companies within distribution channels to reassess the way products and services get to the consumer. An omnichannel approach allows organizations to maximize the shopping experience for the consumer by integrating multiple delivery and engagement options.27
Link to Learning: Omnichannel Revolution
Consumers have high expectations of their online and in-person retailers. Learn from this TED Talk about the future of retailing from an eyewear company that is looking to revolutionize the retail experience.
Also read about how you can use omnichannel experiences to create profits and the difference between omnichannel and multichannel experiences.
Retailer Communication
Retailers communicate to both their consumers and other channel members. The communication to consumers must be clear and concise to let potential customers know exactly what is being offered. While retailers develop communication strategies to directly reach their consumers, they will also collaborate on communication strategies with channel partners. For example, a Target commercial may feature a sale on Kellogg’s cereal. The retailer and the manufacturer have worked together on a joint message for the consumer. Consider a second example. When you walk into a bookstore and see the latest release of a popular author’s book in the front of the store display, the bookstore and the publisher have collaborated on all elements of that display: signage, how the book story is conveyed, display setup, etc.
This upward flow of communication is also important in a distribution channel. Retailers are on the front line of the exchange with consumers. Therefore, they can relay communication regarding products upward to other channel members. Assume a product that is sold primarily at retailers is being returned frequently because consumers are confused about how to use it. This information can be relayed back to the manufacturer, and the two can work together to overcome this challenge. It’s important to remember that every member of the channel is in business to make money and add value to other channel members, so the more communication and cooperation the channel members have with one another, the more likely it is that they will all enjoy success.
Merchandise
Coupled with location and price, the choice of retail strategy will largely depend on the type of merchandise being offered to the consumer. Merchandise is simply the goods that are being offered for sale by a retailer. For large superstores, merchandise can include hundreds or thousands of pieces of merchandise, while smaller specialty stores stock narrow but deep product lines.
Retailers pay close attention to their choice of merchandise in terms of category management. Category management refers to a grouping of similar products into categories based upon consumer usage. The concept allows marketers to decrease competition between similar products and also buy similar product bundles at lower cost. Most retail chain stores use category management as a way to lower costs. For example, suppose a retailer has 20 stores across the country. Rather than having a buyer from each location analyze prices and find the best supplier for their location, a centralized group of people negotiates prices and contracts for all retail locations. The time and money that the retailer saves add up when done for all or most products carried.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
After trying to sell a line of clothing at your retail location, you decide to change the price from $25 to$15. Which pricing strategy have you used?
1. Markup
2. Original markup
3. Maintained markup
4. Markdown
2.
A superstore chain is planning to open an establishment in the town Levi lives in. Which of the following would be the most likely location for this superstore?
1. Central business district
2. Strip mall
3. Freestanding location
4. Regional shopping district
3.
You are interested in opening a small retail location that sells handmade jewelry in the small, rural town you reside in. Which of the following would be your best choice of location?
1. Department store
2. Regional shopping center
3. Central business district
4. Automatic vending
4.
Pablo is trying to determine their gross margin at the end of the quarter. Which is the correct equation?
1. Units sold times selling price
2. Units purchased times purchase price
3. Net sales less cost of goods sold
4. Unit cost plus the sale price
5.
Which of the following has had the most impact on a customer’s access to product, brand visibility, and personalization?
1. Omnichannel marketing
2. Freestanding retail locations
3. Retail communication
4. Strip malls | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.03%3A__Retailing_Strategy_Decisions.txt |
Learning Objectives
By the end of this section, you will be able to:
• List major trends and developments in retailing.
• Discuss the reason for these trends and developments.
Trends in Retailing
As consumer behavior changes and as technology advances, marketers must make changes to stay relevant in the minds of their target market. During the late 1800s, the department store began the transition away from small mom-and-pop stores. In the 1920s, the first supermarket opened. In the 1950s, door-to-door selling was in full swing. In the 1980s, infomercials became mainstream. In the 1990s, online shopping got its start. In the 2000s, traditional brick-and-mortar stores began online sales. The rise of social media began in 2007, which created new selling opportunities (see Figure 18.14). Then, in 2017, the United States saw a slight shift back toward traditional store retailers. But, alas, in 2020 as the COVID-19 pandemic arose, that shift reversed again to online. These are just a few examples of how retailing has evolved with the times in the last century. As consumers get busier with their work and social lives, retailers find new ways to create value with the products they are selling. Let’s take a deeper look at some of the more recent trends in retailing.
Social Commerce
Social commerce is the blend of e-commerce and social media. With the rise of social media, brands have found new ways to engage and create lasting relationships with consumers. Many brands use social media as an additional marketing tool to engage more personally with customers. Retailers can do so in a variety of ways, from shoppable posts to influencer videos and everything in between.
Let’s take a look at Macy’s, an iconic American department store chain founded in 1858. Macy’s has weathered many changes in the retail landscape, and today it utilizes social commerce in a variety of ways. In 2020, the company opened its ambassador program to people outside the company—influencers who would promote Macy’s products through affiliate links or shoppable videos on social media.28 The pay is 5 percent commission on sales. Why this shift to working with influencers? Simple. Consumers tend to trust the opinion of influential individuals over company-created marketing. And for Macy’s and numerous other retailers, the strategy has worked because social commerce grew 30 percent from 2019 to 2020.29
As social media has grown since the inception of Facebook in 2004, marketers and social media apps alike have taken advantage of the ability of consumers to interact with brands and to purchase products directly in-app. For example, Instagram’s Shop and Checkout feature allows consumers to purchase products immediately without ever leaving the app.30 With the onset of the COVID-19 pandemic, the ability of consumers to purchase products while staying sheltered in place resulted in a change in behavior that is likely to endure in the coming years.
Online Stores in Offline Spaces
Have you ever purchased something online and picked it up at the store? This is what is referred to as online stores in offline spaces. While this practice was slowly gaining traction among larger retailers, the COVID-19 pandemic accelerated this trend drastically throughout nearly every industry. Retailers that already had the technology in place and/or were already testing such practices made a fairly easy transition to this new demand. Others closed their doors forever or scrambled to update their strategies to include some form of online sales.31
Walgreens, the second-largest pharmacy chain in the United States, was extremely successful in making such changes on the fly. In 2019, the company began allowing customers to order items online and pick them up at the drive-through window, which was previously primarily used for prescription pick up. Because the drive-through window was already established at Walgreens, it put them at a unique advantage to transition quickly to offer online orders in offline spaces.32
Same-Day Delivery
While most might think of Amazon Prime as the originator of same-day package delivery, the concept has actually been around for decades but was less prevalent in retail. Companies that offer legal and financial services have long had same-day delivery of their documents. In addition, restaurants have been offering guaranteed on-time delivery for some time. Florists have also offered one-day service for many years, particularly for funeral arrangements. And while Amazon Prime made the practice much more widespread throughout retailing, the now-defunct company Kozmo.com likely pioneered the practice in 1998.33
Kozmo was an online retailer that promised one-hour delivery of “videos, games, DVDs, music, mags, books, food, basics & more,” including Starbucks coffee.34 The company was popular with young professionals and college students, but it couldn’t stay afloat and closed in 2001. The company likely inspired the US Postal Service Metro Post, which allowed Amazon to offer same-day delivery of packages in San Francisco in 2012.35 Fast-forward to today, and many retailers, including Amazon and Walmart, offer same-day delivery in larger, well-populated areas.
The Emergence of Digital Wallets
Digital wallets are software-based systems that allow for secure transactions. Digital wallets were first used in the late 1990s, but today they offer more security and allow users to save numerous passwords and payment methods. The system allows users to quickly make online purchases without having to remember passwords or dig through their physical wallets to get cash.36 They also allow users to pay for products and services in-store directly from their phones, allowing for touchless payments.
If you are familiar with the Apple Store or the Google Play Store, you’ve likely used digital wallets. When you purchase online on one of these devices, an automated display will come up asking if you would like to save your log-in and payment information. Once saved, each time you log in to the same website or begin to make a purchase, the digital wallet will auto-fill your information. While digital wallets are a huge time-saver for consumers, they also benefit retailers by capturing a sale that might have been lost due to inconvenience.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following trends in retailing grew considerably during the COVID-19 pandemic?
1. Social commerce
2. Online stores in offline spaces
3. Digital wallets
4. All of the above trends grew considerably.
2.
Cam posts numerous times on TikTok and Instagram. As a result, she is asked to work as an influencer for a major retailer. Which trend in retailing is Cam a part of?
1. Online stores in offline spaces
2. E-commerce
3. Social commerce
4. Same-day delivery
3.
Software-based systems that allow for secure transactions by storing passwords and payment information are known as ________.
1. e-commerce
2. online stores in offline spaces
3. social commerce
4. digital wallets
4.
Of the following, which is the most likely reason for an increase in online shopping?
1. A pandemic
2. The shift from two-income to one-income families
3. More people retiring than ever before
4. The rise in regional shopping centers
5.
Which of the following is TRUE of social commerce?
1. Social media is on the decline.
2. Very few brands and companies utilize social media.
3. Social media is one way to incorporate omnichannel marketing.
4. Social media decreases personalization with customers. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.04%3A__Recent_Trends_in_Retailing.txt |
Learning Objectives
By the end of this section, you will be able to:
• Define wholesaling.
• Identify different types of wholesalers.
Wholesaling Defined
Wholesaling is the business of buying goods in bulk at a discount from a manufacturer or other distribution channel member and selling them to retailers for a higher price. Wholesalers are often referred to as middlemen because they are the entity that links the producer to the retailer. Unlike retailers, wholesalers generally do not interact with customers or have physical locations for them to visit. Wholesalers engage in a variety of business practices including buying, storing, selling, and marketing.
Wholesalers are integral marketing intermediaries, responsible for getting the right product to the right place at the right time and creating additional value for the customer and other channel members. Furthermore, wholesalers actually make the final price for consumers less because they purchase in bulk, whereas some smaller retailers could not afford do so. There are several types of wholesalers, and each has its unique importance in the distribution channel.
Types of Wholesalers
In addition to the general importance noted above, each type of wholesaler plays a specific and integral role in getting products from a manufacturer to the end user. The decision of which type of wholesaler a retailer will utilize—or which type of wholesaling a wholesaler chooses—will largely depend on the type of product, the additional services needed, and often, the industry as a whole. The following section examines the types of merchant wholesalers (see Figure 18.15).
Merchant Wholesalers
Merchant wholesalers engage in buying, storing, and physically handling products in large quantities and selling those products in smaller quantities to retailers.37 Merchant wholesalers are the most common form of wholesaling and can take on many responsibilities in the distribution channel to assist retailers. Merchant wholesalers are classified by the level of service they provide to retailers and include full-service wholesalers, limited-service wholesalers, and manufacturer’s agents. Retailers and manufacturers will choose which type of wholesaler to work with based on their needs. Some large retailers, such as Walmart, may need fewer services from wholesalers than smaller specialty stores will need. As you continue to read, remember that wholesalers are a business—so they are in business to make money, but they also take on risk in doing so.
Full-Service Wholesalers
Wholesalers that take on the most risk are full-service wholesalers. Full-service wholesalers offer retailers the most complete range of services, such as buying, selling, storage, transportation, sorting, and financing. This type of wholesaler likely has its own salespeople to assist retailers, and some assist in the stocking of the products on retailers’ shelves. They often provide retailers lines of credit to purchase products now and pay at a later date. Merchant wholesalers focus on either general or specialty merchandise.
Full-service wholesalers that offer an extensive list of merchandise for sale are known as general-merchandise (full-line) wholesalers. Retailers are able to purchase most, if not all, of their inventory from one wholesaler. For retailers, general-merchandise wholesaling is convenient because it provides for greater availability and flexibility with product quantities. However, retailers need to be cautious in utilizing only one wholesaler for all of their needs as they may find themselves in predicaments they cannot contractually be protected from—such as higher prices.
Unlike general-merchandise wholesalers, which focus on an extensive line of products, specialty wholesalers focus on a limited line of products. For example, Sysco, one of the country’s largest food-service wholesalers, focuses on limited product lines, such as food and food-service supplies.38 The company’s target market includes hospitals and nursing homes, schools and colleges, and other entities that offer food service on a large scale. You might be surprised to learn that your high school cafeteria or college commons is served by Sysco.39 The company offers a host of services to its customers, such as financing, consultation, menu assistance, and food production.
Limited-Service Wholesalers
As the name suggests, limited-service wholesalers offer a limited range of services to retailers. These wholesalers often compensate for the lack of services by offering lower prices than full-service wholesalers. For example, a limited-service wholesaler may not be able to offer retailers financing or stocking services, but it may purchase excess inventory from full-service wholesalers or manufacturers at a deeply discounted rate and in turn offer a better price to retailers. Limited-service wholesalers offer retailers many services to increase value.
Rack jobbers are companies that work with retailers to display and sell a product in-store. These items are often not products that the retailer would ordinarily stock and are budget-friendly items. For example, when you enter a gas station and see a rack of cell phone chargers and accessories, it is likely that they are from a rack jobber. The rack jobber stocks and maintains the cell phone display, and the gas station receives a portion of the sales. The advantage to the retailer is that it is not responsible for ordering products or maintaining and stocking displays; it is almost like passive income. The biggest disadvantage to retailers is that rack jobbers may over- or under-order products or fail to maintain displays as frequently as needed.
Cash-and-carry wholesalers are those that offer a limited line of fast-moving goods that they sell to retailers for cash. Because these wholesalers do not have to have massive amounts of storage space and do not offer services, they are able to offer products at lower prices. They also do not often deliver products, so they do not have overhead related to transportation. The advantage to the retailer is lower prices. But the disadvantages include no guarantee of product, the expense of transportation, and the demand for cash payment.
Drop shippers are retailers that use suppliers to ship products directly to the end consumer. In this case, retailers sell the product to the consumer, but they don’t actually ever take possession (stock on a shelf, have inventory, etc.) of the product. The retailer only pays for the product after the consumer pays for and receives the order. Drop shipping is advantageous to retailers because they do not assume much risk since they do not take possession of the product. However, the profit margins for drop shippers are usually lower than utilizing other wholesalers because the wholesaler assumes all the risk.
Truck jobbers are wholesalers that make calls to retailers carrying goods on a truck. They carry a small inventory of the same product or small product lines, such as milk or bread. Because they have inventory in the truck, they can stop at a retailer, take the order, and deliver it within the same call. Truck jobbers are most often used for perishable foods that cannot sit in a warehouse waiting to be ordered.
Manufacturer’s Agents or Representatives
The final, and perhaps least common, type of wholesaler is a manufacturer’s agent or manufacturer’s representative. Unlike the other types of wholesalers mentioned above, agents do not take possession of any product at any time. Rather, manufacturer’s agents are independent contractors who act as salespersons for multiple manufacturers to sell similar (but not competing) products to retailers. The agent provides advantages to both to the manufacturer and the retailer. This is particularly true for smaller manufacturers where the expense and management of a sales force would likely not be feasible. Rather, an agent can take on the responsibility of working with the retailers or wholesalers to sell the product.40
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following best describes wholesalers?
1. Businesses that buy in bulk at discounted prices and sell to retailers
2. Online stores in offline spaces
3. The final link between manufacturers and consumers
4. Businesses that produce goods and services
2.
Your friend Jesus wants to start a retailing business but doesn’t think he can afford space, nor does he wish to travel and make sales calls to retailers. Which of the following might be the best warehousing option for Jesus?
1. Rack jobber
2. Specialty wholesaler
3. Cash-and-carry wholesaler
4. Drop shipper
3.
The type of wholesaler that offers the most complete range of services is known as a ________.
1. rack jobber
2. cash-and-carry wholesaler
3. limited-service wholesaler
4. general-merchandise wholesaler
4.
Which type of wholesaler utilizes independent contractors as liaisons between manufacturers and retailers?
1. Manufacturer’s agents
2. Rack jobbers
3. Truck jobbers
4. Full-line wholesalers
5.
________ are companies that agree with retailers to display and sell products in-store.
1. Rack jobbers
2. Cash-and-carry wholesalers
3. Drop shippers
4. Truck jobbers | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.05%3A__Wholesaling.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain the impact of growing competition and global dynamics.
• Discuss the complexity of regulatory requirements.
• Discuss the challenges of technology evolution.
Growing Competition
Prior to 2019, most of us did not give much thought to the supply chain or its channel members. We went to the store and were welcomed with endless aisles of the products we were used to purchasing. However, when the COVID-19 pandemic hit, the entire country became more in tune with channel members. Wholesalers were not unaffected by the disruption that the pandemic caused channel members, and new trends are on the horizon for wholesalers. Let’s take a look at these recent trends that affect wholesaling.
Wholesalers are a central link in the economy and supply chain. The industry is facing tough competition with new as well as nontraditional wholesalers entering the market. Just as consumers are demanding more convenient shopping experiences and increased value in products and services, retailers are demanding the same from their intermediaries. Wholesalers must find innovative and competitive business models to compete.
The Impact of Global Dynamics on the Supply Chain
Globalization has been integrating global markets for the past several decades. And supply chains have had to adjust to keep up with these changes. With products available from around the world at lower costs and retailers demanding faster deliveries, many wholesalers have expanded their operations in response to the rise of the global economy. This comes with its own set of challenges, such as an expanded sales force and the need to understand other economies, cultures, and languages.
More recently, it has become apparent in the United States and around the world that supply chain participants were not prepared for disruptions such as those seen during the COVID-19 pandemic. Shortages of workers, products, containers, and long-haul truck drivers have proven to the industry that some major changes need to occur.
Regulatory Requirements and Complexity
With advancements in technology (and the need for consumer security) as well as the growing global economy, regulatory requirements also increase—and become more complex. Wholesalers must understand such requirements in order to conduct business legally. For example, wholesalers need a special license to distribute restricted goods, such as alcohol, controlled drugs, firearms, and pesticides. Depending on the type of transportation mode being used—such as tractor-trailers hauling containers—special licensing may need to be obtained.
Wholesalers also have a large responsibility when it comes to disposing of waste. More specific government regulations in regard to wholesalers include the Sale of Goods Act, which requires goods sold to be safe and include clear directions.41 The government has also enacted various rules to protect consumers and to be able to trace products.
Consumer Protection
Caveat emptor (Latin for “let the buyer beware”) was a long-standing motto in commercial transactions, one that implies the buyer purchases at their own risk. However, consumer protection laws are now woven into the fabric of the economy. Regulations help keep sellers honest and consumers protected. In general, consumer protection regulations exist to prevent unethical or dangerous business practices throughout the distribution channel. These practices range from false advertising to predatory lending to scams and frauds.42 Some of these will be discussed later in the chapter.
Product Traceability
Product traceability refers to the ability to track all processes for a product, from the procurement of raw materials to production, consumption, and disposal. Increasing numbers of consumers want to know exactly where their products are coming from and whether they are ethically sourced.43 Aside from consumer demand, it is a crucial part of the distribution channel as product recalls become more common.
For example, on January 6, 2022, the US Department of Agriculture (USDA) announced a recall of over 25,000 pounds of ground beef.44 Because of product traceability, the specific ground beef under the recall was able to be traced to a specific location, production date, and lot. Without product traceability, there may have been no way of knowing where the ground beef came from, forcing consumers to discard purchases of product that was not tainted. Additionally, product traceability helps combat counterfeit products by finding the originating source.
Link to Learning: Traceability Standards
The GS1 Global Traceability Standard defines what is minimally acceptable for full supply chain traceability. It establishes a full system that traces products end to end. Read more about the standards and see how it’s applied to food.
Challenges of Technology Evolution
The advancement and increased use of technology has brought about both challenges and opportunities for wholesalers. Product traceability has become increasingly easier, for example. Orders are easier to make and track. However, technology is expensive and comes with a learning curve for new users. The increased demand of consumers and retail customers requires wholesalers to keep up with technological advancements to stay competitive.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
What does caveat emptor translate to in English?
1. Buyer beware
2. Manufacturer beware
3. Retailer beware
4. Consumer protection
2.
Justia saw on the news that chicken was recently recalled by the US Food and Drug Administration (FDA). The news anchor specified which sell-by dates, manufacturer, and retailers were affected. Justia doesn’t understand how the FDA can know, with such specificity, which chickens were affected. How would you describe to Justia this specificity?
1. Increased competition
2. E-commerce
3. Caveat emptor
4. Product traceability
3.
Which of the following is NOT an advantage of product traceability?
1. It makes it easier to trace counterfeit goods.
2. It makes it easier to trace tainted food.
3. It creates less work for distribution channel members.
4. It makes it easier for consumers to know where products come from.
4.
Which of the following is NOT a growing trend in wholesaling?
1. Decreased government regulations
2. Increased competition
3. Increase in globalization
4. Increase in technological advances
5.
Which regulation requires goods sold to be safe and include clear directions?
1. Sale of Goods Act
2. Food and Drug Act
3. Caveat Emptor
4. Better Business Bureau | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.06%3A__Recent_Trends_in_Wholesaling.txt |
Learning Objectives
By the end of this section, you will be able to:
• Discuss ethical issues in retailing.
• Discuss ethical issues in wholesaling.
Ethical Issues in Retailing
As with any business entity, ethical issues arise in both retailing and wholesaling. It can be easy to find oneself in an ethical dilemma while trying to meet consumer demands and stay competitive. There are several prominent ethical issues that arise specifically with retailing and wholesaling.
Because retailers are the final link between manufacturer and consumer, ethical issues often arise in the practices used toward consumers. Common issues in retail include deceptive or misleading marketing, poor treatment of consumers, and misleading sales tactics.
Unethical Practices Used by Retailers
Although there has been a considerable rise in the number of consumers and advocacy groups calling out unethical business practices, many retailers still attempt to use tactics to sway consumers into purchasing products. Truly Organic, a retailer based in Miami Beach, Florida, came under attack by the Federal Trade Commission (FTC) in 2019 for misleading consumers into believing their products were 100 percent organic, which wasn’t entirely true.45 The case stated that Truly Organic was guilty of false or misleading advertising, an unethical marketing practice by which consumers are given false or misleading information about a product or service.
Misleading or manipulative sales tactics is another common unethical practice used by retailers. Misleading sales tactics involve misleading the consumer with untrue information regarding a product or service. Subscription services used to be notorious for misleading sales tactics as they offered a service or product for a free trial but did not include in the promotion that the consumer would be charged every month after a free trial. There are many regulations that require such companies to disclose this information.
Ethical Issues in Wholesaling
Just as retailers may face the temptation to be unethical toward consumers, wholesalers often find themselves in an ethical dilemma with their retail customers. Two common ethical issues that arise in wholesaling surround fairness and pricing.
Fairness and Billing
Fairness can certainly be a subjective term. What you and your sibling may each deem as fair is based on your individual perspectives and opinions. In wholesaling, and commerce in general, the government has enacted regulations to maintain fairness in business practices. You have probably heard the term “monopoly.” In the United States, monopolies are considered unfair business practices and thus are largely against FTC regulations. If one or a few businesses control all of an industry, the laws of supply and demand cease to exist because one company controls both. In the wholesaling industry, the same rules apply. If a wholesaler requires a retailer to sign very specific contracts that they will use no other wholesaler, the retailer is at the mercy of the wholesaler when it comes to everything surrounding their business’s livelihood.
Just as with fairness, wholesalers also need to pay close attention to their billing practices. Wholesalers and retailers agree on the billing method to be used in their contract. However, it is unethical for wholesalers to bill retailers for product never shipped or received, damaged product without recourse, or product not ordered.
Companies with a Conscience: Trader Joe’s
In 1967 in Pasadena, California, the first Trader Joe’s was opened. Today, the retail grocery chain has 505 stores in over 42 states as well as an online presence. Trader Joe’s has always been committed to improving sustainability in its channel. Unlike many competitors in the grocery industry, Trader Joe’s donates 100 percent of its unsold products. It does not allow certain controversial products in the manufacturing of its private-label goods and continues to make organic products more accessible. Additionally, the company has removed more than 6 million pounds of plastic from packaging and continues to have high rates of employee satisfaction.46 The ethical decisions of Trader Joe’s involve relationship building throughout the supply chain to ensure that each channel member upholds the high ethical standards that help enhance the customer experience.
There are other supermarkets known for ethical practices. These include Natural Grocers, Sprouts, Costco, and Whole Foods.47
18.08: Chapter Summary
This chapter explores two important members of the distribution channel and value delivery system: wholesalers and retailers. Both add value to the product by ensuring assorted merchandise is available when and where customers want it and at an acceptable price. Retailers buy products from manufacturing firms or wholesalers and provide them for sale to the consumer.
Retailers buy in bulk, hold inventory, offer convenient hours for shoppers, supply services, and collect and share feedback from consumers with other members of the distribution channel. Retailers may have a storefront; non-store retailers usually sell through direct mail and catalogs, vending machines, direct selling, online sites, TV home shopping, and telemarketing. Retail strategy includes identifying target audiences, choosing location(s), providing a product assortment, and pricing.
Wholesalers buy goods in bulk at a discount from a manufacturer or other distribution channel member and sell them to retailers for a higher price. They are often called “middlemen” because they link the manufacturer to the retailer. Unlike retailers, wholesalers do not interact with the final consumer, and they do not have highly visible physical locations accessible to end consumers. Wholesalers engage in a variety of business practices including buying, storing, selling, transporting, financing, and even marketing.
Just as in all marketing strategies, retailers and wholesalers contend with changes in consumer behavior and expectations, technological advances, complex regulations, channel member availability, and international dynamics. Of the regulations, most are intended to protect consumers from unethical or dangerous products and business practices. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.07%3A__Ethical_Issues_in_Retailing_and_Wholesaling.txt |
Example and Directions
Words (or words that have the same definition) The definition is case sensitive (Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages] (Optional) Caption for Image (Optional) External or Internal Link (Optional) Source for Definition
(Eg. "Genetic, Hereditary, DNA ...") (Eg. "Relating to genes or heredity") The infamous double helix https://bio.libretexts.org/ CC-BY-SA; Delmar Larsen
Glossary Entries
Word(s) Definition Image Caption Link Source
automatic vending the use of an electronic device that dispenses a product
cash-and-carry wholesalers wholesalers that offer a limited line of fast-moving goods that they sell to retailers for cash
category killers large superstores, most often chains stores, that are bigger, cheaper, and more convenient than competitors
category management grouping similar products into categories based on customer usage
central business district (CBD) the commercial and business center of a given city or town
convenience store a small retail business that stocks a limited range of everyday items such as groceries, snacks, soft drinks, tobacco, toiletries, and lottery tickets
department stores larger retailers that have separated areas—or departments—for similar product lines
digital wallets software-based systems that allow for secure transactions
direct mail solicited or unsolicited advertising of products and services to prospective customers through the mail
direct selling a marketing strategy that involves selling products and services directly to the consumer in a non-retail setting
discount store retailer that sells a broad range of products at lower prices than competitors
drop shippers a wholesaler business model where retailers use suppliers to ship products directly to the end consumer
factory outlets retailers that offer overstocked merchandise at discounted prices
false or misleading advertising an unethical marketing practice by which consumers are given false or misleading information about a product or service
freestanding retail locations store retailers that are not attached to any other retailer or establishment
full-service wholesalers wholesalers that offer retailers the most complete range of services, such as buying, selling, storage, transportation, sorting, and financing
general-merchandise (full-line) wholesalers wholesalers that offer an extensive list of merchandise for sale
gross margin net sales minus the cost of goods sold
intermediaries companies that act as liaisons between the buyer and seller
keystone pricing a pricing strategy that doubles the price from the wholesaler or manufacturer
limited-service wholesalers wholesalers that offer a limited range of services to retailers to increase value
maintained markup the actual markup on the merchandise that is sold to the consumer
manufacturer’s agents independent contractors who act as salespeople for multiple manufacturers to sell similar (but not competing) products to retailers
markdown a price decrease for a product that is at the end of its life cycle or season
markup the amount added to the cost retailers purchase goods for
merchandise the goods that are being offered for sale by a retailer
merchant wholesalers wholesalers that engage in buying, storing, and physically handling products in large quantities and selling those products in smaller quantities to retailers
non-store retailers retailers that operate outside of traditional brick-and-mortar locations
off-price retailers retailers that provide high-quality goods at lower prices
omnichannel marketing utilization of multiple distribution channels
omnichannel strategy manufacturer strategy that uses multiple distribution channels to distribute a product
online retailing a business model that allows consumers to search and purchase products remotely over the Internet
original markup the markup a business has decided upon at the onset of the offering, which includes planned sales and overhead
product traceability the ability to track all processes for a product from the procurement of raw materials to production, consumption, and disposal
rack jobbers wholesalers (or manufacturers) that agree with retailers to display and sell a product in a retail store
regional shopping centers commonly referred to as “malls”; collection of stores that offer general merchandise or fashion-oriented offerings
retailing the process of selling goods and services to consumers
social commerce a blend of e-commerce and social media
specialty stores retailers that focus on selling a single type of product or a single product line
specialty wholesalers wholesalers that focus on a limited line of products but carry the line in some depth
store retailer a traditional brick-and-mortar establishment where products are displayed for customers to purchase
strip malls classified by an attached row of retail stores offering both products and services
supermarket retailer that mostly focuses on a product mix of grocery items but also carries household and personal items and offers limited services
superstores very large retailers that have characteristics of both supermarkets and department stores
telemarketing the attempted sale, or marketing, of goods and services to potential customers via telephone
television home shopping a business practice in which products or services are sold via television
truck jobbers wholesalers that make calls to retailers carrying goods on a truck
warehouse clubs retailers that sell goods in bulk at discounted prices
wholesaling the business of buying goods in bulk at a discount from a manufacturer or other distribution channel member and selling them retailers for a higher price | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.09%3A_Key_Terms.txt |
1 .
Define direct consumer marketing channels and indirect consumer marketing channels. List an example of each type and explain the difference between them.
2 .
The shift to online shopping has challenged many retailers who had only a brick-and-mortar location. One of the industries hit hardest by changes in consumer behavior is travel agencies because travelers can access much of the necessary pricing information themselves and then purchase tickets directly from the airlines. Name two additional store retailers that have virtually disappeared because of non-store retailing.
3 .
Markup is a term used by retailers to explain how much revenue comes from the difference between the cost of acquiring a product and the price it is sold for. Why do florists usually mark up their products 80% while grocers generally mark up their products 15%?
4 .
How does location matter for a wholesale business?
5 .
Is it ethically acceptable for a jewelry store to advertise \$50 diamond-studded heart necklaces for Valentine’s Day and then tell customers who come to the store that the \$50 necklace is out of stock but a \$75 option is in stock?
18.11: Critical Thinking Exercises
1 .
According to PR Newswire, more than 40 percent of the overall revenue from the multimodal distribution market is due to roadway logistics. Give three reasons why retailers and wholesalers depend largely on roads—rather than rail, air, or water—to send and receive products. Why do roads create the greatest transportation-based revenue for businesses and lowest costs for consumers?
2 .
Thanks to retailers and wholesalers and their strategies, products may be distributed in various ways. What are two examples of consumer products that are sold by retailers, and what is the corresponding distribution strategy?
3 .
Most firms today take advantage of multimodal transportation, especially those that source and distribute products internationally. List three reasons why multimodal transportation makes sense financially for a retailer like Amazon that operates in a time-sensitive marketplace.
18.12: Building Your Personal Brand
Have you ever worked in a grocery store stocking shelves, worked at your campus bookstore, or waited on customers at a restaurant or drive-through? Working in retail is a fantastic resume booster. Not only have you advanced your knowledge of the business world, but you have also worked closely with demanding customers and management in a retail environment. Learning to serve customers, following training and rules, being part of a successful job interview, and holding a job outside of school are all highly coveted experiences. According to the Skills You Need website, the most important employability skills include “getting along with and working well with other people” and “being reliable and dependable: doing what you say you will by the deadline you have agreed [to] and turning up when you are meant to be there.”48 Create or revise your resume to include the applicable skills.
18.13: What Do Marketers Do
C.H. Robinson is a third-party logistics provider headquartered in Eden Prairie, Minnesota. Many businesses outsource elements of distribution, warehousing, and fulfillment services to companies such as C.H. Robinson. Like wholesalers, logistics providers, also an intrinsic part of the value delivery system, operate largely outside of the public eye.
Reach out to one of the 297 C.H. Robinson locations and ask if you can speak to someone about recent supply chain trends for a college course assignment. Your questions may include the following:
• How does technology impact the supply chain?
• What is the biggest industry you work with that depends on supply chain partners?
• How has the COVID-19 pandemic impacted product availability and distribution efforts?
• What does a typical day at C.H. Robinson consist of?
• What special training do I need to work in supply chain logistics?
• What is a typical salary for a professional new to C.H. Robinson?
• Do you have an internship program?
18.14: Marketing Plan Exercise
Complete the following information about the company and products/services you chose to focus on as you develop the marketing plan throughout the course. You may need to conduct research in order to obtain the necessary information.
Instructions: Using the Marketing Plan Template file you created from the Marketing and Customer Value assignment and expanded upon in Strategic Planning in Marketing, Market Segmentation, Targeting, and Positioning, Marketing Research and Market Intelligence, Products: Consumer Offerings, Pricing Products and Services, Integrated Marketing Communications, and Distribution: Delivering Customer Value, complete the following section of your marketing plan:
• Budgeting
• Action Programs
• Controls to Monitor Progress
Submit the marketing plan to your instructor for grading and feedback. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.10%3A_Applied_Marketing_Knowledge-_Discussion_Questions.txt |
Ace Hardware
With annual sales of more than \$400 billion in the United States, the home improvement market has no shortage of eager shoppers. While Home Depot and Lowe’s dominate the market in terms of sales, Ace Hardware dominates by number of locations and customer satisfaction.49
What started in 1924 as a way for the independent hardware retailer to buy inventory like the “big guys,” saving money based on volume, has grown into one of the largest and most well-known retailer-owned cooperatives. Founded by a group of Chicago hardware store owners who wanted to save money and enable the smaller hardware store to compete, is now a worldwide leader in home improvement.
Ace prides itself on being the local neighborhood hardware store. Its major niche in the market is to provide the best service to customers. To this end, Ace has always hired knowledgeable staff to help answer questions, locate products, and provide advice. Ace buys inventory according to the needs and wants of its local consumers, but its real niche is in customer service. Generally, a customer isn’t in the store for more than five minutes before a friendly, red-shirted Ace employee is asking if they need help.
Early on, Ace wanted to set itself apart based on its helpful and friendly service. Playing on this value proposition and looking to build brand awareness, Ace crafted a very catchy ad campaign, which has solidified the Ace brand. Back in the 1970s and 1980s, Ace became known by its famous jingle, “Ace is the place with the helpful hardware man.” This jingle is still being used today, and you can see it here.
Because retailers must execute well on all the marketing mix variables, for a retailer like Ace to be successful, it needs to understand its customers in the local market. In doing so, it can also identify the best location for the store in order to meet the needs of those customers and how they travel around town. Ace knows the customers well, so it is able to set prices and provide products according to local needs.
One of the founding principles of Ace is that each store should be locally owned and operated. Because of this, Ace is embedded in the communities they serve. You will often find the local Ace team stepping in to help with community projects or sponsor local sports teams. The stores work with independent producers to stock locally made products.
Over the past decade, retailing has seen significant changes in how consumers shop. Amazon has swiftly transformed and dominated retailing. Many independent brick-and-mortar retailers have been unable to compete with the convenience of online ordering and at-home delivery.
And with the onset of the COVID-19 pandemic in 2020, retailers everywhere were scrambling to adapt. Ace quickly transformed into an online as well as in-store retailer. Through a quick revamp of its website, Ace was able to offer its customers the ability to order and pay online with options to either pick up at the store or have the product(s) delivered to their home. Home delivery was fulfilled by the local Ace Hardware employees.
Another advantage to Ace Hardware is the services it provides. Making keys, sharpening lawn mower blades and chains for chain saws, repairing screens, and mixing customer paint have allowed Ace to go the extra mile for items customers must come to the store for.50
Case Questions
1 .
Ace fulfills many of the marketing mix variables. What are some of the marketing activities of a local Ace Hardware store?
2 .
What is the retail classification of Ace Hardware?
3 .
How does Ace Hardware differentiate itself from the big-box stores like Lowe’s and Home Depot?
4 .
How was Ace Hardware able to adapt to the digital age and work with consumers who were not shopping in-store during the height of the COVID-19 pandemic? | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.15%3A_Closing_Company_Case.txt |
1. Precycle (website), accessed September 2, 2022, https://www.precyclenyc.com/.
2. Kim Souza, “Nielsen: Consumers Will Want More Local Foods in 2020,” Talk Business & Politics, October 29, 2019, https://talkbusiness.net/2019/10/nie...foods-in-2020/.
3. Jason Fernando, “What Is a Distribution Channel in Business and How Does It Work?,” Investopedia, Dotdash Meredith, updated May 12, 2022, https://www.investopedia.com/terms/d...on-channel.asp.
4. Evangelos Christou and Chryssoula Chatzigeorgiou, “Adoption of Social Media as Distribution Channels in Tourism Marketing: A Qualitative Analysis of Consumers’ Experiences,” Journal of Tourism, Heritage & Services Marketing 6, no. 1 (2020): 25–32, https://doi.org/10.5281/zenodo.3603355.
5. “Our Locations,” Target Corporate, Target Brands, accessed September 2, 2022, https://corporate.target.com/about/locations.
6. Tony Hernández and David Bennison, “The Art and Science of Retail Location Decisions,” International Journal of Retail & Distribution Management 28, no. 8 (2000): 357–367, https://doi.org/10.1108/09590550010337391.
7. “Walmart Services,” Walmart.com, accessed September 2, 2022, https://www.walmart.com/services.
8. Susan Meyer, “The History and Evolution of Retail Stores: From Mom and Pop to Online Shops,” BigCommerce Blog, BigCommerce, last modified July 15, 2022, www.bigcommerce.com/blog/retail/.
9. “Retail Industry Sectors: Types of Retail,” Domain (Industry) Knowledgebase, TechnoFunc, accessed September 2, 2022, https://www.technofunc.com/index.php...ypes-of-retail.
10. “Amazon Go,” Amazon.com, accessed September 2, 2022, www.amazon.com/b?ie=UTF8&node=16008589011.
11. “Company Overview,” Corporate Homepage, Publix Super Markets, accessed September 2, 2022, https://corporate.publix.com/about-p...mpany-overview.
12. “About NACS,” NACS, accessed September 2, 2022, https://www.convenience.org/About-NACS.
13. Daniel Gross, “The Almighty Dollar (Store),” Slate, June 13, 2009, https://slate.com/business/2009/06/d...recession.html.
14. “About Sawgrass Mills,” Sawgrass Mills, Simon Property Group, accessed September 2, 2022, https://www.simon.com/mall/sawgrass-mills/about.
15. “Carvana Debuts Flagship Car Vending Machine in Atlanta,” Investor Relations, Carvana, November 18, 2020, https://investors.carvana.com/news-r...2020-110046117.
16. “10 Oldest Mail Order Catalogs in the World,” Oldest.org, last modified May 17, 2022, https://www.oldest.org/artliterature...rder-catalogs/.
17. Jake Rossen, “15 Things You Might Not Know about QVC,” Mental Floss, August 12, 2015, https://www.mentalfloss.com/article/...know-about-qvc.
18. Carmen Ang, “Timeline: Key Events in the History of Online Shopping,” Visual Capitalist, updated October 6, 2021, https://www.visualcapitalist.com/his...line-shopping/.
19. “Do Not Call,” Federal Communications Commission, last modified June 22, 2016, https://www.fcc.gov/general/do-not-call.
20. Patrick Gleeson, “What Is a Normal Markup Percentage?,” Small Business, Chron.com, updated March 8, 2019, https://smallbusiness.chron.com/norm...age-80750.html.
21. Janette Sadik-Khan, “A Plea for Fifth Avenue,” New York Times, January 9, 2017, https://www.nytimes.com/2017/01/09/o...th-avenue.html.
22. Mall of America (website), MOAC Mall Holdings, accessed September 2, 2022, https://www.mallofamerica.com/.
23. “U.S. Shopping-Center Classification and Characteristics,” ICSC, International Council of Shopping Centers, January 2017, https://www.icsc.com/uploads/researc...SIFICATION.pdf.
24. International Council of Shopping Centers, “U.S. Shopping-Center Classification.”
25. Shari Waters, “Pros and Cons of the Different Types of Retail Locations,” LiveAbout, Dotdash Meredith, updated February 6, 2020, https://www.thebalancesmb.com/types-...ations-2890244.
26. “What Is Omnichannel Marketing: Definition, Tips, and Examples,” Marketing Evolution, accessed September 2, 2022, https://www.marketingevolution.com/k...ls/omnichannel.
27. Hokey Min, “Exploring Omni-channels for Customer-centric E-tailing,” Logistics 5, no. 2 (2021), May 25, 2021, https://doi.org/10.3390/logistics5020031.
28. Liz Flora, “Macy’s Doubles Down on Social Commerce,” Glossy, Digiday Media, August 4, 2020, https://www.glossy.co/beauty/macys-d...cial-commerce/.
29. Jessica Wong, “The Latest E-commerce Trend: What You Need to Know about Social Commerce,” Forbes Communications Council, Forbes Media, December 3, 2021, https://www.forbes.com/sites/forbesc...cial-commerce/.
30. “How Social Media Shopping Is Changing the Retail Game,” Floor Covering News, February 8, 2022, https://www.fcnews.net/2022/02/how-s...e-retail-game/.
31. UWorx Group, “Online Stores in Offline Spaces,” LinkedIn, October 13, 2021, https://www.linkedin.com/pulse/onlin...s-uworx-group/.
32. “Walgreens Introduces New Digital ‘Order Ahead’ Drive-Thru Shopping Experience,” Walgreens Newsroom, Walgreens, May 4, 2020, https://news.walgreens.com/press-cen...experience.htm.
33. “The Rise of Same-Day Package Delivery,” Our Blog, Parcel Pending, last modified September 2, 2021, https://www.parcelpending.com/blog/t...kage-delivery/.
34. Kozmo.com (website), Wayback Machine, Internet Archive, archived April 8, 2000, https://web.archive.org/web/20000408...www.kozmo.com/.
35. “MetroPost,” United States Postal Service 2014 Annual Report to Congress, United States Postal Service, 2014, https://about.usps.com/publications/...4_tech_071.htm.
36. Julia Kagan, “Digital Wallet Explained: Types with Examples and How It Works,” Investopedia, Dotdash Meredith, updated April 10, 2022, https://www.investopedia.com/terms/d...tal-wallet.asp.
37. “Wholesaling,” Encyclopedia Table of Contents, Inc., updated January 5, 2021, www.inc.com/encyclopedia/wholesaling.html.
38. “Our Products,” Sysco, accessed September 2, 2022, www.sysco.com/Products/Produ...ategories.html.
39. “Sysco’s Customers Performance,” CSI Market, accessed September 2, 2022, https://csimarket.com/stocks/markets...e.php?code=SYY.
40. “Manufacturers’ Agents,” Encyclopedia Table of Contents, Inc., updated January 5, 2021, www.inc.com/encyclopedia/man...rs-agents.html.
41. Claire Shaw, “Legal Requirements for Wholesalers and Retailers,” Everyday Law Blog UK, Rocket Lawyer, June 9, 2021, https://www.rocketlawyer.com/gb/en/b...and-retailers/.
42. Ana Gonzalez Ribeiro, “What Are Consumer Protection Laws?,” Investopedia, Dotdash Meredith, updated August 1, 2022, https://www.investopedia.com/article...ction-laws.asp.
43. Ash Baggott, “What Is Product Traceability?,” Holded Blog, Holded, November 14, 2019, https://www.holded.com/blog/what-is-...t-traceability.
44. “Interstate Meat Dist. Inc. Recalls Ground Beef Products due to Possible E. Coli 0157:H7 Contamination,” Food Safety and Inspection Service, U.S. Department of Agriculture, January 6, 2022, https://www.fsis.usda.gov/recalls-al...e.-coli-o157h7.
45. “Truly Organic Inc.,” Legal Library, Federal Trade Commission, updated September 19, 2019, https://www.ftc.gov/enforcement/case...ly-organic-inc.
46. Heather Seely, “8 Most Ethical Supermarkets for Guilt-Free Grocery Shopping,” Tamborasi, February 8, 2021, https://www.tamborasi.com/ethical-supermarkets/.
47. Seely, “8 Most Ethical Supermarkets.”
48. “Employability Skills: The Skills You Need to Get a Job,” Skills You Need, accessed September 2, 2022, https://www.skillsyouneed.com/Tedgen...ty-skills.html.
49. “DIY and Home Improvement in the U.S.: Statistics & Facts,” Statista, September 12, 2022, https://www.statista.com/topics/1732...e-improvement/.
50. “Local Ace Hardware Store Services,” Ace Hardware, accessed September 2, 2022, www.acehardware.com/store-services. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/18%3A_Retailing_and_Wholesaling/18.16%3A_References.txt |
According to Accenture, a global professional services company, “Sustainable organizations are purpose-led businesses which inspire their people and partners to deliver lasting financial performance, equitable impact, and societal value that earns and retains the trust of all stakeholders.”1 Sustainability is about doing business without negatively affecting society. Without sustainable practices, companies may negatively contribute to issues in the environment, inequality, and social injustice.2 Consumers, employees, and other interested parties are now holding businesses to higher standards: 74 percent of consumers agree that conducting ethical practices is an important reason to support a company or brand; 65 percent of employees believe that businesses should leave their employees better off through work; and 81 percent of sustainable investment indexes outperformed comparable benchmarks in 2020.3 According to John Streur, CEO of Calvert Research and Management, “In 2021, we see companies almost competing with one another on sustainability.”4 The proof is in the pudding. A 2021 report by the Weinreb Group found that “there were more chief sustainability officers, or CSOs, recruited in 2020 than in the previous three years combined.”5
Barron’s, a respected source on financial news, creates a 100 Most Sustainable Companies list each year. In 2021, the popular kitchen supply store Williams-Sonoma stood out above others because its board consisted of 67 percent women.6 Williams-Sonoma, Inc.’s 2021 impact report outlined that, at the time of publication, 46 percent of the company’s products supported one or more of its environmental and social initiatives, and the company aims to increase that amount to 75 percent by 2030.7 In 2020, Williams-Sonoma joined the United Nations (UN) Global Compact and aligned its corporate goals with the UN Sustainable Development Goals.8 To learn more about Williams-Sonoma’s sustainablity efforts and plans, review its 2021 impact report, its corporate responsibility web page, and the sustainability section of its website.
Williams-Sonoma is just one example of a company with a vision and a commitment to sustainability. Other companies known for their sustainability commitments and practices include Microsoft, VMware, Intuit, Apple, and Mastercard.9
In the future, all global companies must commit to, assess, and validate the goal of sustainability; as you'll learn in this chapter, it's becoming a significant factor in how businesses evaluate success. Those companies that fully embrace this commitment will stand out most to consumers and achieve business success.
19.01: Sustainable Marketing
Learning Objectives
By the end of this section, you will be able to:
• Define sustainable marketing.
• Explain the three pillars of sustainable marketing.
Environmental Sustainability
Consumers increasingly demand purpose over profits from the brands they work for, shop for, invest in, and allow within their communities. In fact, an IBM study on consumer behavior indicated that 57 percent of consumers would alter consumption habits to be more environmentally conscious, and nearly 80 percent of survey respondents indicated that sustainability is essential.10 Therefore, sustainability is a business imperative. As defined by Philip Kotler, Professor Emeritus at Northwestern University, “the concept of sustainable marketing holds that an organization should meet the needs of its present consumers without compromising the ability of future generations to fulfill their own needs.”11 In other words, products and services consumed today should not harm consumers of tomorrow.
Sustainable marketing infuses purpose into socially conscious brands, products, and services. Marketing seeks to differentiate the brand based on mission. Sustainable brands define a purpose, orient to consumers' and related groups' values, align purpose with strategy, and reflect sustainability in marketing. This business strategy gives brands an edge with those who seek brands that align with their values.
The three pillars of sustainable marketing include environmental sustainability, social good, and economic return (see Figure 19.2). You may have heard the term “planet, people, and profits,” which describes the three pillars of sustainable marketing. Businesses meet the needs of the marketplace without sacrificing the future viability of the world. Companies are increasingly following an environmental, social, and governance strategy and use these ESG pillars to guide their work. The topic extends beyond sustainability into doing what’s right socially and ethically. Companies report their quantitative and qualitative results in annual disclosures to share the impact of ESG efforts.
Link to Learning: ESG
Are you interested in learning more about the elements of ESG? Here are several sources where you can read more:
The environmental pillar focuses on reducing a company’s impact on the environment. For example, companies may reduce their environmental impact through recycling, reusing, minimizing waste, and increasing energy efficiency. Stonyfield Organic has a commitment to the environmental pillar with its plans to cut carbon emissions by 30 percent by 2030. In addition, it plans to focus on energy conservation, waste reduction, and sustainable packaging and logistics.12 Additionally, Subaru of Indiana Automotive operates a “green lean” manufacturing facility that is designed as zero landfill. Subaru recycles or composts 98 percent of its manufacturing waste, and the remaining 2 percent is incinerated as waste to fuel.13
The social pillar considers a company’s consumers and employees and creates a more inclusive environment for its community. Much of the work in the social pillar occurs through responsive programs for employees that increase well-being. However, companies can also reach beyond their walls to impact their communities.
Link to Learning: The Story behind State Bags
There are many examples of companies that work to support their communities. One example is State Bags. State Bags donates a bag filled with school supplies for each bag purchased. It also partners with nonprofits such as Seeds of Peace, Time’s Up, and Bottomless Closet to support women and children from underserved communities.14 You can learn more about State Bags and its work by visiting the company’s website or following the State Bags Instagram account.
Adobe is another example of a company that works inside and outside its organization to effect social change by partnering with local nonprofits in the communities in which its employees live and work. Adobe has a rich diversity, equity, and inclusion initiative within its organization that empowers diverse voices. For example, Gen Create is a digital space for diverse thinkers and creators to collaborate to change the world for the common good. Finally, Adobe provides access to its software to underserved communities to work toward greater equity regardless of location.
Link to Learning: Adobe Gen Create
Check out Adobe’s Gen Create program, a place for young creators to collaborate and effect change.
The economic pillar (governance pillar) of sustainability concerns profitability and business ethics. Businesses cannot be sustainable if they are not profitable, which is a clear key sustainability performance indicator. Companies can demonstrate success in the economic pillar through proper governance structures, risk management, and compliance. Proper governance over voting, legal compliance, and accounting standards shows people that companies are following their obligations. Governance also includes business ethics, anticompetitive practices, and tax transparency. At the end of the day, is the company doing the right thing for its investors and all of its interested parties?
Governance structures can be examined to ensure diversity of leadership that aligns with the company’s various interested and influential groups. Fortune and Refinitiv partnered to develop a Measure Up initiative that aims to bring transparency to businesses diversity, equity, and inclusion work of the Fortune 500. The initiative reviewed measures such as policies, employee resource groups, percentage of minorities in board or leadership positions, and salary parity to determine a score for companies. Companies such as Microsoft, Target, and Gap rated highly on the criteria, demonstrating advanced diversity, equity, and inclusion.15 Amazon publishes its representation statistics sorted by job level to illustrate how it is making progress on creating a more diverse workforce.
Link to Learning: Measure Up
Learn more about the Measure Up initiative to help businesses build fair and inclusive work spaces. In its work, it ranks companies based on their diversity, equity, and inclusion (DEI) disclosure and performance metrics.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
If a brand develops a diversity, equity, and inclusion initiative, which pillar of sustainability is addressed?
1. Environmental
2. Social
3. Economic
4. All of the above are correct.
2.
How does sustainable marketing differentiate from other types of marketing?
1. It is more expensive.
2. It is only for people who care about the environment.
3. It is a business imperative.
4. It is rooted in purpose. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.00%3A_In_the_Spotlight.txt |
Learning Objectives
By the end of this section, you will be able to:
• Explain how the parties in traditional and sustainable marketing are different.
• Define the different objectives in traditional and sustainable marketing.
Differences between Traditional and Sustainable Marketing
Traditional marketing takes a customer approach and focuses on product, price, place, and promotion for a target audience. Sustainable marketing takes a “stakeholder approach” and considers customers, shareholders, employees, vendors, interest groups, media, and the general public. These groups are interested in the brand’s sustainability agenda, which becomes the focus of the marketing effort.
Costco is an example of a company that takes this kind of approach to its sustainability marketing. Costco describes its sustainability agenda this way: “Sustainability to us is remaining a profitable business while doing the right thing.” Costco honors three sustainability principles: “For Costco to thrive, the world needs to thrive. We are committed to doing our part to help. We focus on issues related to our business and where we can contribute to real, results-driven positive impact. We do not have all of the answers, are learning as we go and seek continuous improvement.”16 These principles demonstrate a commitment to all of Costco’s interested parties. For example, Costco pays its employees above market rates to honor its commitment to support its employees and communities.
Link to Learning: Costco Sustainability Commitment
Costco publishes its commitment to sustainability on its website as a way to be fully transparent about its sustainability strategy. The company shares its code of ethics, mission statement, sustainability principles and responsibilities, and development goals. You can read more about its commitment here.
Traditional business strategy indicates that shareholder return is the primary obligation of companies. However, a sustainable business strategy suggests that companies have a corporate social responsibility (CSR) to use their platforms to improve the world and not cause harm. Furthermore, an environmental, social, and governance (ESG) strategy holds companies accountable for their sustainability work. An ESG strategy uses an organization’s influence to make positive change and develop metrics to show how purpose is measured.
Businesses have always been required to comply with environmental laws, but sustainable companies put the environment in the center, designing for the environment. New Belgium Brewery in Fort Collins, Colorado, is a foremost example of a company designed around the environment. The brand is committed to clean energy to combat climate change. New Belgium Brewery has three principles woven into its business model to keep management accountable for its sustainability goal of becoming carbon neutral by 2030. Those principles are to
• reduce emissions by creating electricity from wastewater, collecting heat while brewing to reuse, and earning LEED certification on its properties;
• work with interest groups to advocate for improved climate policies; and
• improve recycling in the United States through its cofounded glass recycling coalition.17
Link to Learning: New Belgium Brewery Commitment to Climate
Learn more about New Belgium Brewery sustainability strategies by reading about its commitment to climate.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Traditional marketing takes a customer approach, while sustainable marketing takes a(n) ________ approach.
1. shareholder
2. value
3. economic
4. cost-savings
2.
In sustainable marketing, companies innovate now and do which of the following for the future?
1. Earn money
2. Ensure viability
3. Save money
4. Earn profits | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.02%3A_Traditional_Marketing_versus_Sustainable_Marketing.txt |
Learning Objectives
By the end of this section, you will be able to:
• Describe the various benefits of sustainable marketing.
• Explain why sustainable marketing is a business imperative.
Purpose-Driven Strategy
A purpose-driven strategy is when companies work to make a difference in their community through their decisions and support of environmental programs. There are numerous benefits to developing a purpose-driven business strategy, including enhanced brand recognition, reduced costs, improved effectiveness, easier regulatory compliance, waste minimization, and enhanced return on investment (ROI) (see Figure 19.3).
Harvard Business School Professor Rebecca Henderson indicates that businesses must adopt a shared value orientation. Doing well and doing good are mutually dependent. Companies cannot do good if they are not doing well. Companies with strong ESG programs outperform the market long-term despite the short-term investment.18
PepsiCo developed its sustainability program under former CEO Indra Nooyi. Nooyi understood the benefits of purpose to planet, people, and profits. PepsiCo focuses on agriculture, water, packaging, product, climate, and people to create systemic change within PepsiCo and the broader environment. The results of this work are outlined in an annual sustainability metrics report that holds PepsiCo accountable for its purpose. The company earned over \$70 billion in net revenue in 2020, illustrating the shared value opportunity.19
Link to Learning: PepsiCo and Its Purpose-Driven Strategy
Read more about PepsiCo and its commitment to sustainability in its 2021 ESG Report and its ESG Performance Metrics report.
Enhanced Brand Recognition
Brands that incorporate purpose earn enhanced brand recognition for that work, which can become a competitive advantage and result in higher profitability. Patagonia is a prime example of a company known for its sustainability programs. Its founder, Yvon Chouinard, envisioned the company as a pillar of sustainability and set the stage for other companies to follow. Patagonia sells outdoor wear that is durable and designed around sustainability. The brand will repair its goods to avoid customers purchasing new ones when they reuse them. It also donates 1 percent of annual sales to good causes worldwide. Finally, Patagonia facilitates an Action Works website that connects interested parties with local environmental protection groups to promote activism.20 These sustainability activities are critical to ensuring that Patagonia is a brand with a purpose.
Reduced Costs
Sustainability practices often carry an up-front investment; however, over time, these costs typically return a cost reduction. A survey by Bain & Company indicates five times revenue growth among all brands scoring highest on sustainability.21 This is possible because sustainability programs mean reduced materials, recycling programs, and lower use of natural resources, which are all good for the planet and reduce production costs.
For example, Ben & Jerry’s stopped using plastic straws and spoons in its stores.22 This reduction strategy was good for the planet while also decreasing expenses for the business, demonstrating that planet and profits can be mutually beneficial. Founders Ben Cohen and Jerry Greenfield set forth a product, economic, and social mission for the business. In response to the success seen from Ben & Jerry’s, the “triple bottom line” mission has been adopted by many organizations that seek to align profit, planet, and people.
Improved Effectiveness
Sustainability practices can improve organization effectiveness. For example, investing in human capital is an area of importance because potential new employees consider purpose, well-being, culture, diversity, equity, and inclusion when deciding where to work. Mastercard is an organization that prioritizes its people, and it sees improved effectiveness as a result. Mastercard saw an average annual profit growth of nearly 19 percent in the 10 years it connected purpose to profits.23
The Anya Hindmarch company brought attention to the excessive use of plastic bags in 2007 with its “I Am Not a Plastic Bag” campaign.24 The campaign sought to replace plastic bags with an eco-friendly alternative that reuses existing materials. Since 2007, companies have followed suit with reusable tote bags that serve as both a sustainability measure and a means of advertising their brands.
Link to Learning: Anya Hindmarch and Antidote
Anya Hindmarch’s “I Am Not a Plastic Bag” campaign was a collaboration with Antidote, a creative agency, that gained loads of press coverage. That publicity contributed to the U.K. decision to charge for plastic bags. Read more about the campaign from the Anya Hindmarch website and Antidote’s website. When you’re finished, take a moment to be inspired by Anya Hindmarch and her recent sustainability fashion product, a collection of biodegradable leather bags.
Easier Compliance with Regulators
In addition to returning value to shareholders, companies are also responsible for following international, national, and local laws. A sustainability agenda goes beyond companies’ legal obligations and extends to serving the world better. This strategy eases compliance by going above and beyond what is expected by government agencies. For example, the US Environmental Protection Agency (EPA) provides regulatory information by sector to provide businesses with clear regulatory compliance criteria.
Link to Learning: EPA Regulatory Information
If you’re interested in learning more about the EPA’s regulatory information and its compliance criteria per industry, check out this regulatory information by business sector.
Waste Minimization
Environmental measures can reduce waste, creating a healthier planet. Many organizations are focused on waste minimization to demonstrate a commitment to the Earth. For example, McDonald’s has set a waste minimization goal of having 100 percent guest packaging derived from renewable, recycled, or certified sources by 2025. This is impactful because single-use plastics are a known source of waste, particularly in the oceans where plastic outnumbers fish in some regions.25
Enhanced Return on Investment
As with any business strategy, goals and metrics are also important with a sustainability strategy. Organizations expect a return on investment when resources are committed, even with sustainability work. Organizations can look at several factors to determine the financial return on sustainability efforts. They will evaluate the increased interest from investors, changes in brand value, and revenue. Additionally, organizations can consider the well-being of their employees, their impact on the planet, and their efforts to improve the world as another key measure of success (see Figure 19.4).
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following is the sustainability strategy benefit when a company becomes known for its sustainability efforts and it becomes a competitive advantage?
1. Increased brand recognition
2. Reduced costs
3. Waste minimization
4. Enhanced return on investment
2.
Which benefit of sustainability occurs when brands show their shareholders an economic return on sustainability programs?
1. Increased brand recognition
2. Reduced costs
3. Waste minimization
4. Enhanced return on investment | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.03%3A_The_Benefits_of_Sustainable_Marketing.txt |
Learning Objectives
By the end of this section, you will be able to:
• List the principles of sustainable marketing.
• Explain how these principles are put into practice.
Consumer-Oriented Marketing
Consumer-oriented marketing is a solution focused on a customer’s need. The product is designed to solve a problem, distributed for convenience, and promoted as a solution to the consumer’s needs. A consumer-oriented marketing strategy requires extensive marketing research to understand the consumer’s needs. Organizations then must design the four Ps around those needs. Finally, a consumer-oriented marketing strategy requires customer service and feedback to ensure that consumer needs are met. Zappos is known for having a customer-oriented marketing strategy. With its strategy, it focuses heavily on customer service and has assembled an extensive team that solves any issue a consumer may face with an order.
Link to Learning: Consumer-Oriented Marketing
Numerous companies are well-known for their consumer-oriented marketing approaches. Read this succinct summary on what Starbucks, Patagonia, Zappos, Amazon, and Nordstrom are specifically doing to understand their customer’s journey and build customer loyalty.
For a deeper look into Zappos’ strategy, read this article from Entrepreneur that outlines nine steps to Zappos’ exceptional service.
Customer-Value Marketing
Customer-value marketing seeks to provide the customer with maximum utility compared to competitors. Customers make a value exchange when purchasing a product, so they naturally ask themselves whether the cost is worth the value of the transaction. This does not mean that all customer-value products and services are inexpensive. In fact, the high price of a product might be an intentional choice by the company to attract a specific target audience. For example, Tiffany & Co. has created a luxury brand around its jewelry’s value to customers.
Innovative Marketing
Innovative marketing uses media as a method for capturing shoppers’ attention and converting them into customers. The ever-changing digital landscape offers myriad possibilities to engage an audience in an innovative marketing strategy. For example, Shedd Aquarium in Chicago took its penguins on a field trip to meet their aquatic roommates for a virtual event in 2020. During the field trip, the Aquarium broadcasted on social media and delighted animal lovers worldwide while promoting the aquarium.
Mission Marketing
Mission-driven marketing aligns purpose and brand. With mission-driven marketing, a company uses its core mission and purpose as the focus of its marketing strategies.
A mission-driven organization can be a for-profit or nonprofit, governmental or nongovernmental, public or private, or religious entity.
Charity: Water is an outstanding example of a mission-driven organization that uses marketing to inspire its audience. Its mission is to bring clean water to communities that face a clean water crisis. The founder, Scott Harrison, has his own story that inspires the mission, and storytelling is integral to implementing charity: water’s marketing strategy.
Link to Learning: Charity: Water
Charity: water has raised more than \$640 million and funded more than 91,000 water projects in 29 countries. Watch this video about Scott Harrison’s journey and witness his storytelling abilities as he shares his personal experience around the impact of dirty water.
Societal Marketing
Societal marketing is most akin to the sustainability strategies discussed in this chapter. A societal marketing strategy fulfills social responsibility obligations while satisfying customer needs. Athleta, a Gap company, sells premium-priced performance apparel to female athletes. Its product is designed for a target audience of women in motion. Athleta launched a Power of She campaign to celebrate the diversity of women and serve as a societal marketing effort. Additionally, approximately 70 percent of Athleta’s apparel is manufactured from recycled and sustainable materials.26
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
________ uses media as the lead for awareness building.
1. Consumer-oriented marketing
2. Customer-value marketing
3. Innovative marketing
4. Mission marketing
2.
Which of the following puts a purpose at the center of marketing and is implemented most often using storytelling?
1. Consumer-oriented marketing
2. Customer-value marketing
3. Innovative marketing
4. Mission marketing | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.04%3A_Sustainable_Marketing_Principles.txt |
Learning Objectives
By the end of this section, you will be able to:
• Understand issues related to purpose-driven marketing.
• Articulate best practices in purpose-driven marketing.
Brand Purpose
Brands satisfy many people, from employees to investors, to customers, to suppliers, and to the communities that they serve. These parties ask for more than a good product at a fair price. They ask for a brand to stand for something more than the product or service being offered. Brand purpose is developed deep in the DNA of an organization and should be infused in everything the brand says and does.
Accenture conducted a global survey of 30,000 consumers about brand purpose. It found that 62 percent of customers want companies to take a stand on issues such as sustainability, transparency, or fair working conditions. Furthermore, the brand purpose should align closely with the consumer’s values to create an optimal purchase choice. Consumers are willing to switch brands if their values do not align.27
The challenge runs deep. People expect brands to connect to a deep purpose; however, they are intolerant of brands who do so inauthentically. Walmart is an example of a company that received backlash from customers because of what they felt was not authentic. In May 2022, Walmart launched an ice cream flavor for the upcoming Juneteenth holiday. Consumers felt that Walmart was trying to sell a product rather than honor an important day in history.28 This example demonstrates the importance of holding a purpose at the center of the brand instead of using it as a means of selling a product.
Bombas knows how to build purpose into its DNA. The innovative, purpose-driven brand built its business on donating socks and underwear to homeless shelters with each purchase. As of this writing, Bombas has donated over 5 million items with the help of 3,500 impact partners in every state.29 Its message is simple: you buy socks, they give socks. Purpose is at the heart of Bombas’s organizational mission, and it will share it with anyone who will listen.
Link to Learning: More about Walmart and Bombas
There are numerous articles about Walmart and the Juneteenth backlash. Here are two worth reading so you can gain better insight into the customer’s perspective:
CNN Business interviewed the founders of Bombas to learn more about their work to provide homeless people with socks. Check out this video about how Bombas integrates purpose and business.
Brands That Put Purpose First
The brands that put purpose at the center create ways for their customers to experience purpose. Dove was a pioneer in brand purpose when it developed its Campaign for Real Beauty. Marketing research uncovered that young girls were impacted by media’s standards of beauty. Dove took this insight and decided to tackle a systemic societal problem. This multi-decade campaign led to a celebration of all types of beauty, redefining how we think of women and impacting self-esteem. Customers could experience purpose because the Campaign for Real Beauty was all about them. The Campaign for Real Beauty was more than just advertising; it reflected who Dove wanted to be in the world.30
Link to Learning: Dove’s Campaign for Real Beauty
Dove’s campaign included several ads and commercials. Seeing examples of how companies focus on purpose will help your creativity in future marketing jobs. Explore the commercials created by Dove:
• Real Beauty Sketches, a commercial that artistically compares the gap between self-perception with perception from others
• Anti-photoshopping film Evolution, a very popular and viral commercial of a behind-the-scenes look at what happens with beauty ads
• Reverse Selfie, a commercial about the impact of social media on young girls’ self-esteem
Why was this campaign so successful? There are numerous articles and opinion pieces that provide insight into its success. Read these two out for a sampling:
Purpose-driven brands speak up, even when it’s difficult or costly to do so. If you read the news, you may see brands taking a stand on social issues. Russia’s war on Ukraine in 2022 urged several American companies to cease operations in Russia. It can be costly to cease operations in a country as large and populous as Russia, but companies such as Starbucks and McDonald’s decided that their purpose was more important than their profits in this case.
Brands with purpose are intentional about inclusion. While exclusivity can be an effective marketing tactic for luxury brands, purpose-driven brands know that inclusivity is paramount. Procter & Gamble is known as a company that weaves inclusion into the fabric of its organization, from its hiring practices to the use of its paid media.
Link to Learning: Procter & Gamble Prioritizes People
Visit Procter & Gamble’s (P&G) “Explore Our Stories” web page to view how the company prioritizes inclusion and creates opportunities for all people. Read three to five stories and consider what P&G is saying about who and what it values. Also, look at the partners that P&G collaborates with to create change in its communities.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.
1.
Which of the following concepts are related to purpose-driven marketing?
1. Transparency
2. Sustainability
3. Fair working conditions
4. All of the above are correct.
2.
Which of the following is a best practice of purpose-driven brands?
1. Standing up for what’s right
2. Good advertising
3. Telling everyone about their purpose
4. Being profitable | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.05%3A_Purpose-Driven_Marketing.txt |
Sustainable marketing is an effort by companies to run their business to serve the customers of today while preserving the world for the customers of tomorrow. Companies are increasingly following an ESG, or environmental, social, governance, structure to bring transparency to their sustainability efforts. Sustainable marketing uses the main drivers of traditional marketing such as customer satisfaction, but it considers a broader set of impacted groups. There are myriad benefits to sustainable marketing as it relates to brand equity, financial measures, and government compliance. Purpose-driven brands stand for something more than what they sell, and they build their organization around that stated purpose.
19.07: Key Terms
Example and Directions
Words (or words that have the same definition) The definition is case sensitive (Optional) Image to display with the definition [Not displayed in Glossary, only in pop-up on pages] (Optional) Caption for Image (Optional) External or Internal Link (Optional) Source for Definition
(Eg. "Genetic, Hereditary, DNA ...") (Eg. "Relating to genes or heredity") The infamous double helix https://bio.libretexts.org/ CC-BY-SA; Delmar Larsen
Glossary Entries
Word(s) Definition Image Caption Link Source
consumer-oriented marketing marketing strategies focused on customer needs and solving their problems
corporate social responsibility (CSR) sustainable business strategy where companies use their platform to do good, improve the world, and be socially accountable to their customers and other interested parties
customer-value marketing marketing strategies in which a company works to provide the customer with maximum value compared to competitors
economic pillar (governance pillar) the sustainability pillar that concerns profitability and business ethics
environmental pillar the sustainability pillar that focuses on reducing a company’s impact on the environment
environmental, social, and governance strategy a strategy that holds companies accountable for a sustainability strategy
ESG pillars the three pillars of environmental, social, and governance that guide corporate sustainability work
innovative marketing marketing strategies that use media as the method for capturing prospects’ attention and converting them into customers
mission-driven marketing marketing strategies that align purpose and brand by using the corporate core mission and purpose as their focus
purpose-driven strategy strategy in which companies work to make a difference in their communities through their decisions and support of environmental programs
social pillar the sustainability pillar that focuses on creating an inclusive environment for the community
societal marketing a marketing strategy focused on fulfilling social responsibility obligations while also satisfying customer needs
sustainable marketing a marketing strategy that infuses purpose into socially conscious products and services
19.08: Applied Marketing Knowledge- Discussion Questions
1 .
If we agree with the notion that products and services of today should not harm people of tomorrow, how would you redesign your favorite snack food to be more sustainable?
2 .
The three pillars of sustainability are environmental sustainability, social good, and economic return. Why are these three pillars intertwined? What would happen if you had one without the other two?
3 .
Research New Belgium Brewery. How do the company’s sustainability practices benefit the environment, communities, and its financial bottom line?
4 .
Waste minimization is a key sustainability strategy. Take a look in your kitchen cabinets and describe the products that could be made with less waste.
5 .
Review the trailer for “This is a True Story” on Charity: Water’s website. How has the nonprofit gamified its mission?
19.09: Critical Thinking Exercises
1 .
Design a sustainability campaign. Select a product or service that is not currently sustainable and redesign it to be sustainable. Consider how you would change the form, function, packaging, distribution, and/or target audience.
2 .
Evaluate a purpose-driven brand. Review the website for the footwear company Allbirds. Describe how sustainability is at the heart of its mission as a company.
3 .
Review the Edelman Trust Barometer. What does this research tell you about the importance of brand trust? Discuss the brands you trust and describe the actions that they take to invoke that trust. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.06%3A_Chapter_Summary.txt |
A workplace study by Blue Beyond Consulting shows that 8 in 10 employees say that it’s important that their employer’s values align with their values. Furthermore, more than 75 percent of respondents indicated that they expect their employer and business to be a force for good.31
Consider what you value and how you would like your future employer to honor those values. Research a few organizations to find an employer that closely aligns with your values. Write about how you might integrate your personal purpose with that of your employer to make the change that you wish to see in the world.
19.11: References
1. “Shaping the Sustainable Organization,” Accenture, accessed September 7, 2022, https://www.accenture.com/us-en/insi...e-organization.
2. Alexandra Spiliakos, “What Does ‘Sustainability’ Mean in Business?,” Business Insights (blog), Harvard Business School Online, October 10, 2018, https://online.hbs.edu/blog/post/wha...ty-in-business.
3. Accenture, “Shaping.”
4. Lauren Foster, “Barron’s 100 Most Sustainable Companies,” Barron’s, February 11, 2022, https://www.barrons.com/articles/mos...es-51644564600.
5. Ibid.
6. Ibid.
7. Williams-Sonoma Inc., Good by Design: Impact Report 2021, July 2022, https://sustainability.williams-sono...act-Report.pdf.
8. Ibid.
9. Diana Olick, “These Are the 10 Greenest Large Companies of 2022, according to Just Capital,” CNBC, April 22, 2022, https://www.cnbc.com/2022/04/22/10-g...t-capital.html.
10. Karl Haller, Jim Lee, and Jane Cheung, “Meet the 2020 Consumers Driving Change,” Research Insights, June 2020, https://www.ibm.com/downloads/cas/EX...2077%20percent.
11. Adanma Onuoha, “What Is Sustainable Marketing?” Network for Business Sustainability, October 12, 2021, https://nbs.net/articles/what-is-sus...ble-marketing/.
12. Black Morgan, “101 Companies Committed to Reducing Their Carbon Footprint,” Forbes, August 26, 2019, https://www.forbes.com/sites/blakemo...h=6c30ded6260b.
13. Roben Farzad, “Subaru of Indiana: America’s Greenest Carmaker,” Business Week, June 7, 2011, https://www.nbcnews.com/id/wbna43269332.
14. Home page, State Bags, accessed March 10, 2022, https://statebags.com/?source=pepper...kId=3897953715.
15. “Measure Up Initiative: Fortune and Refinitiv Partnership (Methodology),” Fortune, accessed March 20, 2022, https://fortune.com/franchise-list-p...p-methodology/.
16. “Costco Wholesale Corporation Sustainability Commitment,” Costco, accessed December 28, 2021, https://www.costco.com/sustainabilit...&reloaded=true.
17. “Climate: Our Commitments,” New Belgium Brewing, accessed December 6, 2021, https://www.newbelgium.com/company/mission/climate/.
18. Natalie Chladek, “Why You Need Sustainability in Your Business Strategy,” Business Insights (blog), November 6, 2019, https://online.hbs.edu/blog/post/bus...ity-strategies.
19. PepsiCo, 2021 ESG Summary Overview,” June 28, 2022, https://www.pepsico.com/docs/default...rsn=c61afffa_0.
20. “Environmental & Social Footprint,” Patagonia, accessed April 29, 2022, https://www.patagonia.com/our-footprint/.
21. Jenny Davis-Peccoud and Magali Deryckere, “How Sustainable Brands Add Value,” Bain & Company, October 4, 2021, https://www.bain.com/insights/how-su...ue-snap-chart/.
22. “Sustainable Packaging,” Ben & Jerry’s, accessed December 6, 2021, https://www.benjerry.com/values/how-...able-packaging.
23. “Resources to Change the Working World,” World at Work, accessed December 6, 2021, https://worldatwork.org/workspan/art...-at-mastercard.
24. “I’m Not a Plastic Bag,” Anya Hindmarch, accessed April 29, 2022, https://us.anyahindmarch.com/pages/i...-a-plastic-bag.
25. Sara Napolitano Matz, “Companies Working to Reduce Single-Use Plastics,” U.S. Chamber of Commerce Foundation, accessed January 3, 2019, https://www.uschamberfoundation.org/...e-use-plastics.
26. Gap, Inc., “Global Sustainability Report,” 2020, https://www.gapinc.com/CMSPages/GetA...8509b20c7e7b64.
27. Rachel Barton, “From Me to We: The Rise of the Purpose-Led Brand,” Accenture Strategy Research Report, December 5, 2018. https://www.accenture.com/us-en/insi.../brand-purpose.
28. Jordan Valinsky, “Walmart Apologizes for Selling Juneteenth Ice Cream,” CNN Business, updated May 24, 2022, https://www.cnn.com/2022/05/24/busin...eam/index.html.
29. Home page, Bombas, accessed June 7, 2022, http://www.bombas.com/.
30. “Dove Campaigns,” Dove, accessed June 7, 2022, https://www.dove.com/us/en/stories/campaigns.html.
31. Beyond Blue Consulting, “‘The Great Resignation’: A Majority of Employees Would Quit Their Job - And Only 1 in 4 Workers Would Accept One - If Company Values Do Not Align with Personal Values.” Cision PR Newswire, October 20, 2021, https://www.prnewswire.com/news-rele...301404919.html. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/03%3A_Product_Promotion_Price_and_Place/19%3A_Sustainable_Marketing-_The_New_Paradigm/19.10%3A_Building_Your_Personal_Brand.txt |
1.1 Knowledge Check
1. c. Place utility addresses convenience in terms of where a consumer can purchase your company’s product.
2. b. Marketing is a complex activity and includes creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
3. a. Employees are internal parties.
4. a. Customer equity is the total potential profits a company earns from its current and potential customers.
5. d. The aim of successful customer relationship management is to produce high customer equity.
1.2 Knowledge Check
1. d. The 4Ps of marketing are product, price, place, and promotion.
2. b. Price is the amount consumers pay for a product or service.
3. c. Place—sometimes known as distribution—involves focusing on how and where to deliver the product to consumers most likely to buy it.
4. d. Place— sometimes known as distribution—involves focusing on how and where to deliver the product to consumers most likely to buy it.
5. d. In the realm of promotion advertising, direct mail, social media communications, trade shows, events, coupons, and media choices are among the many aspects considered.
1.3 Knowledge Check
1. a. Materials considers the availability of the resources needed for product. It is the element that looks at the supply.
2. b. Market intermediaries are retailers, wholesalers, and others in the distribution channel who help deliver products to the end user.
3. a. The competition has to be assessed to see how well and to what degree the need you hope to fulfill is currently being addressed.
4. b. The technological domain is responsible for emerging production technologies as well as the creation of new innovations that make possible new products.
5. d. The social and cultural domain is concern with such things as social trends, attitudes, and opinions.
1.4 Knowledge Check
1. a. The product concept is concerned most with the quality of the product a company intends to sell.
2. c. The societal marketing concept involves meeting consumers’ and businesses’ current needs while simultaneously being aware of the environmental impact of marketing decisions on future generations’ ability to meet their needs.
3. c. The goal of the selling concept was simple: beat the competition. Customer needs and satisfaction took a back seat to beating the competition.
4. a. This order accurately represents the evolution of marketing.
5. b. During the societal era, it was recognized that society as a whole, had to be considered in all activities.
1.5 Knowledge Check
1. d. A delight need is an added value you may get from the seller without prior expectation or request for the same.
2. c. The customer is the individual or business that purchases the product or service. The consumer is the user of the product or service.
3. d. The value that a product promises to deliver is called the value proposition.
4. a. The benefit(s) to the customer or consumer relative to the cost is known as value.
5. c. The exchange process is designed to allow for the transaction to occur without either party feeling like the other has benefitted at its own cost.
1.6 Knowledge Check
1. d. All the other choices are ways of achieving customer relationship management. Offering the lowest price of all companies on the market is not.
2. b. Customer relationship management (CRM) is the means through which companies track, manage, and analyze customer interactions.
3. b. Customer loyalty is a customer’s willingness to repeatedly return to a company to conduct business.
4. d. Collaborative CRM is sharing customer data with outside companies. It can give the company a fuller perspective on customers by collaborating with other companies in order to obtain data to which it would not otherwise have access.
5. a. A customer loyalty program offers rewards, discounts, and other special incentives designed to attract and retain customers. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/20%3A_Answer_Key_Chapter_1.txt |
2.1 Knowledge Check
1. b. The mission statement sums up in a few sentences what the company does, who it serves, and what differentiates it from its competitors.
2. c. Corporate-level strategy covers the entire business in a complex organization in which there are multiple businesses, divisions, or operating units.
3. d. A business’s overall strategy encompasses the plans, actions, objectives, and goals that outline how the business will compete in its chosen markets given its portfolio of products or services.
4. b. A gap analysis is an internal analysis of a company or business unit used to identify deficiencies that may hinder its abilities to meet its goals.
5. d. Goals should be realistic and have a reasonable chance of being met.
2.2 Knowledge Check
1. a. The fact that the health club is the only facility in the area to offer water aerobics classes would be categorized as a strength in terms of a SWOT analysis.
2. a. The BCG matrix captures the market share and market growth of products in a portfolio of offerings.
3. c. A cash cow has high market share in a low-growth industry.
4. c. Opportunities are openings for something positive to happen if you can capitalize on them.
5. d. A company that pursues a product development strategy introduces new (and/or improved) products into the market to replace existing ones in order to improve its competitive position and sales.
2.3 Knowledge Check
1. d. In this paragraph of the executive summary, you would describe the current marketplace and industry sectors in which you sell your products and/or services, the trends affecting and influencing them, and the innovations currently taking place within the market.
2. c. In a SWOT analysis, strengths and weaknesses are factors that are internal to the organization.
3. c. A perceptual map suggests where your product or service stands in relation to the competition.
4. b. A SWOT analysis identifies key internal influences (strengths and weaknesses) and external influences (threats and opportunities).
5. d. Within the current marketing situation of your marketing plan, you should include a competitive analysis and a discussion of how competitors fare in the marketplace.
2.4 Knowledge Check
1. d. KPIs consist of a very focused selection of core variables that allow us to monitor the health/performance of the organization. We need enough indicators to evaluate the various critical aspects of the organization. We need to avoid having so many that the clutter obscures symptoms that should be highlighted.
2. a. We should always monitor KPIs on a continuous basis. Some information is only available periodically when financials are produced and production statistics are rolled up. The use of real-time dashboards can make it possible to monitor KPIs in real time. The faster we can get the data, the faster we can make adjustments (when required).
3. a. To calculate the CSAT score, take the total number of satisfied customers and divide that by the total number of responses. Then multiply that number by 100 to obtain the percentage. In this scenario, you add 500 and 300 to get 800. Then divide that by 1,825 to get .438. Multiple that by 100 for 44%.
4. d. A single data point in isolation tells us very little. However, we can compare the data point to other data points (for example, historical results, forecasts, operating tolerances, or industry averages) to judge our effectiveness.
5. d. We discussed the concept of lifetime customer value (LCV) in the text. Customer acquisition can be very expensive, especially with a missionary sell (e.g., convincing a customer that they have a need for an unknown product or service). Repeat purchases may not require any additional promotional expense. Happy customers also serve as brand ambassadors that spread the word about a company’s products/services. Negative reviews from brand ambassadors can be extremely damaging—we want to uncover any problems right away. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/21%3A_Answer_Key_Chapter_2.txt |
3.1 Knowledge Check
1. c. Complex buying behavior involves high involvement in the buying decision and the perception of significant differences between brands.
2. b. Marketing stimuli are those generated by the marketer and are comprised of the 4Ps of marketing—product, promotion, price, and place.
3. d. Purchase timing is the outcome of the thinking that takes place in the buyer’s black box. Samantha is stimulated to buy the mattress during the holiday weekend in order to take advantage of the sale.
4. b. Habitual buying behavior has low involvement in the purchase decision and doesn’t perceive much brand differentiation. If your regular brand isn’t available or another brand is on sale, you’ll probably buy the other brand.
5. c. Consumer buying behavior encompasses the actions you take before buying a product or service.
3.2 Knowledge Check
1. c. Situational factors influencing consumers are external factors that affect how consumers encounter and interact with a product, forming their opinions at that moment in time. Environmental factors such as aroma, lighting, music, and noise can either encourage or discourage the purchase of a product.
2. a. Culture refers to the values, ideas, and attitudes that are learned and shared among the members of a group.
3. b. The safety and security level of Maslow’s hierarchy of needs reflects the need to be safe from physical and psychological harm.
4. d. Selective distortion is the tendency of people to interpret information in a way that fits their preconceived notions.
5. b. The behavioral intention aspect of an attitude is what you as a consumer plan to do—buy the brand or not buy the brand.
3.3 Knowledge Check
1. c. They are evaluating the “bundle of attributes” of each venue.
2. a. Ra’Shana has detected a difference between her actual state (not having a functional car) and her desired state (having a car that runs).
3. c. Having identified that he needs a new laptop, Jason is searching for more information about different laptops and their capabilities.
4. b. Heuristics are types of preexisting value judgments that are used when people make purchase decisions.
5. c. It appears that Nathan and his husband have already done an information search and are now evaluating their new car alternatives.
23: Answer Key Chapter 4
4.1 Knowledge Check
1. c. Derived demand is a market demand for a good or service that results from a demand for a related good or service.
2. a. A B2B (or “business-to-business”) transaction is one that is conducted between one business and another.
3. c. B2B purchasing is more likely to involve complex negotiations concerning price, delivery schedules, technical specifications, etc., so personal selling plays a vital role.
4. c. The B2B market is more geographically concentrated in areas based on cost, access, and availability of resources.
5. d. DaVonte’s purchase of the lumber in connection with his business is a B2B transaction; the purchase of batteries for the smoke detector in his house is a B2C transaction.
4.2 Knowledge Check
1. c. Government markets make up the largest single business and organizational market in the United States.
2. a. A straight rebuy is making a routine purchase of a standard product or products with no modifications from a familiar supplier.
3. c. In a modified rebuy, the purchaser is buying goods that have been purchased previously but changes either the supplier or certain elements of the previous order.
4. c. The initiator is the individual within the buying center who first suggests the idea of purchasing a new product or service.
5. d. Buyers are those who have authority within the organization to select suppliers and negotiate and arrange the purchase terms.
4.3 Knowledge Check
1. c. The goals and objectives act as a major element as to what the business purchases.
2. a. Legal factors include laws, rules, and regulations with which a business or individual must comply.
3. d. Conditional factors include the present financial condition of the organization, as well as product/service availability.
4. b. Economic factors include the level of primary demand, the economic outlook, and the cost of money (i.e., interest rates).
5. d. The availability of the product or service plays a significant role in the buying decision, and availability is a conditional factor.
4.4 Knowledge Check
1. c. The purpose of a product specification is to provide a description and statement of the requirements of a product, the components of a product, the capability or performance of a product, and/or the service or work to be performed to create a product.
2. d. Stage 5 of the B2B buying process is proposal solicitation, in which qualified vendors are asked to submit proposals.
3. b. In Stage 2: Need description, the buying center will work to put some parameters around what needs to be purchased and develop a bill of materials.
4. d. In Stage 7: Order-routine specification, the B2B buyer negotiates the order, listing the technical specifications, the quantity needed, the expected time of delivery, etc.
5. a. Similar to consumer buying, the first stage in the B2B buying decision process occurs when someone identifies a problem that can be resolved through a purchase. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/22%3A_Answer_Key_Chapter_3.txt |
5.1 Knowledge Check
1. c. Starbucks researches the culture of the countries in which it operates so that beverages appeal to local tastes.
2. a. Psychographic segmentation divides consumers into different groups based on internal characteristics like personality, values, and beliefs.
3. c. Demographic segmentation groups consumers by focusing on traits such as age, gender, income, etc.
4. c. Garnier has segmented the market based upon the benefits sought by the consumer.
5. d. Just like our in-text example of Mirror, Peloton speaks to the personality of people who want to work out but can’t find the time to go to the gym.
5.2 Knowledge Check
1. c. Firmographics segments customers based on sets of characteristics such as industry, location, size, legal structure, and performance.
2. a. Technographic segmentation is based on the various hardware and software used by B2B customers.
3. c. Value-based segmentation (sometimes called tiering or profitability segmentation) groups customers according to the potential value they may bring to a business.
4. c. Firmographics segments customers based on sets of characteristics such as industry, location, size, legal structure, and performance.
5. d. Needs-based segmentation is based on the premise that a marketer should focus their limited resources on those customers that need the product and have the ability to purchase it.
5.3 Knowledge Check
1. b. Societies with a high degree of uncertainty avoidance compensate for this uncertainty by establishing rules, policies, and procedures, whereas societies with low uncertainty avoidance more readily accept change.
2. a. Infrastructure is the basic physical systems of a nation, such as roads, sewage treatment, communication, water treatment, etc.
3. d. In countries with a high masculinity ranking, men are intended to lead; women are supposed to follow.
4. c. Economic factors consider things like inflation, per capita income, unemployment, etc.
5. b. Masculinity/femininity assesses “masculine” values (such as achievement, ambition, and acquisition) versus “feminine” values like quality of life and service to others.
5.4 Knowledge Check
1. d. A market segment should be measurable—that is, you should be able to accurately determine the size of the market segment in terms of sales value or number of customers so you can decide whether, how, and to what extent you should focus your efforts on that segment.
2. c. A market segment should be substantial because it’s inefficient to waste resources to market the product or service to a segment too small to justify a company’s time.
3. a. Accessibility refers to the ability to reach customers in the chosen segment at an affordable cost, given the strengths and abilities of your marketing department.
4. d. Accessibility refers to the ability to reach customers in the chosen segment at an affordable cost, given the strengths and abilities of your marketing department.
5. c. A measurable market segment means that you can accurately determine the size of the segment in terms of either sales volume or number of customers.
5.5 Knowledge Check
1. c. Undifferentiated marketing treats all buyers or potential buyers as a homogenous group and creates one message for an entire audience.
2. a. A buyer persona is a semi-fictional representation of your ideal customer based on market research and real data about your existing customers.
3. c. Concentrated marketing (or niche marketing) is a subset of a market on which a particular product or service is focused. In Lefty’s case, it is focusing on left-handed people.
4. c. A differentiated marketing strategy focuses on the differences between segments and designs a specific marketing mix for each segment.
5. d. A niche market (or concentrated marketing) channels all marketing actions toward one well-defined segment of the market. In this case, the subset is people over the age of 55 who are in the market for an active adult lifestyle.
5.6 Knowledge Check
1. c. A positioning statement defines where your offering fits in the marketplace and why it is better than competitors’ offerings.
2. a. The STP process is an acronym for segmentation, targeting, and positioning.
3. b. Differentiated positioning is based on the differentiating characteristics or qualities that make your product/service/brand better than those of your competitors.
4. c. Determinant attributes are those attributes or factors that a customer uses in making their purchase decision.
5. d. A perceptual map is a visual diagram that shows how the average target market consumer perceives your product versus those of your competitors. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/24%3A_Answer_Key_Chapter_5.txt |
6.1 Knowledge Check
1. d. Marketing research is the process of collecting information from a variety of sources in order to make a good managerial decision.
2. b. A marketing information system is a collection of data that an organization uses to make marketing decisions.
3. b. Individuals uploading personal data into social media is part of the volume, velocity, and variety of data that makes up big data.
4. a. Although marketing research is helpful in providing the data necessary for successful business ventures, there is no guarantee that it will cause customer satisfaction.
5. c. Although a competitor’s information is interesting, your company would not have access to it, and therefore it would not be considered marketing research.
6.2 Knowledge Check
1. c. A response to a customer service survey by a customer would be external information.
2. a. Of the available answers, pricing of the competition would be a good source of information to have before setting Xin’s price.
3. d. A marketing information system is not a source of information—it is where the information is stored within a business.
4. d. A competitor’s website is an opportunity to learn more about the company and its resources, products, promotional plans, and pricing.
5. b. Internal data is data that already exists within a company’s database. Internal data includes sales records, product research, pricing comparisons, and other data compiled previously.
6.3 Knowledge Check
1. d. Deciding who to include in the research study is part of designing the sample.
2. a. A mailed survey can be sent to all households easily through a postal service.
3. c. The collection of data includes both primary (focus group and survey data) and secondary (journal articles and syndicated data).
4. d. A frequency analysis shows how many people reported each answer on a survey.
5. a. A cross tabulation shows the relationship of two different variables, so the researcher can see if there is correlation between the two.
26: Answer Key Chapter 7
7.1 Knowledge Check
1. a. Global market opportunities refer to the favorable conditions that allow companies to choose to expand globally.
2. c. Cultural barriers are a hindrance to international trade.
3. a. Cultural sensitivity involves a person’s ability to be aware of and appreciate cultural differences.
4. d. This advice to Ashia could not only be offensive to her dinner guest but would also cause poor business relationships.
5. b. Business politics vary greatly across cultures. Businesspeople must decide how far they are willing to adapt to the local expectations.
7.2 Knowledge Check
1. a. An exchange rate is the rate at which one country’s currency can be exchanged for that of another country
2. c. As stability increases in a country, the economy often improves.
3. a. Stereotypes are assumptions or generalizations made about an entire group of people.
4. d. An embargo is a complete halt of trading with a specific country or of a specific good.
5. b. The USMCA is a trade bloc agreement between the United States, Mexico, and Canada.
7.3 Knowledge Check
1. a. McDonald’s is a franchise.
2. c. Exporting is the easiest way in which to begin an international business.
3. a. Licensing is an agreement whereby one company can legally use the copyrighted material of another for a royalty fee.
4. d. A joint venture is a business arrangement whereby two or more companies create a single enterprise or project.
5. b. An international firm has centralized decision-making, meaning decisions are made in the home country headquarters.
7.4 Knowledge Check
1. a. A standardized strategy employs the same strategy for every market.
2. c. The degree to which a promotion strategy should change depends on the market.
3. a. “Real Magic” is Coca-Cola’s slogan in New Zealand.
4. d. The whole channel refers to all distribution channel members, including manufacturers, retailers, transportation, and wholesalers.
5. b. Singapore has the highest automobile prices due the country’s small size and limited infrastructure. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/25%3A_Answer_Key_Chapter_6.txt |
8.1 Knowledge Check
1. a. Choosing between standardization and adaptation strategies includes balancing internal capabilities like operations, sales, and customer service with external forces like competition and consumer demographic changes.
2. d. Constrained standards do not increase flexibility. Constraints, instead, limit options for companies and consumers.
3. d. A marketing adaptation strategy involves adjusting a company’s efforts, as well as its marketing mix, to increase its appeal and respond to consumers’ specific needs, tastes, or expectations. This must be done according to the company’s abilities and resources.
4. c. Adaptation strategies can increase production costs instead of reducing them.
5. b. Increasing a company’s customer base is a benefit associated with diversity marketing as an adaptation strategy.
8.2 Knowledge Check
1. d. Diversity marketing includes identifying different subsegments of consumers that share cultural and sociodemographic characteristics and creating advertisements to connect with them.
2. a. Diversity marketing is important because today’s marketplace is changing dramatically everywhere.
3. c. For companies to be successful in any market, the focus of diversity marketing should be consumer centric. This means putting targeted customers first regarding any decisions about a company’s goods, services, or experiences to create satisfaction and strengthen loyalty.
4. d. Diversity in market research is a good idea because it can help companies win over people from different segments of the population by providing better cultural and social information. This can reduce wrong assumptions and avert public relations missteps.
5. b. Tech-savvy and digital natives are not a sociodemographic segment; they are behavioral segments. Hispanic, Black, Asian, American Indian, and Alaskan Native people are among multicultural segments. Gen Xers, Zoomers, and consumers with disabilities are among sociodemographic segments.
8.3 Knowledge Check
1. d. Culture is described as all of these statements.
2. c. Values and attitudes are not examples of external expressions of culture. They are examples of internal expressions of culture.
3. b. Marketers must be careful using symbols as cultural expressions because they can have different meanings among different cultures.
4. c. An advertisement that speaks to personal accomplishments, independence, and assertiveness is appealing to individualism.
5. a. An advertisement that is visually appealing and emphasizes quality of life, people, and relationships is an example of femininity.
8.4 Knowledge Check
1. c. The Hispanic population is the largest multicultural segment in the United States based on 2020 US Census data.
2. b. A person from Puerto Rico or of Puerto Rican descent is both Hispanic and Latino/Latina. Hispanic is a language-based term describing somebody from a Spanish-speaking place, while Latino/Latina is a location-based term that identifies gendered individuals whose families originate in Latin America.
3. b. Acculturation is the process by which a person’s family cultural patterns change because of direct and constant contact with a different culture.
4. d. An overwhelming majority of Black people believe that race and community engagement are a major part of the Black identity.
5. a. Success requires connecting with each demographic on a personal and intimate level. This inevitably means that one must understand the cultural identities and the context within each population segment. Being successful with diversity marketing includes various multicultural and sociodemographic segments.
8.5 Knowledge Check
1. d. Sociodemographic marketing is a subcategory of diversity marketing. It intentionally targets certain audiences with attractive advertising and promotions based on shared social and demographic variables. Overlaying these two factors has several worthwhile benefits for marketers.
2. a. For marketers, focusing on the societal experience around belonging (acceptance, welcoming, support, and inclusion) is key for reaching the growing number of LGBTQIA+ consumers.
3. d. All of these are important steps to consider to be more successful in advertising to consumers based on their generations.
4. c. Use an approach that ensures the company’s efforts express humanity, authenticity, and inclusivity, which can involve consulting or hiring individuals who have a disability rather than using actors or models who do not.
5. b. It is projected that consumer spending will continued to be dominated by baby boomers. While this isn’t a new trend, it is certainly a trend that will continue through the 2030s as this generation ages out. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/27%3A_Answer_Key_Chapter_8.txt |
9.1 Knowledge Check
1. a. A haircut is a service because it cannot be touched, owned, or stored for later use.
2. c. An experience combines marketing, technology, and service to alter the consumer's perception.
3. a. A convenience product is widely available, has a low cost, and does not require a lot of consideration.
4. d. A bag is a supply that does not retain value on a balance sheet.
5. c. The customer seeks both the core product (the bike) and the online classes, warranty, customer service, and support (the augmented product) in order to stay fit.
9.2 Knowledge Check
1. b. Oreo's selection of flavors represents a product line because it encompasses multiple similar products.
2. c. A product mix contains all the products that a company sells.
3. a. An addition of a type of pizza would represent product line depth.
4. d. Product line depth refers to the number of products in a product line. Products must be similar or complementary to be part of the same product line.
5. b. Product line filling has the benefit of protecting a brand from competitors that might enter the market with a similar offering and utilizes the brand’s capacity to produce more products.
9.3 Knowledge Check
1. d. While profitability is measured along the product life cycle, it is not a stage of the product life cycle.
2. c. The product life cycle follows a product’s sales and profitability.
3. b. The growth stage is characterized by a rapid increase in sales.
4. c. Stable sales and profitability characterize the maturity stage.
5. c. Brands that are a fad are typically introduced, grow rapidly, and decline quickly.
9.4 Knowledge Check
1. b. The growth stage of the product life cycle is characterized by increasing distribution channels.
2. a. Pricing strategies are most common during the introduction stage of the product life cycle.
3. d. Harvesting and divesture are most common during the decline stage of the product life cycle.
4. c. Product and market modification are most common during the maturity stage of the product life cycle. LaToya is engaging in both product and market modification.
5. b. Expanding distribution, improving product quality, and messaging are most common during the growth stage of the product life cycle.
9.5 Knowledge Check
1. b. Brands often evoke positive feelings that allow a company to charge more for its product or service.
2. d. Brand value is the financial asset associated with a brand.
3. c. Brand equity is the additional value that a brand has over its competitors, while values, benefits, and attributes are all associated with brand positioning.
4. b. Whole Foods uses the 365 brand as a private label for its products.
5. d. The two brands collaborated on one offering.
9.6 Knowledge Check
1. b. Domino's is leveraging its brand to a new category of products.
2. a. A line extension retains the product category and brand.
3. a. Customers who frequently change brands are switchers.
4. d. Hard-core loyal customers primarily purchase one brand in the category.
5. c. Brand preference measures intended behavior.
9.7 Knowledge Check
1. c. Colors, fonts, and logos can capture attention.
2. d. A package as product indicates usability.
3. c. Packaging can provide safety from personal harm from the product.
4. c. The package displayed value to the consumer.
5. b. Customer experience is created when the package adds to the experience of consuming the brand.
9.8 Knowledge Check
1. d. Typically, wood is not used in grocery packaging.
2. d. Natural resources are part of the biological cycle.
3. c. Companies are trying to reduce packaging to only the necessary parts in their sustainability efforts.
4. d. Discarded packaging can be found in water sources, in landfills, and on the ground.
5. d. Biodegradation turns the product back into a natural resource that becomes a nutrient for plants. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/28%3A_Answer_Key_Chapter_9.txt |
10.1 Knowledge Check
1. c. With dynamically continuous innovation, some changes in consumer habits are necessary, but the changes aren’t as dramatic as with discontinuous innovation and are not as insignificant as in continuous innovation.
2. b. Remember, new-to-the-firm products aren’t new to the world, but they are a new product venture for the firm.
3. d. The laundry detergent is supposedly a current product made better.
4. b. With continuous innovation, the existing product undergoes only marginal changes and doesn’t alter consumer habits.
5. d. Revenue streams are the different sources from which a business earns money from the sale of its goods or services.
10.2 Knowledge Check
1. c. A prototype is an early model of a new product that R&D develops in order to be able to test the design.
2. b. Concept testing is a research method that involves determining how customers feel about the new product before actually launching it.
3. d. Commercialization is where the “rubber hits the road” and the company introduces the product to the market on a full-scale basis, involving production, marketing, distribution, and customer support.
4. b. In sales-wave research, consumers are initially allowed to try the product at no cost. They are then reoffered the product (or a competitor’s product) at a reduced price a number of times (i.e., sales waves). The point of this research is to see how many consumers select the new product and record their reported levels of satisfaction with the product.
5. d. The first stage in the new product development process is idea generation.
10.3 Knowledge Check
1. d. Product metrics are data measurements that businesses use to evaluate the success of a product.
2. b. Current year percentage of sales is a “quick and dirty” way to estimate the product’s future value.
3. c. Return on investment (ROI) is a performance measure used to evaluate the profitability of new product development.
4. c. Time to value is a critical metric that measures how long it takes new users to recognize the value of your product.
5. d. Annual recurring revenue (ARR) is the annual value of revenue generated from subscriptions and contracts.
10.4 Knowledge Check
1. c. Technological synergy is how much of a match there is between the existing technological skills of the firm and the technological skills needed to execute the new product initiative.
2. a. The study found that new product failure rates varied among industries, ranging from 35 percent for health care products to 49 percent for consumer goods.
3. b. The prolonged delay of a new product can have many implications: changing customer needs/wants, an economic downturn, rising unemployment rates, or even the evolution of different market segments.
4. d. In an effort to bring “something new” to the market, companies often include features that make the product more costly to produce.
5. a. Products that deliver real and unique benefits to customers are typically more successful than products that have few positive points of differentiation compared to existing products on the market.
10.5 Knowledge Check
1. d. Innovators typically buy new products as soon as they hit the market.
2. a. Product awareness is the first stage in the consumer adoption process, in which a company creates awareness that the product is available.
3. d. Communicability is the extent to which the benefits of a new product are likely to be noticed and discussed by consumers.
4. c. Laggards are more in tune with the past than the future, and they are skeptical of new ideas.
5. d. Consumers in the late majority category are typically slow to catch on to the popularity of new products or services. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/29%3A_Answer_Key_Chapter_10.txt |
11.1 Knowledge Check
1. c. The concept of service perishability states that services (such as airline tickets) cannot be stored in inventory for future use or sale.
2. a. Service intangibility refers to the fact that you can’t see or touch a service before it is performed.
3. c. Service variability may be defined as the changes in the quality of the same service provided by different service providers.
4. c. People-based services are those in which people, rather than equipment or machinery, play the major role in delivery, and within this classification, people-based services can be broken down further into services provided by unskilled labor (e.g., parking lot attendant), skilled labor (e.g., plumber), and professionals (e.g., attorneys and accountants).
5. d. Equipment-based services are those in which machinery or other forms of technology are used to perform the service tasks required by customers. Since there is no person involved in the parking service, the parking meter is considered an automated equipment-based service.
11.2 Knowledge Check
1. c. According to the service-profit chain model, customer loyalty drives profitability and growth.
2. a. Employee satisfaction is the extent to which employees are happy and/or content with their jobs and work environment.
3. c. According to the model, customer satisfaction (Step 5) and customer loyalty (Step 6) are related and directly linked.
4. c. Interactive marketing occurs when employees and customers interact. It is there where the promises made during external marketing are either kept, broken, or exceeded by employees.
5. d. According to the service-profit chain model, employee satisfaction is inversely related to employee turnover (i.e., an increase in employee satisfaction results in a decrease in turnover).
11.3 Knowledge Check
1. c. The knowledge gap represents the difference between what customers expect and what the company thinks they expect.
2. a. The policy gap is the difference between management’s perception of the customer’s needs and the translation of that understanding into service delivery policies and standards.
3. c. The customer gap is the difference between the customer’s expectations of the service and their perception of the experience itself.
4. c. According to the model, the five dimensions that would result in service excellence and lead to higher customer loyalty are reliability, assurance, tangibles, empathy, and responsiveness.
5. d. Tangibles represent the physical facilities, employees’ appearance, equipment, machinery, and information systems.
31: Answer Key Chapter 12
12.1 Knowledge Check
1. a. Artificial time constraints tell the consumer they will miss out if they don’t purchase right now.
2. c. To determine profit, total costs (fixed and variable) are subtracted from total revenue.
3. a. Perceived value is perceived benefits less perceived costs.
4. d. Price anchoring is a strategy that utilizes a psychological theory that buyers frame their price reference around the first piece of information they see.
5. b. The value that a buyer receives from an exchange takes into account the perceived benefits and costs of making the purchase.
12.2 Knowledge Check
1. c. Channels of distribution include the importance of understanding the value of a product through the lens of suppliers and retailers.
2. d. Compatibility refers to the consistency of pricing decisions with the other marketing mix elements.
3. a. Analyzing the critical Cs of pricing will help ensure the pricing strategies are set appropriately.
4. b. Cost does not only include the materials needed to produce a produce, but all other costs associated with doing business.
5. d. The five critical Cs of pricing include cost, customers, channels of distribution, competition, and compatibility.
12.3 Knowledge Check
1. c. The demand curve describes the relationship of demand and price for most goods and services.
2. b. Fixed costs do not change based on the number of units produced.
3. d. As demand declines for a product, it is generally expected that prices will also decrease.
4. a. Total costs are equal to fixed costs + variable costs.
5. d. Cross-elasticity of demand refers to the increase in demand for a substitute product when the price of a product increases.
12.4 Knowledge Check
1. c. Penetration pricing is setting an initially low price to capture as much market share as possible.
2. d. The break-even unit formula is Fixed Costs / (Unit Price + Variable Unit Cost)
3. a. $Break\;Even\;in\;Units = Fixed\;Costs/(Unit\;Price-Variable\;Unit\;Cost) = 100/(2.00 - 0.25)$
4. b. Price skimming sets an initially high price to capture the portion of the market willing to pay the price.
5. d. Penetration pricing attempts to capture the greatest market share possible when introducing a new product.
12.5 Knowledge Check
1. c. Bundle pricing is a tactic that has a lower price for a bundle of items than when those items are purchased separately.
2. a. Captive pricing is a tactic used when there is both a core and a captive product.
3. a. Odd-even pricing is a tactic used to illustrate value or quality to a customer through pricing.
4. b. Price skimming sets an initially high price for new products to capture the portion of the market willing to pay the price.
5. d. Economy pricing is a tactic in which products are priced much lower than their name-brand competitors. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/30%3A_Answer_Key_Chapter_11.txt |
13.1 Knowledge Check
1. a. The goal of IMC is to communicate a clear and consistent message through various promotional mix methods that will reach the various segments of the target market.
2. b. The promotional mix method of advertising is a paid form of nonpersonal communication.
3. c. Advertising is a paid form of nonpersonal communications meant to reach a large audience.
4. a. Sales promotion includes coupons that help to induce sales in the short term.
5. b. Public relations encompasses nonpaid activities that promote a product, service, idea, or person.
13.2 Knowledge Check
1. a. The celebrity is the paid spokesperson of the company, and they are the sender of the message.
2. b. Noise is anything that gets in the way of the sender and the message intended for the receiver.
3. c. Television advertising is the medium through which the message is delivered.
4. a. Encoding is the process of taking ideas and information and putting them into symbolic form.
5. a. The Tennessee Department of Tourist Development sent the message, so it is the source.
13.3 Knowledge Check
1. c. The combination of product placement, paid advertising, and the screening of the film on the British Airways flights is an example of integrated marketing communications.
2. a. Integrated marketing communications seeks to have all of the promotions send a consistent and unified image to the customer.
3. c. Sally’s ability to recall and think of Taco Bell to fulfill her needs is a benefit of improved brand awareness.
4. d. Because Tina is satisfied and educated on all the ways to shop at Walgreens, she is exhibiting customer satisfaction.
5. c. Using multiple promotional methods to send a consistent message is the goal of integrated marketing communications.
13.4 Knowledge Check
1. c. The process should begin with a complete understanding of the target audience for the promotional efforts.
2. d. Jennifer is acting on the promotional method Panera Bread used to reach her in the customer journey.
3. b. With continuity scheduling, an advertiser is showing its advertisement on a continuous schedule without variation.
4. b. Nestlé Tollhouse is working to create an emotional connection with the consumer.
5. c. Wendy’s would be using all that their budget could afford for the marketing promotions.
33: Answer Key Chapter 14
14.1 Knowledge Check
1. a. One media channel used in advertising is commercials.
2. c. This is an example of institutional advertising.
3. a. Advertising has a low per-exposure cost.
4. d. Product advertisements focus on one product from an organization’s product mix and/or comparing it with competitors.
5. b. Advertising is still one of the costlier elements of the promotion mix.
14.2 Knowledge Check
1. a. Posttests are utilized after a campaign has launched.
2. c. The first step in advertising planning is determining objectives.
3. a. Millennials are more likely to see advertisements in digital form, such as social media, rather than more traditional media.
4. d. Reach refers to the estimated number of potential customers that can be reached with an advertising campaign.
5. a. Assessment is the final step of the advertising plan.
14.3 Knowledge Check
1. a. ROAS = \$500/\$20 = \$25
2. c. Brand recognition involves recognizing a brand based on a picture or logo.
3. a. Return on ad spend (ROAS) calculates the revenue generated for each advertising dollar spent.
4. d. KPIs, or key performance indicators, measure the effectiveness of an advertising campaign.
5. b. Impressions = Rating × Target Population × Number of Ads. In this scenario, Liam is missing the rating information.
14.4 Knowledge Check
1. a. Public relations is earned.
2. c. Lobbying involves attempts to influence public policy and law.
3. a. Events are a type of public relations in which a company participates to increase brand awareness.
4. d. Press relations is the part of public relations that creates and maintains positive relationships with the press.
5. b. Public affairs involves creating relationships with public officials.
14.5 Knowledge Check
1. a. The company’s donation and the public relations surrounding it has created sales and leads.
2. c. Public relations is often not under a company’s direct control.
3. a. The company had no direct control over whether the press release would be picked up by news stations.
4. d. Public relations is free, and it has no guaranteed results.
5. b. Taco Bell was hoping that the campaign would outweigh the negative brand image caused by the lawsuit (and it worked). | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/32%3A_Answer_Key_Chapter_13.txt |
15.1 Knowledge Check
1. d. Personal selling is used by companies when they have a product that needs explanation and education, it is higher in price, and it can be varied according to the needs of the customer.
2. c. Personal selling is the one-on-one interaction between a sales professional and the potential customer.
3. b. Personal selling allows for the sales professional to adjust the product to meet the needs and wants of the customer.
4. b. Most products in the market have a lot of competition. The level of competition has nothing to do with the use of personal selling.
5. d. Jasmine has effectively demonstrated the personal selling skills of one-on-one interaction with the customer, meeting the needs and wants of the customer, and having personal communication with the customer to satisfy their needs and wants.
15.2 Knowledge Check
1. d. When customers call into a company to place an order an inside order taker is the person answering and taking the order.
2. b. When several people within the organization are responsible for making the sale, this is considered a team selling approach
3. c. The person who is responsible for making sure the product meets the needs of the customer is the technical specialist.
4. d. Missionary sales is responsible for educating and informing while also encouraging the use of a product.
5. a. Companies often have support personnel to assist with elements of the sale. This can include checking on inventory and setting appointments for outside sales professionals.
15.3 Knowledge Check
1. d. Lucia is trying to find the qualified people to buy the products.
2. a. When customers have questions and the sales professional is ready to answer the questions, this is typically considered handling objections.
3. d. Shakira is acting more as a consultant to help her customer have the best fit for their needs.
4. c. During the approach phase, the sales professional gathers insights and seeks to contact the prospect to build rapport and gather more information on the needs and wants of the prospect.
5. c. Keith is demonstrating the product and telling about the features that are important to the prospect. Keith is doing the presentation.
15.4 Knowledge Check
1. c. Lev needs to know how many sales professionals he will need to hire.
2. d. Malika is focused on bringing in new customers.
3. b. Companies regularly need to inform and educate their sales professionals about the products they are selling.
4. c. Nestle is most likely paying Johnny a commission on the sales he makes.
5. a. Ranee needs to spend time on selling activities.
15.5 Knowledge Check
1. d. This is an example of sales promotion geared toward generating an immediate sale.
2. b. The sales promotion is structured to stimulate demand for more product.
3. c. Rolex wants to spread information about its products to the target market of customers that will be present at the events.
4. a. Sales promotion is primarily to stimulate demand in the short term.
5. a. Sally is happy and satisfied when she gets email and promotions from American Eagle.
15.6 Knowledge Check
1. b. Coupons provide a saving off of the purchase of a specific product.
2. d. Samples provide for a free amount of product.
3. b. Sweepstakes give consumers a chance to win when they purchase something or follow the rules of the sweepstakes.
4. a. Allowances and discounts are typically provided to the trade and used to push the product to the customer.
5. d. Sales promotion is a short-term incentive to consumers and the trade.
35: Answer Key Chapter 16
16.1 Knowledge Check
1. a. Online direct marketing includes digital tools such as email, websites, online videos, and blogs to communicate and engage with individual consumers and elicit a desired consumer response or action.
2. a. As consumers are more connected to the internet via their mobile devices and digital technologies have evolved, online direct marketing has emerged as a practical promotion tool for reaching consumers.
3. d. Content marketing involves creating and distributing content that consumers find meaningful and valuable. With content marketing, marketers must anticipate what type of content their audience wants and tell their story in a way that the audience can relate to.
4. d. Email marketing is permission-based marketing. Consumers must opt in to receive messages from companies. This typically occurs when a consumer purchases a product or service and asserts that they would like to receive messages from the company from which they’ve purchased.
5. d. Advantages of online direct marketing are that it has global reach, is highly targeted, and can be much easier to measure ROI.
16.2 Knowledge Check
1. a. An advantage of social media marketing is that companies can concentrate their promotional efforts on very specific groups of consumers who share common interests and demographics.
2. c. Lack of control over the message is a challenge for social media marketers. Consumers who are dissatisfied with the company can use social media to make negative comments that could hurt brand reputation.
3. a. An important element of a good mobile strategy is ensuring that your website has a responsive design. Simply put, this means ensuring that menus and content are easy to read and that the user has a good experience on the site regardless of the device.
4. d. Responsive web design is a website development approach that results in a website’s display dynamically changing to adapt to whatever device a consumer uses. This approach is important to ensuring that consumers have a good user experience regardless of the device they are using.
5. b. Measuring mobile campaigns can be challenging because it’s difficult to measure whether a consumer has seen a push notification or in-app message.
16.3 Knowledge Check
1. d. Online marketing metrics help marketers measure the performance of their online marketing campaigns.
2. c. Because the goal of the campaign is to increase paid subscriptions, a visitor who enters their payment information and contact information and clicks “place order” would be a conversion.
3. c. The bounce rate measures the percentage of times visitors leave your site after visiting only one page.
4. a. Social engagement relates to the actions that users take when they engage with content on social media. Online marketers measure clicks, likes, shares, and comments to help online marketers assess the quality of their content.
5. a. Jax’s Sushi House will learn which source is more effective at driving traffic to the restaurant’s website. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/34%3A_Answer_Key_Chapter_15.txt |
17.1 Knowledge Check
1. d. A marketing channel is a collection of people, organizations, processes, and activities that work together to deliver products and services to the consumer.
2. d. Agents serve as representatives of manufacturers. While they never take possession of a product or service, they earn a commission or collect a fee for facilitating the transaction between the customers and the manufacturer.
3. c. When intermediaries are removed from the marketing channel, manufacturers must then be solely responsible for distributing products directly to all customers. Thus, the number of transactions would increase.
4. a. Intermediaries add value by performing important activities that manufacturers are not expert at performing. This helps create efficiency in the marketing channel, which helps meet the wants and needs of targeted customers.
5. d. Accumulating, bulk-breaking, adjusting for assortment discrepancies, and providing financing are the valuable services that intermediaries provide.
17.2 Knowledge Check
1. b. A direct marketing channel sells and distributes directly to the consumer without the use of intermediaries.
2. b. An indirect marketing channel relies on a partnership with intermediaries to sell and distribute its products.
3. c. In the B2B or industrial space, manufacturers or producers sell products and services aimed at reaching a business end user.
4. b. In a corporate vertical marketing system, one channel member owns one or more other channel members.
5. c. Omnichannel marketing systems allow consumers to buy and receive products and services seamlessly across a variety of channels, including online and in-store.
17.3 Knowledge Check
1. a. The three overarching factors that impact channel choice include target market coverage, fulfillment of buyer requirements, and profitability.
2. d. An intensive distribution strategy is used when a company wants to distribute through every possible retail outlet where a consumer might find its products.
3. b. A post-sale service is a buyer requirement that is fulfilled after the purchase of a product.
4. c. Perishability is an important factor in channel decisions for companies who sell products that have a short shelf life.
5. d. Profitability is a factor that companies consider when choosing a distribution channel. Companies are attracted to channels that help them maximize profits and operate more efficiently.
17.4 Knowledge Check
1. c. Manufacturers should select channel members based on years of experience, reputation, experience within the market, and profitability. In the scenario above, selecting a channel member based on experience, reputation, and profitability makes the most sense.
2. c. Production Company C and DirectDocumentaries are involved in a well-managed relationship. There is cohesion and transparency, and they share common goals.
3. d. Disintermediation occurs when a channel member is removed from the distribution channel.
4. a. Order accuracy rate is the percentage of orders that are processed, fulfilled, and shipped to consumers without any errors.
5. b. Time to ship is a metric that measures the length of time from when a customer places an order to when it reaches them.
17.5 Knowledge Check
1. c. Supply chain management entails managing all the members and activities from the procurement and transformation of raw materials into finished goods through their distribution to targeted consumers.
2. a. In order for companies to deliver on their value proposition to consumers, they must ensure that the activities and members in the supply chain share the common goal of delivering value to consumers.
3. d. Companies that manufacture goods rely on raw materials to produce the products they sell. They purchase the required materials from suppliers, who must be able to deliver them in accordance with the manufacturer’s timeline.
4. d. Resources include the labor, the raw materials, and the technology that are required to move products from their raw material phase to finished goods available for consumption.
5. a. Information workflow is a supply chain management function that relates to what and how information moves between members of the supply chain.
17.6 Knowledge Check
1. b. Air transportation provides the fastest delivery speed over trucking, rail, and water transportation.
2. b. Logistics is the planning, organizing, and controlling the movement of raw materials and ultimately finished goods to end consumers
3. c. Companies use logistics information to develop demand forecasts and conduct supply planning. It can also be used to analyze and assess the effectiveness and efficiency of the supply chain to ensure optimization.
4. d. Integrated logistics management ensures that every element of logistics as part of the entire supply chain is part of a system that works cohesively to ensure that the wants and needs of final customers are met.
5. a. 3PL providers have the expertise, flexibility, and cost efficiencies in logistics that manufacturers don’t possess. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/36%3A_Answer_Key_Chapter_17.txt |
18.1 Knowledge Check
1. c. Retailing is the process of selling goods and services to the consumer.
2. a. Wholesalers are in business to buy in large quantities and sell to other businesses.
3. d. Loyalty cards are one way retailers can communicate with consumers.
4. c. An omnichannel strategy is one that utilizes multiple channels.
5. c. Schwan’s eliminates the intermediaries and sells directly to the consumers.
18.2 Knowledge Check
1. b. Automatic vending includes vending machines, in which there is no buyer-seller interaction.
2. b. Television home shopping would be the most likely retailing strategy to reach this target market. Consumers can call a toll-free number to place an order without ever leaving their home.
3. b. Warehouse clubs sell in bulk to consumers who purchase memberships.
4. c. Off-price retailers are those providing high-quality goods at discounted prices.
5. a. Factory outlets are retailers that are operated by manufacturers to sell overstock items at discounted prices.
18.3 Knowledge Check
1. d. A markdown is a price decrease for a product that is at the end of its life cycle or season.
2. c. Superstores generally choose a freestanding location.
3. c. A small, rural town is most likely to have a central business district, or “downtown.”
4. c. Gross margin = net sales – cost of goods sold
5. a. Omnichannel marketing increases customer’s access to product, brand visibility, and personalization because it utilizes multiple channels to reach the customer.
18.4 Knowledge Check
1. d. All of the trends grew considerably.
2. c. Social commerce is a blend of e-commerce and social media, where retailers often use influencers to market products.
3. d. Digital wallets store consumers’ passwords and payment information for safety and ease of ordering online.
4. a. Pandemics, such as the one in COVID-19 pandemic, forced many consumers to stay home. This caused a significant rise in online shopping.
5. c. Social media is one way in which companies can utilize an omnichannel marketing strategy, one in which utilizes many different channels to reach customers.
18.5 Knowledge Check
1. a. Wholesalers are businesses that buy products in bulk and sell to retailers.
2. d. Retailers use drop shippers to ship products directly to the end consumer.
3. d. General-merchandise wholesalers offer the most complete range of services.
4. a. Manufacturer’s agents are independent contractors who act as salespersons for multiple manufacturers to sell similar (but not competing) products to retailers.
5. a. Rack jobbers are companies that agree with retailers to display and sell products in-store.
18.6 Knowledge Check
1. a. Caveat emptor is Latin for “let the buyer beware.”
2. d. Product traceability allows products to be traced throughout the distribution channel to the manufacturer.
3. c. Product traceability does not make less work for distribution channel members.
4. a. Government regulations are not decreasing but are increasing and becoming more complex.
5. a. The Sale of Goods Act requires the accurate, safe, and clear use of directions on goods and services sold.
38: Answer Key Chapter 19
19.1 Knowledge Check
1. b. Diversity, equity, and inclusion support people, which makes it a social initiative.
2. d. Sustainable marketing is rooted in purpose, based on mission, and seeks to align people, planet, and profits.
19.2 Knowledge Check
1. a. Sustainable marketing considers all parties.
2. b. Sustainable marketing innovates now while ensuring a viable future.
19.3 Knowledge Check
1. a. Increased brand recognition occurs when brands are known for their sustainability efforts.
2. d. Return on investment occurs when brands can show that the sustainability investment had a positive economic return.
19.4 Knowledge Check
1. c. Innovative marketing uses the media to spur awareness and convert prospects into customers.
2. d. Mission marketing puts purpose at the center of marketing and uses storytelling to spur action.
19.5 Knowledge Check
1. d. Transparency, sustainability, and fair working conditions are all concepts related to purpose-driven marketing.
2. a. Purpose-driven brands stand up for what is right. | textbooks/biz/Marketing/Principles_of_Marketing_(OpenStax)/20%3A_Answer_Key/37%3A_Answer_Key_Chapter_18.txt |
Welcome to The Power of Selling Video Ride-Alongs
Do you want to be successful in sales and in life? You’ll have a chance to meet the pros, the people who have achieved success in their careers in sales. At the beginning of each chapter you’ll have the opportunity to go on a video ride-along, a chance to hear from sales professionals and learn firsthand what it’s like to be in sales. You’ll go on video ride-alongs with some of the best in the business and hear about their personal selling experiences and tips of the trade.
Meet Lisa Peskin, sales trainer at Business Development University. Lisa has spent over twenty years in sales with sales and sales management positions at companies such as Automated Data Processing (ADP), Bayview Financial, and Interbay Funding. She is currently a sales trainer at Business Development University and works with sales forces across the country to become more effective. Lisa is an experienced and passionate seller who will share her insights and tips for success with you throughout the book.
Ride along with Lisa as she shares her thoughts on the power of selling in everyday life.
1.02: Get What You Want Every Day
Learning Objective
• Understand the role of selling in everyday life.
What does success look like to you?
For most people, to achieve personal success entails more than just making a lot of money. Many would claim that to be successful in a career means to have fulfilled an ongoing goal—one that has been carefully planned according to their interests and passions. Is it your vision to run your own business? Or would you rather pursue a profession in a service organization? Do you want to excel in the technology field or, perhaps, work in the arts? Can you see yourself as a senior executive? Imagine yourself in the role that defines success for you. Undoubtedly, to assume this role requires more than just an initial desire; those who are most successful take many necessary steps over time to become sufficiently qualified for the job presented to them. Think about your goal: what it will take to get there?
With a good plan and the right information, you can achieve whatever you set out to do. It may seem like a distant dream at the moment, but it can be a reality sooner than you think. Think about successful people who do what you want to do. What do they all have in common? Of course, they have all worked hard to get to their current position, and they all have a passion for their job. There is, additionally, a subtler key ingredient for success that they all share; all successful people effectively engage in personal selling, the process of interacting one-on-one with someone to provide information that will influence a purchase or action.Michael Levens, Marketing: Defined, Explained, Applied (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 181.
Congratulations, You’re in Sales!
If you think personal selling is only for salespeople, think again. Everyone in every walk of life uses personal selling (some more effectively than others!). Selling is what makes people successful. We all have to sell our ideas, our points of view, and ourselves every day to all sorts of people—and not just those related to our jobs. For example, when you work on a team project, you have to sell your ideas about how your team should approach the project (or, sometimes more delicately, you will have to persuade others as to what you should do about a lazy team member). When you are with your friends, you have to sell your point of view about which movie you want to see or where you want to go to eat. When you pitch in for a friend’s gift, you have to sell your ideas about what gift to give. You are selling every day whether you realize it or not.
Think about the products and services that you buy (and concepts and causes that you believe in) and how selling plays a role in your purchase decision. If you rented an apartment or bought a car, someone sold you on the one you chose. If you read a product review for a new computer online then went into the store to buy it, someone reinforced your decision and sold you the brand and model you bought. If you ran in a 5K race to raise money for a charity, someone sold you on why you should invest your time and your money in that particular cause. A professor, an advisor, or another student may have even sold you on taking this course!
This video highlights how your life depends on selling.
“I Sell Stories”
Selling is vital in all aspects of business, just as it is in daily life. Consider Ike Richman, the vice president of public relations for Comcast-Spectacor, who is responsible for the public relations for all NBA and NHL games and hundreds of concerts and events held at the company’s Wachovia Center in Philadelphia. When you ask Ike to describe his job, he replies, “I sell stories.” What he means is that he has to “pitch”—or advertise—his stories (about the games or concerts) to convince the press to cover the events that he is promoting. So, even though he is not in the sales department, his job involves selling. Gary Kopervas, similarly, is the chief creative strategist at Backe Digital Brand Communications. He works in the creative department in an advertising agency, yet he describes his job as “selling ideas,” not creating ads. Connie Pearson-Bernard, the president and founder of Seamless Events, Inc., an event planning company, says she sells experiences. For many of her clients, she also sells time because she and her team execute all the required details to create the perfect event. As you notice, all these people are engaged in selling, even though “sales” may not be included in their respective job descriptions. Clearly, whether you pursue a career in sales or in another discipline, selling is an important component of every job…and everyday life.
Power Player: Lessons in Selling from Successful Salespeople
Who Wants to Be a Millionaire?
Imagine being a nineteen-year-old college dropout with a child on the way.
That described Tom Hopkins in 1976. He worked in construction to pay the bills. He realized there had to be a better way to make a living, so he took a job in real estate sales, but had no success. In fact, after his first six months, he had only sold one house and made an average of just \$42 a month to support his family.
One day, he met someone who suggested that he go to a sales training seminar. Tom was inspired by the concepts in the seminar and put them to work. Before he was thirty, Tom was a millionaire selling real estate. Tom is now a legend in the selling arena with his “Training for Champions” and “Sales Boot Camp” programs. He is a successful author, speaker, columnist, and sales coach at Tom Hopkins International, which provides sales training for companies such as Best Buy, State Farm Insurance, Aflac, U.S. Army Recruiters, and more.Tom Hopkins International, “Tom Hopkins Bio,” www.tomhopkins.com/tomhopkins_bio.html (accessed June 7, 2009).
Experience the power of Tom Hopkins in action. www.tomhopkins.com/video_demo.html
Source: Tomhopkins.com
The New World of Selling
There are some people who might think of selling as a high-pressure encounter between a salesperson and a customer. Years ago, that may have been the case in some situations. But in today’s world, successful selling is not something you do “to” a customer, it is something you do “with” a customer. The customer has a voice and is involved in most selling situations. In fact, Internet-based tools such as forums, social networks like Facebook, MySpace, and Twitter, along with Web sites, live chat, and other interactive features allow customers to participate in the process no matter what they are buying. Listen to consumer behavior expert and author Dr. Michael Solomon discuss the process of selling in today’s world.
Brand + Selling = Success
What do Ikea, Red Bull, Mini Cooper, and Apple have in common? All four are strong and highly identifiable brands. You might wonder what role a brand name plays in selling strategy. Perhaps it is not always noticeable, but when you buy a Red Bull at the corner store for some extra energy, at that very moment, a specific, chosen brand has become an extremely powerful selling tool, and it has significantly influenced your inclination to purchase that particular drink. Selling can only be successful when that thing that you sell has perceived value applied to it by the consumer—why Red Bull rather than another caffeine drink? Red Bull must be more effective if a person chooses it rather than the other brand nearby. A brand is a tool to establish value in the eyes of the customer because it indicates something unique. On the surface, a brand is identified by a name, logo, or symbol so that it is consistently recognized.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 286. But a brand is more than that.
A great brand has four key characteristics:
1. It is unique. (Ikea furniture has exclusive, on-trend styling at unbelievable prices.)
2. It is consistent. (Red Bull looks and tastes the same no matter where you buy it.)
3. It is relevant. (Mini Cooper looks cool and doesn’t use much gas, and you can design your own online.)
4. It has an emotional connection with its customers. (An iPod, with hundreds of personalized qualities, becomes a loved companion.)
A brand is important in selling because it inherently offers something special that the customer values. In addition, people trust brands because they know what they can expect; brands, over time, establish a reputation for their specific and consistent product. If this changes, there could be negative repercussions—for example, what would happen if thousands of Mini Coopers started to break down? Customers expect a reliable car and would not purchase a Mini if they could not expect performance. Brand names emerge in all different sects of the consumer market—they can represent products, like PowerBar, or services, like FedEx. Brands can also be places, like Macy’s, Amazon.com, or even Las Vegas (everyone knows that what happens in Vegas stays in Vegas!Michael McCarthy, “Vegas Goes Back to Naughty Roots,” USA Today, April 11, 2005, www.usatoday.com/money/advertising/adtrack/2005-04-11-track-vegas_x.htm (accessed June 4, 2009).). Brands can be concepts or causes like MTV’s Rock the Vote or the Susan G. Komen Race for the Cure. Brands can also be people, like Lady Gaga, Jay-Z, Martha Stewart, or Barack Obama.
When products, services, concepts, ideas, and people demonstrate the characteristics of a brand, they are much easier to sell. For example, if you go to McDonald’s for lunch, you know you can always get a Big Mac and fries, and you always know it will taste the same whether you go to the McDonald’s near campus or one closer to your home. Or if you go to Abercrombie & Fitch, you can expect the store to look and feel the same and carry the same kind of merchandise whether you go to a store in Baltimore, Maryland, or Seattle, Washington.
The same concept applies to people. Think about your classmates: is there one that is always prepared? He or she is the one who always does well on the tests, participates in class, is a good team player, and gets good grades on assignments. This person has created a brand. Everyone knows that they can count on this person; everyone knows what to expect. Conversely, the same is true for a person who is often times late and sometimes arrives unprepared. You probably wouldn’t want to work with that person because you’re not sure if that person will hold up his or her end of the project. Which one would you choose as a teammate? Which one would you trust to work with on a class project? Which person is your brand of choice?
The Power of an Emotional Connection
Uniqueness (no other fries taste like McDonald’s), consistency (a Coke tastes like Coke no matter where you buy it), and relevance (your college bookstore is only relevant on a college campus, not in your local mall) are clear as characteristics of a brand, but the most important characteristic is also the most abstract—the emotional connection it creates with its customers. Some brands create such a strong emotional connection that its customers become brand fans or advocates and actually take on the role of selling the brand by way of referrals, online reviews, user-generated content, and word-of-mouth advertising.
Harley-Davidson measures their customer loyalty by the number of customers who have the company’s logo tattooed on their body.Fred Reichheld, “The Ultimate Question: How to Measure and Build Customer Loyalty in the Support Center,” presented via Webinar on May 14, 2009. These customers are emotionally connected with the brand, which offers unique selling opportunities for Harley-Davidson dealerships. Another example of emotional connection to a brand can be found by examining consumer relationships to sports teams. Fans willingly advertise their favorite team by wearing T-shirts, hats, and even putting decals and bumper stickers on their cars. They attend games (some of which require hours of standing in line) or watch them religiously on television. For popular events, in fact, many times customers are willing to pay more than the face value of tickets to attend; some will spend hundreds of dollars to see the NCAA Final Four, the World Series, or the Super Bowl. These consumers are emotionally connected to their teams, and they want to be there to support them. A loud, sold-out stadium certainly illustrates why it’s easer to sell brands when customers are emotionally connected.
Power Selling: Lessons in Selling from Successful Brands
Emotion Sells
Did you ever consider why the salespeople at Starbucks are called baristas instead of employees?
Howard Schultz, the chief executive officer of Starbucks, has built the brand in his vision since the company began in 1982. He believes strongly that the brand stands for more than beans. During an interview, he said, “By making a deeper emotional connection with your customers, your brand will stand out from the hundreds, if not thousands, of vendors, entrepreneurs, and business owners selling similar services and products.”Carmine Gallo, “How to Sell More Than a Product,” BusinessWeek, May 19, 2009, http://www.businessweek.com/smallbiz/content/may2009/sb20090519_058809.htm (accessed June 7, 2009). Schultz is especially passionate about the role salespeople have in creating the “Starbucks” experience.
The brand recently launched a new marketing campaign called “It’s not just coffee. It’s Starbucks.” Listen to what baristas have to say about the latest Starbucks marketing campaign.Eleftheria Parpis, “Starbucks Claims ‘It’s Not Just Coffee,’” Brandweek, May 1, 2009, www.brandweek.com/bw/content_display/news-and-features/retail-restaurants/e3i88d85d8ede4fd0afae2e6d752751e2a3 (accessed June 7, 2009).
Starbucks baristas talk about their emotional connection to the brand.
Source: Starbucks Corporation
The concept of emotional connection is not limited to the brand, it is also an especially critical component in the actual practice of selling. Customers are much more readily persuaded to make a purchase if they develop an emotional connection with the salesperson. If you go to Best Buy to look at a new home theater system, a helpful (or unhelpful) salesperson can make all the difference in whether you buy a particular system from that particular Best Buy or not. If the salesperson asks questions to understand your needs and develops a good relationship (or emotional connection) with you, it will greatly increase your chances of purchasing the home theater system from him. Rock star Gene Simmons, front man for the legendary rock band KISS and wildly successful entrepreneur, summed it up best: “I have to have an emotional connection to what I am ultimately selling because it is emotion, whether you are selling religion, politics, even a breath mint.”“Gene Simmons: Rock ‘n’ Roll Entrepreneur,” BusinessWeek, September 5, 2008, http://www.businessweek.com/smallbiz/content/sep2008/sb2008095_987221.htm (accessed June 7, 2009).
Clearly, brands are fundamental building blocks in the selling process. The bottom line is, great brands = great sales.
Key Takeaways
• Personal selling is a powerful part of everyday life. The selling process can help you get what you want both personally and professionally.
• You are always selling your ideas, your point of view, and yourself in virtually every situation, from class participation to going out with friends.
• In order to understand the selling process, you have to understand brands. A brand can be a product, service, concept, cause, location, or even a person. A brand consistently offers value to a customer with something that is unique, consistent, and relevant and creates an emotional connection.
• Brands are important in selling because customers trust brands. The brand doesn’t end with the product, service, or concept; the salesperson is also a brand.
Exercise \(1\)
1. Identify a situation in which you were the customer in a personal selling situation. Discuss your impressions of the salesperson and the selling process.
2. Think about this class. In what ways do you sell yourself to the professor during each class?
3. Think about your school as a brand. Discuss what makes it unique, consistent, and relevant and have an emotional connection with its customers. How would you use these characteristics if you were trying to sell or convince someone to attend the school?
4. Think about the following brands: Xbox, Victoria’s Secret, and BMW. Discuss how each brand forms an emotional connection with its customers. Why is it important in selling? | textbooks/biz/Marketing/The_Power_of_Selling/01%3A_The_Power_to_Get_What_You_Want_in_Life/1.01%3A_Introduction.txt |
Learning Objectives
• Discuss the role of selling in the economy.
• Explain the role of selling in an organization.
Look around. Your computer, your car, your jewelry, your eyeglasses, and your cell phone—many of the things you own—were probably sold to you by someone. Now, think about things you can’t see, like your cell phone service, your Internet service, and your car insurance. Chances are, those services were probably sold to you by someone as well. Now that you think about it, you can see that selling is involved in life in so many ways. But did you ever think about the impact that selling has on the economy?
In the United States alone, almost 16 million people were employed in jobs in sales in 2008. This number includes retail salespeople and cashiers, insurance sales agents, real estate brokers and sales agents, and manufacturing sales reps just to name a few. According to the Bureau of Labor Statistics, that number will increase to almost 17 million people employed in sales and sales-related occupations by 2018, which represents a 6.2 percent increase from 2008. That translates to one in every ten people in the United States having a job in sales.United States Department of Labor, Bureau of Labor Statistics, “Employment by Major Occupational Group, 2008 and Projected 2018,” Economic News Release Table 5, 2009, www.bls.gov/news.release/ecopro.t05.htm (accessed May 6, 2010). Other estimates, such as the Selling Power Magazine’s annual report of America’s Top 500 Sales Forces in 2008, puts the total number of salespeople at the top 500 companies at over twenty million for the first time.“Selling Power 500: America’s 500 Largest Sales Forces,” Selling Power, October 2008, 52.
But the bigger story is the fact that many companies sell their products and services globally. Multinational corporations (MNCs), large companies that have operations, including selling, in several countries,[citation redacted per publisher request]. such as Procter & Gamble, Dell, Reebok, and Kraft Foods, employed 32 million workers in 2007.Bureau of Economic Analysis, International Economic Accounts, “Summary Estimates for Multinational Companies: Employment, Sales, and Capital Expenditures for 2007,” April 17, 2009, www.bea.gov/newsreleases/international/mnc/2009/mnc2007.htm (accessed June 5, 2009). Although not all these employees are engaged in selling, the number helps provide some sense of relativity as to the proportional impact of international business. Most large MNCs have offices (including sales offices) in many foreign countries. This provides the company with the opportunity to become integrated into the culture, customs, and business practices of each country in which it has operations.
A large number of MNCs generate a significant portion of their sales from countries outside the United States. If you’ve traveled outside the United States, think about the products you saw. Companies such as Coca-Cola, eBay, Gillette, KFC, and Starbucks have a significant presence in foreign countries. Many companies expand selling to international markets for several reasons, including slow population growth in their domestic country, increased competition, opportunity for growth and profit, and sometimes, out of sheer necessity due to the fact that globalization is rapidly changing the economic landscape.George E. Belch and Michael A. Belch, Advertising and Promotion: An Integrated Marketing and Communications Perspective, 8th ed. (New York: McGraw-Hill Irwin, 2008), 653–54.
In the past, expansion to foreign markets was limited to those corporations that could make the investment required to locate offices and operations abroad. The Internet, however, has provided that same opportunity to small- and medium-sized companies, so that they may sell products and services internationally. Why would small companies want to do this? With only a one-to-five proportion of Internet users living in the United States, almost 80 percent of Internet users live in places abroad; thus, there is a much larger market to be found by way of the Internet. Before you take your lemonade stand global, however, remember that selling internationally is not as simple as just setting up a Web site. Language, shipping, currency exchange, and taxes are just some of the costs and considerations necessary for selling products and services internationally via the Internet. To help companies overcome these barriers of doing business internationally, organizations such as e-commerce service provider FiftyOne offer technology solutions that manage these important components of international selling.FiftyOne, www.fiftyone.com/solution (accessed June 5, 2009).
Think about the possibilities. When companies such as Overstock.com want to sell globally, companies like FiftyOne have a selling opportunity.Caroline McCarthy, “Overstock.com Will Extend Reach to Canada, Europe,” CNET News Blog, news.cnet.com/8301-10784_3-9933344-7.html (accessed June 5, 2009). In other words, selling products and services can generate more opportunities for selling other products and services in the future. When companies (FiftyOne is a perfect example) and salespeople think creatively and see the environment through the customer’s eyes, they can identify selling opportunities that might not otherwise exist. This is a basic tenet of selling, both domestically and internationally.
The Internet: Power to the People
The Internet has been a game changer for selling in many ways. Just like the Internet expands the reach of a company to virtually anywhere in the world, it also provides customers with access to information, products, and services that they never had before. In some industries, the Internet has virtually eliminated the need for a salesperson. Travel agents are no longer the exclusive providers of reservations and travel plans. Music stores are almost extinct. Newspaper want ads have almost vanished. In other industries, the relationship of the salesperson and customer has changed dramatically. The power has shifted from the seller to the buyer. Take, for example, the auto industry. It used to be that when you wanted to buy a car, you went to a car dealership. The salesperson would show you the cars, take you out on a test drive, and then negotiate the selling price when you were ready to buy, holding the dealer invoice close to the vest. Today, customers may e-mail a car dealership to set up an appointment to drive a specific car after they have researched different models of cars including features, benefits, competitive models, editor and customer reviews, competitive pricing, and dealer invoice pricing. In some cases, the customer may know more than the salesperson.Robert McGarvey and Babs S. Harrison, “The Human Element: How the Web Brings People Together in an Integrated Selling System,” Selling Power 20, no. 8, http://www.sellingpower.com/content/article.php?a=5566 (accessed March 16, 2010).
Sales organizations are embracing a movement called Sales 2.0. You may have heard of Web 2.0, the second generation of the Internet, which includes interactivity, community, and on-demand information. Sales 2.0 is a term that appropriately describes a new way of thinking about the role of the Internet in the selling process as it encompasses the impact of constantly changing technology and multiple electronic devices, “mash-ups” of different sources of information, and user-generated content on sites like Facebook, LinkedIn, YouTube, and Twitter. According to Tim Sullivan, director of intellectual property and information for Sales Performance International, these Internet-based changes pose new implications for sales. Educating customers is no longer the primary function of the salesperson. Customers are actively involved in engagement, interaction, and collaboration to seek information. Salespeople need to understand the power of collaboration both inside their organization and with their customers, so that they may participate in the online conversation, enabling them to better deliver value. Just as customers use blogs, wikis, and social networking as tools to learn about a product, companies can use these tools to learn about customers (and what they want and need). It’s a new mind-set and new technology tools are constantly changing the landscape—salespeople must be prepared to adjust their reactions accordingly.Heather Baldwin, “What Does Sales 2.0 Mean for You?” Selling Power Sales Management eNewsletter, March 3, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=801 (accessed March 16, 2010). The shift of power to the customer is underscored by Gerhard Gschwandtner, founder and CEO of Selling Power, Inc. According to him, “Sales 2.0 gives the customer a 360-degree view of the company and provides sales organizations with a variety of tools that help manage that two-way communication process.”Selling Power, Sales 2.0 Newsletter, September 18, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=868 (accessed June 21, 2010). Sales 2.0 takes the selling process to the next generation.
Video Clip
Whiteboard Session with David Thompson, CEO of Genius.com
Sales 2.0 and how it works.
www.bnet.com/2422-13731_23-187203.html
Source: BNET
Sales Is Not a Department, It’s a State of Mind
Sold.
It’s a deal.
Let’s shake on it.
Sign on the dotted line.
You’ve got the job.
Those are the words that signal success in selling. They seem simple, but according to Gerry Tabio, bringing a saleBNET Business Dictionary, “Sales,” BNET, dictionary.bnet.com/definition/Sales.html?tag=col1;rbDictionary (accessed June 5, 2009). to fruition is “not just about celebrating the sale; it’s about celebrating the growth of the customer.”Gerry Tabio, “How to Create Ideas That Sell,” presentation at Greater Media Philadelphia Sales Meeting, Philadelphia, PA, May 15, 2009. The most successful companies work to build and sustain relationships with the customer at every touch point, any way in which the company comes in contact with the customer, and consider selling the job of everyone in the organization. In other words, although there are specific functional departments such as sales, marketing, operations, human resources, finance, and others, everyone in the organization is focused on the customer. This is called a customer-centric organization.Barry Welford, “7 Habits of a Truly Customer-Centric Selling Organization,” SMM Internet Marketing Consultants Newsletter 13, www.smmbc.ca/newsletter-13.htm (accessed June 5, 2009).
You might wonder why all companies aren’t considered customer-centric. After all, if they were in business to sell products and services to customers, it would make sense that they would be customer-centric. However, you have probably encountered companies that aren’t really focused on the customer. How many times have you heard this message while you were on hold to talk to a salesperson or customer service representative, “Your call is important to us. Please stay on the line for the next available representative”? Being on hold and hearing a recorded message hardly makes you feel as if you are important to the company.
It’s All about the Customer
Being customer-centric means insisting on accountability. Although everyone is focused on the customer, every employee is part of a department or function. Each department has goals and accountabilities. In a true customer-centric organization, the departments work together to satisfy the needs of the customer and achieve the financial objectives of the company. Most companies have core functions or departments such as sales, customer service (sometimes it is included as part of the sales department), marketing, operations, finance, human resources, product development, procurement, and supply chain management (also called logistics). Departments such as finance and human resources are called support (or staff) functions since they provide support for those that are on the front lines such as sales and customer service (these departments are also called line functions as they are part of a company’s daily operations).BusinessDictionary.com, “Staff Function,” www.businessdictionary.com/definition/staff-function.html (accessed June 8, 2009). In a customer-centric organization, the focus on the customer helps prevent organizational “silos” (i.e., when departments work independently of each other and focus only on their individual goals).
The sales department is the heartbeat of every company. According to Selling Power Magazine, the manufacturing and service companies listed on its “Power Selling 500 Report” generate \$6.7 trillion dollars in sales annually. Each salesperson supports an average of 12.9 other jobs within the company.“Selling Power 500: America’s 500 Largest Sales Forces,” Selling Power, October 2008, 53. This means that the level of sales that is generated by each salesperson actually pays for the roles in human resources, marketing, operations, and other departments. It makes sense that the salespeople fund the operations of the company. After all, it is a salesperson with whom you interact when you buy a Nissan Cube, lip gloss at Sephora, or an interview suit at Macy’s. The people in the sales department “ring the cash register” (whether the business has a cash register or not). They are responsible and accountable to deliver sales to generate revenue and profit, which are required to operate and to invest in the company. In fact, the sales department is considered so important that even in this difficult economy, companies should continue to fill open sales positions even if they are not hiring in other departments, according to Dennis J. Ceru, a professor of entrepreneurship at Babson College and the president of Strategic Management Associates, a consulting firm in Wellesley Hills, Massachusetts.Elaine Pofeldt, “Empty Desk Syndrome: How to Handle a Hiring Freeze,” Inc., May 1, 2008, www.inc.com/magazine/20080501/empty-desk-syndrome.html (accessed June 7, 2009). Without a healthy and strong sales department, companies can wither and die.
Each salesperson generates enough revenue and profit to support 12.9 jobs in the average company.
Power Point: Lessons in Selling from the Customer’s Point of View
Role Reversal
How would you feel if you wanted to buy a new car, but every sales rep you called was in a meeting?
Brad Lathrop, a sales professional, learned the hard way about how a customer feels in this situation. When he was in the market for a new car, he called several dealerships. Every receptionist told him that all the salespeople were in meetings. The receptionist at the last dealership he called said the same thing, but added that if Brad would hold for a minute, she would get a salesperson out of a meeting. It’s no surprise that was the dealership where Brad eventually bought the car and learned a powerful lesson about selling.
Is It Sales, or Is It Marketing?
So you might be wondering, if the sales department interacts with customers, what exactly does the marketing department do? That’s a great question. Some people use the terms in tandem—sales and marketing—to refer to sales. Some people use the terms interchangeably and refer to marketing as sales. It’s no wonder that it confuses so many.
According to the American Marketing Association, “marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”American Marketing Association, “About AMA,” October 2007, www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx?sq=definition+of+marketing (accessed June 6, 2009). In other words, it is the role of the marketing department to use the four Ps of the marketing mix (product, place, promotion, and price) to determine the brand message, which is ultimately communicated to customers.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 380. Then, the marketing department uses the elements of the promotional mix of advertising, sales promotion, public relations, direct marketing, interactive marketing, and personal selling to get the word out to customers.George E. Belch and Michael A. Belch, Advertising and Promotion, 8th ed. (New York: McGraw-Hill Irwin, 2008), 10. Marketers seek to motivate prospective customers to purchase by driving them to a Web site, store, phone, event, or another related, desired action. Essentially, marketing builds relationships between customers and the brand. When you see an online ad for Best Buy, get a text message about the new release of Terminator 2: Judgment Day on Blu-ray, call the 800 number to check on your Rewards Zone point balance, post a comment on the Best Buy Facebook page, respond to a tweet from Best Buy on Twitter, see a newspaper insert or an ad on television, or read about the opening of a new store near year you, these are all examples of marketing. They are designed to encourage you to engage with the brand and encourage you to take an action—visit the store, go to the Web site, call the 800 number, or tell your friends about the brand.
When you go into the store or visit the Web site, it’s the sales department that takes over. A salesperson will speak with you (either in person in the store, online with live chat, or by phone) to determine what you need and to help you make the best decision by communicating product information (this printer is wireless), service information (we can deliver that tomorrow), warranty information (it has a 90-day manufacturer warranty), and other pertinent facts. The salesperson extends the relationship that was established with the marketing contacts and makes a personal connection with you. If you have a good experience, your relationship with Best Buy gets even better, and you are more likely to shop there again and tell your friends.
At times, however, sales and marketing don’t play well together. When organizations are not customer-centric, the departments may appear to have separate or conflicting goals. Marketing may feel that sales doesn’t follow up on prospective customers, or perhaps sales feels that the marketing efforts are focused on the wrong customers. To understand more about the relationship between sales and marketing, watch Chip Terry, vice president and general manager of sales intelligence at Zoom Info, talk about how the two functions are aligned (and sometimes how they may not be aligned):
Video Clip
Chip Terry Interview
How sales and marketing work together.
www.bnet.com/2422-13723_23-222675.html
Source: BNET
In addition to closing the sale (when the customer purchases the product or service), the salesperson has a very important role in the marketing process. Because the salesperson (in the store, online, or on the phone) is a primary touch point and a personal interaction with the customer, the salesperson is the brand in the eyes of the customer. According to Dr. David A. Shore of Harvard University, “The sales force is the most visible manifestation of the brand. Salespeople need to say with a singular voice, ‘This is who we are, and, by extension, this is who we are not.’ The critical element that power brands have is trust, and a sales force needs to become the trusted advisor to the customer.”Gerhard Gschwandtner, “How Power Brands Sell More,” Selling Power 21, no. 3, http://www.sellingpower.com/content/article.php?a=5705 (accessed March 16, 2010).
So now you can see that marketing and sales work hand-in-hand: one develops the brand and the other assumes the image of the brand. Neither works without the other, and the relationship between the functions must be transparent to the customer. There’s only one brand in the eyes of the customer, not two departments. When marketing and sales work well together, the customer experience is seamless.
Key Takeaways
• Sales is a career opportunity for you to consider; one in ten people in the United States has a job in sales or a sales-related occupation.
• In this global economy, many companies sell products in multiple countries around the world. Many multinational corporations have sales offices in foreign countries, and large and small companies sell globally by using the Internet.
• Sales 2.0 is a term that is used to refer to the ever-changing technology, such as social networking, that is changing the relationship salespeople have with customers. It’s important to understand how technology can support your communication and collaboration with customers.
• A customer-centric organization has the customer as the focal point. You work as a team with all functions in the company to provide products and services that meet customers’ needs.
• Sales and marketing are two distinct but closely related functions. Sales converts the customer to a purchaser with one-on-one interaction. Marketing determines the brand message and uses the elements of the promotion mix to motivate the customer to take an action. Both work together to build ongoing relationships with customers.
Exercise \(1\)
1. Visit http://www.sellingpower.com and review the “Selling Power 500.” Discuss the top ten companies listed in one of the six categories of businesses (office and computer equipment, insurance, consumables, communications, medical products, or financial services). Did you realize these companies employed so many salespeople? Have you come in contact with salespeople from any of these companies? To whom do these salespeople sell?
2. Identify a company that you think is customer-centric and one that is not. Identify at least three touch points for each company. Based on this, discuss why you think each company is customer-centric or not.
3. Discuss the difference between sales and marketing. Choose one of your favorite retail brands and discuss one example of sales and one example of marketing. | textbooks/biz/Marketing/The_Power_of_Selling/01%3A_The_Power_to_Get_What_You_Want_in_Life/1.03%3A_Selling_-_Heartbeat_of_the_Economy_and_the_Company.txt |
Learning Objectives
• Understand how the selling process can help you get the job you want.
Ultimately, this book is about the power of YOU.
To help you realize that power and get the job you want, this textbook includes a section called Selling U. It is the final section in every chapter, and it is filled with proven methods, information, examples, and resources to help you apply the selling concepts you learned in the chapter so that you may sell yourself to get the job you want.
In the Selling U sections throughout this book you’ll learn skills, such as how to create a cover letter and résumé that help you stand out, how to communicate with prospective employers, how to go on successful interviews, how to follow up, and how to negotiate and accept the right job offer. The complete table of contents is shown here.
Selling U Table of Contents
Chapter 1: The Power of Your Personal Brand
Chapter 2: Résumé and Cover Letter Essentials
Chapter 3: Networking: The Hidden Job Market
Chapter 4: Selling Your Personal Brand Ethically: Résumés and References
Chapter 5: The Power of Informational Interviews
Chapter 6: Developing and Communicating Your Personal FAB
Chapter 7: How to Use Prospecting Tools to Identify 25 Target Companies
Chapter 8: Six Power-Packed Tools to Let the Right People Know about Your Brand
Chapter 9: What’s Your Elevator Pitch for Your Brand?
Chapter 10: Selling Yourself in an Interview
Chapter 11: How to Overcome Objections in a Job Interview
Chapter 12: Negotiating to Win for Your Job Offer
Chapter 13: What Happens after You Accept the Offer?
Chapter 14: It’s Your Career: Own It
Chapter 15: Inspiration, Resources, and Assistance for Your Entrepreneurial Journey
Getting Started
Some people know exactly what they want to do in life. Madonna, Venus and Serena Williams, Steve Jobs, and countless others have been preparing for their chosen careers since they were young. Dylan Lauren, daughter of designer Ralph Lauren and chief executive of Dylan’s Candy Bar, could see her path even when she was young. With a father who was a fashion designer and her mother a photographer, she said, “I always knew I wanted to be a leader and do something creative as a career.”Patricia R. Olsen, “Sweets Tester in Chief,” New York Times, June 7, 2009, business section, 9. Katy Thorbahn, senior vice president and general manager at Razorfish, one of the largest interactive marketing and advertising agencies in the world, always knew she wanted to be in advertising. Her father was in advertising, her uncle was in advertising, and she had an internship at an advertising agency, so it was no surprise that she pursued a career in advertising. You probably know some people like this. They know exactly the direction they want to take and how they want to get there.
It’s not that way for everyone, however. In fact, most people don’t really know what they want to do for a career or even what types of jobs are available. Whether you are currently working at a job or you are just beginning to determine your career direction, it’s never too early or too late to learn about what career might be a good fit for you. It’s a good idea to use the three steps outlined below to help you begin your career search. These steps can be most effective if you complete them even before you put together your résumé (you’ll get the tools to create your résumé and cover letter in Selling U in Chapter 2).
Step 1: Explore the Possibilities
Whether you know your direction or are trying to figure out what you want to do “when you grow up,” there are some excellent tools available to you. The best place to start is at your campus career center. (If your school does not have a career center, visit the library.) The people who work there are trained professionals with working knowledge of the challenges to overcome, as well as the resources needed to conduct a career search. People find that visiting the career center in person to meet the staff is a great way to learn firsthand about what is available. Also, most campus career centers have a Web site that includes valuable information and job postings.
At this stage in your career search, you might consider taking a career assessment survey, skills inventory, and/or aptitude test. If you’re unsure about your direction, these tools can help you discover exactly what you like (and don’t like) to do and which industries and positions might be best for you. In addition, there are many resources that provide information about industries, position descriptions, required training and education, job prospects, and more. These are especially helpful in learning about position descriptions and job opportunities within a specific industry.
Here are some resources that you may find to be a good place to begin a search. Most of the Web sites listed provide surveys exercises and information at no charge.
Table \(1\): Resources for Your Job Search
Resource Description
Career One Stop
www.careeronestop.org/SKILLS/SkillCenterHome.asp
Information, job profiles, skills assessment, and more information available at no charge. The Skill Center is especially helpful. The site also includes salary and benefits information as well as other job search information.
Job Hunter’s Bible
http://www.jobhuntersbible.com/counseling/index.php
Links to job assessment tests, personality tests, and more. This is the companion Web site to the popular best seller What Color Is Your Parachute?
Queendom, the land of tests
http://www.queendom.com/tests/testscontrol.htm?s=71
Free tests for leadership, aptitudes, personality traits, and more.
Riley Guide
rileyguide.com/assess.html#tools
rileyguide.com/careers.html
A robust Web site with free information and links to help with your career search. The assessment section and career and occupational guides are especially helpful. (Some charges may apply on some linked sites).
Career-Intelligence.com
www.career-intelligence.com/assessment/career_assessment.asp
Self-administered career assessment tests, personality tests, and more; charges apply.
Lifeworktransitions.com
www.lifeworktransitions.com/exercises/exercs.html
Articles and exercises to help you determine your strengths, passions, and direction available at no charge.
United States Department of Labor Career Voyages
www.careervoyages.gov/automotive-main.cfm
Free information about industries, jobs, and more, including in-demand jobs.
United States Department of Labor Occupational Outlook Handbook
www.bls.gov/oco
Free detailed information about occupations by industry, training and education needed, earnings, expected job prospects, what workers do on the job, and more.
Step 2: Create Your Personal Mission Statement
You might be thinking that you just want to get a simple job; you don’t need an elaborate personal mission statement. Although you may not be asked about your personal mission statement during an interview, it is nonetheless important, because it provides you with a concrete sense of direction and purpose, summarized in relatable words. Great brands have clear, concise mission statements to help the company chart its path. For example, Google’s mission statement is “To organize the world’s information and make it universally accessible and useful.”Google, “Corporate Information, Company Overview,” http://www.google.com/intl/en/corporate/ (accessed June 6, 2009). The mission statement for Starbucks is “To inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.”Starbucks, “Our Starbucks Mission,” www.starbucks.com/mission/default.asp (accessed June 6, 2009).
It’s worth your time to write a personal mission statement. You might be surprised to discover that people who have a personal mission statement find it easier to get an enjoyable job. This is precisely because a personal mission statement helps provide framework for what’s important to you and what you want to do and accomplish.
A mission statement is a concise statement about what you want to achieve—the more direct, the better. It should be short (so don’t worry about wordsmithing) and easy to recall (you should always know what your mission statement is and how to measure your activities against it). A mission statement should be broad in nature. In other words, it doesn’t specifically state a job you want. Instead, it describes who you are, what you stand for, what you want to do, and the direction you want to take.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 18.
Links
Learn more about how to write your personal mission statement.
Quintessential Careers
www.quintcareers.com/mission_statements.html
www.quintcareers.com/creating_personal_mission_statements.html
Nightingale Conant
www.nightingale.com/tmission_ExampleStatement.aspx
Time Thoughts
www.timethoughts.com/goalsetting/mission-statements.htm
Once you write your mission statement, you should put it somewhere where you can see it daily—perhaps on your computer wallpaper, on your desk, or on the back of your business card. It should remind you every day of your personal goals.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 20.
Step 3: Define Your Personal Brand
Choosing a career direction and writing a personal mission statement are not things that can be done in one day. They require research, evaluation, consideration, and a lot of soul searching. The same is true for defining your personal brand.
You’ve learned about the power of a brand in the selling process and that a brand can be a product, service, concept, cause, or even a person. Truly, the most important product, brand, or idea you will ever sell is yourself.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 1. You’re not just a person, you’re a brand. When you begin your job search, you will need to sell yourself to prospective employers. When you sell yourself effectively, you will be able to sell your ideas, your value, your experience, and your skills to get the job you want.
It’s easy to talk about brands. It’s harder to define one, especially when the brand is you. Many people feel uncomfortable talking about themselves. Others feel as if they are bragging if they are forced to put themselves in a positive light. The fact of the matter is, to be successful and stand apart from the competition, you have to know yourself and carefully craft your brand story.Peggy Klaus, Brag: How to Toot Your Own Horn without Blowing It (New York: Warner Books, Inc., 2003), 3. For the purposes of finding a career, it is important to carefully consider what you believe defines you—what makes you unique, consistent, and relevant—and how to tell your brand story to create an emotional connection with prospective employers.
Here’s a strategy to help you think about defining your personal brand. If you were on a job interview and the interviewer asked you, “Tell me three things about yourself that make you unique and would bring value to my company,” what would you say? Would you be able to quickly identify three points that define you and then demonstrate what you mean?
Many students might answer this question by saying, “I’m hardworking, I’m determined, and I’m good with people.” Although those are good characteristics, they are too generic and don’t really define you as a brand. The best way to tell your brand story is to use the characteristics of a brand covered earlier in this chapter—unique, consistent, and relevant and creating an emotional connection with its customers.
If you identify three “brand points” you can tell a much more powerful brand story. Brand points are like platforms that you can use to demonstrate your skills and experience. Here are some examples of powerful brand points:
• Leadership skills. This provides a platform to describe your roles in leadership positions at school, work, professional, or volunteer or community service organizations.
• Academic achievement. This provides a platform to highlight your scholarships, awards, honors (e.g., dean’s list), and more. A prospective employer wants to hire the best and the brightest (if academic achievement isn’t your strong suit, don’t use this as one of your brand points).
• Sales (or other) experience. This provides a platform to underscore your contributions and accomplishments in your current and past positions. Past achievements are the best predictor of future success for a prospective employer so you can focus on results that you have delivered.
You can you see how specific brand points can make a big difference in how you might answer the question above; they help define your brand as being unique (no one else has this combination of education, skills, and experience), consistent (each one demonstrates that you are constantly striving to achieve more), and relevant (prospective employers want people who have these characteristics). Finally, the ability to communicate your brand story in a cover letter, a résumé, and an interview will help you establish an emotional connection with your prospective employer because he or she will be able to identify with components of your personality.
You’ve Got the Power: Tips for Your Job Search
You Have More to Offer Than You Think
If you’re putting off thinking about your career because you don’t have any experience and you don’t know what you want to do, don’t worry. Take a deep breath, and focus on how to define your personal brand. You have more to offer than you think.
• Have you worked in a restaurant, hotel, retail store, bank, camp, or other customer service environment? You have multitasking skills, customer service skills, and the ability to work under pressure and deliver results.
• Have you worked for a landscaping company, technology company, or other service provider? You have experience interacting with clients to understand their needs. (Also, don’t forget to mention the fact that you increased the company’s sales if you made any sales).
• Have you worked as a cashier in a bank or in an accounting department? You have had the responsibility of handling money and accurately accounting for it.
• Have you earned money on your own with a small business such as babysitting or lawn care? You have entrepreneurial experience. Include how you landed your clients, advertised for new ones, and managed your costs and time. Every company wants people who can demonstrate drive and independence.
Creating your brand points can effectively make the difference between being an ordinary applicant and being the person who lands the job. Indeed, your brand points are the skeletal framework for the way you sell yourself to get the job you want. You’ll learn how to use your brand points as the core of your résumé, cover letter, and interviews in Chapter 2 and Chapter 10.
For now, just take the time to really think about what are the three brand points that define you. Your education, skills, and experience will probably be different from the example, but your brand points can be just as powerful. Use the box below as a starting point to identify your three brand points.
Suggestions for Brand Points
These are thought starters. You should define your brand based on what you have to offer.
• Sales experience (or experience in marketing, retail, finance, etc.)
• Project management experience
• Leadership experience
• Management experience
• Negotiating experience
• Work ethic and commitment (e.g., working while going to school)
• Entrepreneurial experience (e.g., eBay or other small business experience)
• Customer service experience (e.g., working in a restaurant, retail store, bank)
• Academic achievement
• Subject matter expert (e.g., author of a blog)
• International study
• Community service
Key Takeaways
• Selling U is the final section in each chapter that provides information, resources, and guidance about how to sell yourself to get the job you want.
• Getting started for your job search includes three steps:
1. Explore the possibilities. Learn about yourself through career assessment surveys, skills inventory questionnaires, and personality tests. Investigate industries in which you may want to work by using the resources provided. Don’t forget to visit your campus career center.
2. Write a personal mission statement. State your purpose briefly and concisely. It will help you plot your course.
3. Define your personal brand. Identify three brand points that define your personal brand and become platforms on which to showcase your skills and experience. These three brand points will be the basis of your résumé, cover letter, and interviews.
Exercise \(1\)
1. Visit at least two of the Web sites listed in Table 1.1 for a career assessment, skills inventory, or personality test. Complete at least one of the free tests or surveys. Discuss one thing you learned (or the test confirmed) about yourself.
2. Write your personal mission statement. Discuss what you learned about yourself by creating it.
3. Discuss how the characteristics of a brand can relate to a person (e.g., unique, consistent, and relevant and has an emotional connection with its customers). | textbooks/biz/Marketing/The_Power_of_Selling/01%3A_The_Power_to_Get_What_You_Want_in_Life/1.04%3A_Selling_U-_The_Power_of_Your_Personal_Brand.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand the role of selling in everyday life, in the economy, and in companies.
• You can identify examples of selling in your everyday life.
• You can describe the characteristics of a brand.
• You can compare and contrast the difference between sales and marketing.
• You can understand how to define your personal brand.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. Name three situations in your life in which you use selling.
2. Name the four key characteristics of a brand.
3. Describe what this sentence means: “Each salesperson supports an average of 12.9 other jobs within the company.”
4. Is sales considered a line or a support function? Why?
5. What is the impact of Sales 2.0 on the selling function?
6. Which of the four characteristics of a brand is most important when you are selling your personal brand?
7. What is a customer-centric organization?
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. The following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
College Admissions: Who Is Selling Whom?
Role: College admissions director
You are the director of admissions at your school. You want to choose only the best candidates for admission for next year’s class. The focus of the school is to attract and accept students that demonstrate diversity, academic achievement, life experience, community service, passion for learning, and potential to grow.
You personally meet with each one of the final candidates to determine how they will fit into the culture of the school and help the school meet its objectives. It’s something you enjoy doing because it’s a chance to put a name with a face and see exactly what makes each student special. You and the other management at the school consider it to be a customer-centric organization.
You are about to meet with a prospective student. You are under some pressure to increase enrollment (after all, the admissions department is really like the sales department in a lot of organizations). You are not sure he’s a perfect fit for the school, but you are one of the school’s customer contact points so you want to make him feel at ease while you are learning more about him.
• How will you greet this prospective student to make him feel welcome?
• What questions will you ask to learn about his personal brand and determine if he will be a good fit for the school?
• If he is not exactly the right fit for the school, will you admit him anyway because you want to increase admissions? Why or why not?
Role: Prospective student
You are a prospective student at your school. Your grades are good (not outstanding), but you have been involved in the drama club and Spanish club in high school. You don’t know what you want to do in life, but you know you want to go to college and get a good job. You are nervous about your interview with the director of admissions because it’s your first interview and you don’t really know what to expect.
• How will you “sell” yourself to the director of admissions?
• How will you make an emotional connection with the director of admissions?
• What are your three brand positioning points, and how will you use them in this situation?
TEST YOUR POWER KNOWLEDGE AnswerS
1. Getting into the school of your choice, convincing your parents of something, getting the job you want (as well as other situations you may name).
2. The four characteristics of a brand are the fact that it is unique, consistent, and relevant and has an emotional connection with its customers.
3. “Each salesperson supports an average of 12.9 other jobs within the company” means that the level of sales that is generated by each salesperson is enough to fund the salaries and benefits of almost thirteen people in the organization in departments such as human resources, marketing, operations, finance, and others. Without the sales, the company would not be able to pay for the other jobs.
4. Sales is considered a line function because salespeople are part of the daily operations of the company.
5. Sales 2.0 is a term that applies to the ever-changing world of technology, communication, and relationships in selling. The evolution of the Internet has led to a change in the balance of power in the selling process. Now, customers may have more information than a salesperson due to the research they are able to do on Web sites, through communities, and user-generated content. (In other words, both good and bad news travel fast.) Salespeople have to focus on collaboration inside their companies and with their customers to deliver the best solution to meet their customers’ needs.
6. All of the characteristics are important when you are selling your personal brand. It’s important to define your brand by developing the three most important brand points that best describe you.
7. The organizational chart in a customer-centric organization has the customer at the center so that all functions focus on meeting the needs of the customer rather than working in silos. | textbooks/biz/Marketing/The_Power_of_Selling/01%3A_The_Power_to_Get_What_You_Want_in_Life/1.05%3A_Review_and_Practice.txt |
The Power to Choose Your Path: Careers in Sales
Video Ride-Along with Paul Blake, Vice President of Sales at Greater Media Philadelphia
Meet Paul Blake, a senior sales executive. Paul has been in sales for twenty years with roles at various companies including sales rep, sales manager, and now vice president of sales. He is responsible for over forty salespeople and millions of dollars of revenue. He and his sales team sell media solutions, including radio spots, Internet streaming ads, text message campaigns, and more to help businesses build brand awareness and get more customers.
Ride along with Paul and find out what it takes to be a great salesperson and what he looks for when he’s hiring new salespeople.
2.02: What Does It Take to Be in Sales
Learning Objectives
• Discuss the characteristics required to be successful in a career in sales.
• Understand what you can expect from a career in sales.
When Steve Jobs, the CEO of Apple, delivered the commencement address at Stanford University in 2005, he told the story of how he and Steve Wozniak started the now \$32 billion company in a garage in 1976. Jobs said, “I was lucky—I found out what I wanted to do early in life.”Steve Jobs, “You’ve Got to Find What You Love,” commencement address at Stanford University, Palo Alto, CA, June 12, 2005, in Stanford Report, June 14, 2005, http://news.stanford.edu/news/2005/june15/jobs-061505.html (accessed June 16, 2009). But life at Apple wasn’t always so perfect. When he was thirty, just one year after the launch of the Macintosh, he was fired from the company he founded. Although he was publicly humiliated and frustrated and didn’t know what to do next, he realized that he indeed loved what he did. From there he went on to start Pixar, the company that created Toy Story, the world’s first full-length computer-animated feature film.
He left the Stanford graduates with some personal words of wisdom to think about as they prepared themselves for their careers: “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”Steve Jobs, “You’ve Got to Find What You Love,” commencement address at Stanford University, Palo Alto, CA, June 12, 2005, in Stanford Report, June 14, 2005, http://news.stanford.edu/news/2005/june15/jobs-061505.html (accessed June 16, 2009).
To be successful in sales, and in life, you must love what you do. If you aren’t passionate about your profession, you will never be the best. You will always fall short because the people who love it will naturally excel. It seems simple enough: do what you love. But what if you love many things or don’t know if you’ve found your niche? Don’t worry—there are questions you can ask yourself to help you determine whether a career in sales will excite you and make you want to leap out of bed every morning.
Are You Born to Sell?
How do you know if sales is your passion, the career of your dreams? The first step is taking this course. You’ll have an opportunity to learn about sales and actually put your knowledge to work in real-life situations by role-playing with your classmates. After reading this chapter, you will better understand the profession of selling and what it has to offer. This chapter includes insights about which personal characteristics and talents are best suited to sales, which industries you might work in, and how you can be successful in the profession.
Just like being a teacher requires traits such as a love of learning, an ability to communicate, and the talent to make concepts come alive for people, selling calls for certain personal characteristics as well. Some people think that successful salespeople are those who have the “gift of gab,” but that’s not really what makes salespeople effective. Although communication and relationship building are valuable skills, just being able to talk to people is not enough to be successful in sales. Consider the following points that make a salesperson successful and see if these are a good match to you and your skills.
Character and the Ability to Build Trust
It never goes without saying that character—the combination of your beliefs, tendencies, and actions that you take—is the single defining trait for a salesperson (or any business person, for that matter). Dave Kahle, “The Four Characteristics of Successful Salespeople,” Industrial Distribution 97, no. 4 (April 2008): 54. Your character defines how you will conduct yourself, and it is the yardstick by which customers measure you. After all, your customers are spending their money based on what you say you will deliver; they have to trust you. If you ever break the trust for any reason, you will likely lose not only the sale, but you will most likely lose your reputation, and, ultimately, your livelihood. According to a survey by Forrester Research, trust and believability are so important in the buying and selling processes that 71 percent of buyers based their decisions on these traits. Robert W. Bly, “Everyone Loves a Story,” Target Marketing 32, no. 6 (June 2009): 23. See why Jake Nickell, founder, and Jeffrey Kalmikoff, chief creative officer, of Threadless.com think that being trusted by the customer makes a great salesperson.
Link
The Founders of Threadless.com on the Importance of Trust in Selling
www.inc.com/ss/what-makes-great-salesperson#4
The Ability to Connect
The most successful salespeople know how to engage their customers in a way that helps the customers identify for themselves the way the product or service offered can deliver value. The Xerox Company, after conducting a survey to identify the characteristics of their peak-performing salespeople, says it best: “Your prospect will never buy because you present a pitch. She instead buys from what she convinces herself of. This means that if you are selling a watch, telling your prospect you will cure his ignorance of time will not be enough. Your prospect will literally talk to himself to discover that this watch will indeed keep him from running late. He will not listen to you; he will only listen to himself.”Kerry Johnson, “Five Characteristics of Peak Sales Performers,” Event Solution International, www.eventsolution.com/education/businessarticles.html (accessed June 16, 2009).
A good salesperson will use his personal skills to connect with a customer, so that their conversation prompts and echoes the customer’s own internal thought process. It is ultimately this ability to connect that allows the salesperson to build relationships and trust. This video highlights how a motorcycle trip, passion, and connecting led to a sale with Harley-Davidson.
Video Clip
Interview with Jim Cathcart, President, Cathcart Institute
Learn how a motorcycle trip led to a sale.
http://www.sellingpower.com/content/video/?date=8/12/2009
Listening Skills
Contrary to popular belief, speaking is not the most important aspect of selling—listening is, because “salespeople are communicators, not manipulators.”Monroe Porter, “Six Common Characteristics of Successful Salespeople,” Pro 20, no. 6 (May 2008): 33. It’s interesting to note that many of the salespeople who are constantly talking are actually not successful. It is those salespeople who have a genuine interest in listening who learn precisely what the customers’ needs, priorities, and opportunities are. Listening skills are the fundamental basis for forming a connection. “Listening builds relationships,” according to Marjorie Brody, author of Help! Was That a Career-Limiting Move? She suggests a “silent solution” to many problems in the form of listening.Pamela J. Holland and Marjorie Brody, Help! Was That a Career-Limiting Move? (Jenkintown, PA: Career Skills Press, 2005). The challenge for many people is that listening with undivided attention is hard to do. According to Barry J. Elms, CEO of Strategic Negotiations International, psychologists say that we listen using only 25 percent of our brain.Steve Atlas, “Listening for Buying Signals: Missing Your Prospects’ Buying Signals,” Selling Power 20, no. 2, http://www.sellingpower.com/content/article.php?a=5350 (accessed March 16, 2010). That means that the other 75 percent is thinking about a response or thinking about something else. Salespeople who take notes, refer to written material, and are intently aware of their nonverbal cues can be extremely successful because they see and hear things that people who are talking just can’t absorb.Steve Atlas, “Listening for Buying Signals: Missing Your Prospects’ Buying Signals,” Selling Power20, no. 2, http://www.sellingpower.com/content/article.php?a=5350 (accessed March 16, 2010). See why Andy Taylor, CEO of Enterprise Rent-A-Car, thinks great listening skills make a great salesperson.
Link
Andy Taylor, CEO of Enterprise Rent-A-Car, on Listening Skills
www.inc.com/ss/what-makes-great-salesperson#1
The Ability to Ask the Right Questions
It was Einstein who said, “If I had an hour to solve a problem and my life depended on it, I would use the first fifty-five minutes to formulate the right question because as soon as I had identified the right question, I knew I could solve the problem in less than five minutes.”Kim Michael, “The Most Powerful Tool in the Sales Arsenal—Part 1,” American Salesman 54, no. 6 (June 2009): 3. This demonstrates the power of asking the right questions. Those questions can only be asked when you listen and have the ability to connect. Paul Blake, whom you met at the beginning of this chapter, believes that asking the right questions is vital to the success of his sales force. That’s why he leads by example and always asks one key question when he is interviewing candidates for sales positions: “Do you believe you have the right to change someone’s opinion?” That single question tells him all he needs to know about the candidate and how she would perform on his sales team.Paul Blake, interview with the author, Greater Media Philadelphia, Philadelphia, PA, December 11, 2009.
The Willingness to Learn
You might think that just because you are in school, you are learning everything you need to know for your career. Although you are building a strong foundation, you will continue to learn new things every day when you are working. Salespeople must not only have product knowledge and understand the buying and selling process; they must also learn skills that will make them more effective and efficient as salespeople. For example, in one study on salespeople, executives mentioned that salespeople must be willing to learn more than what appears to be required. Financial skills, negotiating skills, and even speed-reading courses were mentioned as additional training needs.John F. Tanner, Jr., Christophe Fournier, Jorge A. Wise, Sandrine Hollet, and Juliet Poujol, “Executives’ Perspectives of the Changing Role of the Sales Profession: View from France, the United States, and Mexico,” Journal of Business and Industrial Marketing 23, no. 3 (2008): 193. It’s important to note that besides constantly learning new skills, salespeople have to be students of the business. Skills and abilities are developed and fine-tuned over time, and experience plays a role in the learning process. So it stands to reason that salespeople are not “made” simply because they have the title. Just as it takes seven years to become a doctor, three years to become a lawyer, and a thousand hours to become a barber, a great salesperson develops over time.Margaret Norton, “Is the Successful Salesperson Made or Born?” EzineArticles, ezinearticles.com/?Is-the-Successful-Sales-Person-Made-Or-Born?&id=1020044 (accessed June 16, 2009). If you’re thinking about pursuing a career in sales, keep in mind that like other professions it takes time, training, and experience to be successful.
The Drive to Succeed
You can’t be successful if you don’t set goals. Great salespeople set goals for themselves, achieve them, and celebrate those achievements. They visualize what they want, then put together a plan to get it. Kelley Robertson, “10 Characteristics of Successful Salespeople,” Business Know-How, http://www.businessknowhow.com/marketing/successful-salesperson.htm (accessed June 16, 2009). The drive to succeed is important not only in sales, but also in life. Consider Olympic swimmer Michael Phelps. He set out to do something that no one else had ever done: win eight Olympic gold medals. It’s instructive to look at his drive to succeed and what he did to prepare for and achieve his goals. While Phelps has had some recent public relations (PR) challenges about his behavior out of the pool, it doesn’t diminish his hard work, drive to succeed, and accomplishments.
Which Generation Is Best at Selling?
There are now three generations in the work force: baby boomers (born 1946–1964); Gen X (1965–1980); and Gen Y, also known as millennials (born after 1980). According to a recent survey by the consulting firm Generational DNA, 42 percent of Gen X sales reps exceeded their sales goals while 37 percent of Gen Y and only 32 percent of baby boomers exceeded their goals. But everything is relative as the survey also revealed that boomers are more likely to have more ambitious goals, which is a reflection of their experience level.Geoffrey James, “Which Generation Is Best at Selling?” BNET, July 29, 2009, blogs.bnet.com/salesmachine/?p=4424&page=2 (accessed July 27, 2009).
Resilience and a Positive Attitude
It’s important to remember that you will hear “no” more frequently than you hear “Yes, I’ll take it.” That challenge, however, is offset by the thrill of victory when the sale is made and a relationship with the customer based on trust is built. You can only succeed when you go the extra mile, by investigating one more lead, going back for the second sales call even when the first hasn’t been successful, and trial closing even if you are not sure you can really get the sale.Dave Kahle, “The Four Characteristics of Successful Salespeople,” Industrial Distribution 97, no. 4 (April 2008): 54. It’s the eternal optimism that pushes you, even when others might think there is no reason to pursue the sale. If you think you can make it happen, you should definitely be in sales.
The Willingness to Take Risks
Has anyone ever told you, “You won’t know until you try”? That statement is especially true in sales. You can set yourself apart by taking smart business risks. Think about how you consider taking risks in everyday life and how they pay off. For example, let’s say you are from a small town and you chose to go to a college in a big city because you wanted to experience something new. That was a risk; it took you outside your comfort zone. But if you hadn’t taken the risk, you would have never known what life in a big city was like. Great salespeople go beyond the norm to explore and test the waters. For example, making phone calls to senior executives that you have never met, networking with people you don’t know, or making a presentation to a room full of customers all involve some level of risk. But getting out of your comfort zone and taking risks is how great opportunities are found.Dave Kahle, “Characteristics of a Successful Professional—A Propensity to Take Risks,” Agency Sales 36, no. 6 (June 2006): 40.
Taking risks in life and in selling is best summed up by Lisa McCullough, a high-profile stuntwoman: “Don’t focus on your fears, focus on what you want.”Lisa McCullough, “Lessons from a Stunt Woman,” video, Selling Power, http://www.sellingpower.com/content/video/?date=3/23/2007 (accessed March 16, 2010).
Video Clip
Taking Risks
Lisa McCullough shares her thoughts on taking risks in this video.
http://www.sellingpower.com/content/video/?date=3/23/2007
The Secret to Success: Failure
“No risk, no reward” is a familiar saying. But best-selling author Jeffrey Gitomer says, “No risk, no nothing.” He believes the only way to succeed is to take risks and sometimes fail. It’s the failures that can lead to success.Jeffrey Gitomer, “No Risk No Reward,” video, May 17, 2008, http://www.youtube.com/watch?v=UBHBk-A4a5M (accessed August 28, 2009). He talks about the importance of taking risks and failing in this video.
Why Taking Risks Is Important to Success
Source: Buy Gitomer, Inc.
The Ability to Ask for an Order
It may sound intuitive that successful salespeople shouldn’t be afraid to ask for a customer’s order, but you would be surprised at how often it happens. Most customers want you to ask for their order. “Would you like fries with your hamburger?” “What can I get you for dessert?” and “Would you like to pay with credit or debit?” are all examples of salespeople asking for the order.
A large percentage of the time these salespeople are successful and meet their customers’ needs at the same time. You reduce your chances of being successful if you don’t ask for the order.Monroe Porter, “Six Common Characteristics of Successful Salespeople,” Pro 20, no. 6 (May 2008): 33. In other words, if you don’t ask for the order, someone else will. See why Fred Franzia, founder of Bronco Wine Company and creator of “Two Buck Chuck” wine, thinks that asking for the order makes a great salesperson.
Link
Fred Franzia, Founder of Bronco Wine Company, on Asking for the Order
www.inc.com/ss/what-makes-great-salesperson#5
Independence and Discipline
Most sales positions require independence, self-motivation, and discipline. Although these traits may seem contradictory, they are actually complementary. Independence is especially important if you are calling on customers in person. It usually requires travel, either locally by car or by plane, which means that you have to be able to manage your time without being told what to do. In fact, it means that you set your schedule and do what you need to do to meet your sales goals. But having this kind of independence requires discipline. As Michael Janusz, an account manager at ACL Laboratories put it, “I went into sales because of the dynamic environment, competitive aspect, and income potential. I do think there is a shortage of good salespeople. I think this is because it takes a unique blend of skills and a disciplined person. There are many people who can talk well, manage a territory well, or work hard. However, not many can put it all together.”“What Do Salespeople Want?” BizTimes, March 30, 2007, www.biztimes.com/news/2007/3/30/what-do-salespeople-want (accessed June 19, 2009). Besides having an independent streak, salespeople must be focused and hardworking in the long term, or they will not enjoy consistent success over time.
Flexibility
Along with the need for independence comes the importance of flexibility. Just as you are able to set your own schedule, you have to be flexible based on your customers’ needs. Most sales positions are not nine-to-five jobs. That means you might be working nights or weekends, or you might be traveling out of town during the week or even long periods of time, especially if you are selling internationally. You have to be available when your customers want to buy. Before you cringe at the prospect of grueling hours and long flights, remember that this kind of schedule may also work to your advantage. You may have some weekdays off, which allow you to enjoy family, sports, or other outings that you might not otherwise have an opportunity to enjoy.
Passion
If you’re not passionate about what you’re selling, how do you expect your customers to believe in you and your product? You have to love what you do, believe in it, and feel passionately about it. Passion encompasses all the traits mentioned above; it’s how they all come together. Passion is the element that sets you apart from other salespeople and makes your prospects and customers believe in you and your product or service. See why Selena Cuff, head of Heritage Link Brands, thinks passion is what makes a great salesperson.
Link
Selena Cuff, Heritage Link Brands on Passion
www.inc.com/ss/what-makes-great-salesperson#0
Bringing It All Together
If this seems like a lot of traits, think about the list of traits that might be required to be a doctor, lawyer, or college professor. Every profession requires a lot of those who pursue it. To make it easier, you may want to think about how these traits come together. Mahan Khalsa, founder of FranklinCovey Sales Performance Group and author of Let’s Get Real or Let’s Not Play: The Demise of Dysfunctional Selling and the Advent of Helping Clients Succeed, sums up the traits of a successful salesperson this way: “There are three traits that define a successful salesperson: business intelligence (IQ or intelligence quotient), the ability to create rapport and build trust (EQ or emotional intelligence), and a good way to approach and to follow up sales (XQ or executional intelligence; the ability to execute the sale).”Mike McCue, “Lessons from the Master,” Sales and Marketing Management, March 1, 2008, 22–24.
Want to know what employers look for when hiring a salesperson? This video features Mary Delany, chief sales officer at CareerBuilder.com, discussing what she looks for in candidates for sales positions.
Video Clip
Interview with Mary Delany, Chief Sales Officer at CareerBuilder.com
Learn about the characteristics of a great salesperson.
http://www.sellingpower.com/content/video/?date=1/5/2007
Power Player: Lessons in Selling from Successful Salespeople
It’s All about Their Stuff
Mark Bozzini, CEO of Infinite Spirits, learned a powerful selling lesson early in his career. His job was to sell more bottles of wine than were sold the previous year, which seemed easy enough. But when he called on a wine and spirits retailer, the storeowner told him that his products didn’t sell and he would rather not have them on his shelves. So much for selling more bottles of wine. An average salesperson might become pushy, or even leave and seek a sale elsewhere. But Bozzini, an intuitive and passionate salesman, was determined to make the sale. He spent an hour rearranging the store display and asked the storeowner to give it a chance to see if the product sold better. The new display worked, and the storeowner became one of Bozzini’s best customers. The moral of the story: always remember that “the customer doesn’t care about your stuff. They care about their stuff.”Anna Muoio, “Sales School,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/19/one.html?page=0%2C2 (accessed June 23, 2009).
Creating Value Is the Name of the Game
The role of a salesperson can be summed up in one sentence: “Salespeople are value creators.”John F. Tanner, Jr., Christophe Fournier, Jorge A. Wise, Sandrine Hollet, and Juliet Poujol, “Executives’ Perspectives of the Changing Role of the Sales Profession: View from France, the United States, and Mexico,” Journal of Business and Industrial Marketing 23, no. 3 (2008): 193. To further describe what this means, think about a recent visit to the Apple Store. If you go to the store at virtually any hour, it is filled with customers. The salespeople are not just those that are pushing a product, hoping that you buy so that they make their sales quota. They are experts who know everything about the products in the store whether they be MacBooks, iPods, or iPhones. The salespeople engage you in dialogue, listen, and learn about what you are looking for. They ask questions like, “What do you do with the photos you take? Do you like to make videos? Do you want to easily access the Web from your phone?” No techno-talk, no slick sales pitches. They just want to know what’s important to you so that they can let you try the product that not only fits your basic computing needs, but blows you away.
Apple and its sales team know that computers are complicated and can baffle even savvy users. To build trust and confidence with their customers, they developed the “Genius Bar” so that Apple users know that they can always to talk to an individual and find help with any problem or question they may have. In fact, Apple dedicates a section of their Web site to the Genius Bar and invites customers to make an appointment online to come to a store to talk to one of the “resident Geniuses.” Talk about creating value. As a result, Apple is able to charge a premium for its product and generate such demand that in some cases people are lined up to buy their products, as was the case for the launch of the iPhone 3GS in June 2009.Brandon Griggs, “iPhone 3GS Launch Has App Developers Seeing Gold,” CNN.com, June 19, 2009, www.cnn.com/2009/TECH/06/19/iphone.3gs.launch (accessed June 26, 2009).
WII-FM
While a job in sales can be demanding, it can also be very rewarding in many ways. Even in these days of iPods and Pandora, WII-FM (What’s In It For Me) is a radio station that everyone listens to. It’s not a bad thing to think about what’s in it for you. After all, if you are considering investing your career in the selling profession, you should know what’s in it for you.
What Will You Be Doing?
The life of a salesperson is never dull. You could be working with a single customer or with multiple customers. You might work in a corporate office, or you might work from your home. You might talk to customers via phone, live chat, instant message, and text, or you might meet with them in their office in your neighborhood, your region, or anywhere around the world. You might be working on research to identify new customers, preparing a presentation for a new or existing customer, meeting with customers face-to-face, following up to get contracts signed, or communicating inside your organization to be sure all goes well to deliver the product or service to the customer on time and on budget. On any given day you might be working on any number of activities to support an existing customer or to approach, present, or close a new customer.
What Can You Achieve?
A job in selling can be a gateway to wherever you want to go. Stanley Marcus, the ninety-three-year-old chairman emeritus of Neiman Marcus, started as a messenger boy, then as a junior salesperson in his father’s store before working his way to the top. Michael Dell started by selling computers from his dorm room.Anna Muoio, “Sales School,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/19/one.html?page=0%2C3 (accessed June 23, 2009). Selling could eventually give you fame and fortune, but more immediately it can also give you the satisfaction of providing solutions to people, financial opportunity, and even financial independence. Even in today’s challenging economy, these goals are possible.
Sales drive every company’s growth. When you are in sales, you are responsible for the future of the company. That’s why many sales positions offer unlimited income potential. Sales is considered a pay-for-performance profession.Michael Levens, Marketing: Defined, Explained, Applied (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 186. That means that you are paid based on your performance, which in this case is sales. Your income is commensurate with the amount of sales you generate; simply put, you can make as much money as you want. This is a major difference between sales and most other disciplines. In most sales positions, you earn a salary and perhaps some other elements of compensation, such as a bonus. In sales, you can determine your income because it is usually not limited to a specific number; it is based on the amount you sell. Although this topic is covered in detail in Chapter 14, it’s worth noting here that you have the power to determine how much you want to earn when you have a successful career in sales.
If you want to check out base salaries for sales positions in your area or the area in which you would like to work, go to Salary.com and use the Salary Wizard. You’ll be able to see the average salary, bonuses, benefits, and more.
Link
Salary Information
This is a resource to research salary and other compensation elements for different positions in areas across the country.
http://salary.com
Key Takeaways
• To be successful in sales and in life, you have to enjoy what you do for a living.
• A good salesperson does more than sell; he builds a relationship and trust with the customer and offers solutions.
• A successful salesperson is a good listener. It’s important to listen and understand the challenges that the customer is facing in order to present solutions that will work.
• Asking the right questions is critical to being successful in sales. It is the right questions that provide an opportunity for customers to share their challenges. Successful salespeople are always learning new things from selling techniques to technology in order to bring the best ideas to customers.
• Selling requires independence and discipline. There is no typical day in selling so salespeople have to be able to manage their own time.
• One of the biggest challenges of being in sales is the number of times you hear “no.” Successful salespeople are resilient, have a positive attitude, and are willing to take risks.
• Passion is one of the most important characteristics of a successful salesperson. If a salesperson isn’t passionate about what he sells, it’s unlikely that his customers will be motivated to buy.
• The primary role of a salesperson is to create value for the customer and the company.
• A job in sales can be very rewarding on both a personal and a financial level, and it can lead to just about any career path you choose.
Exercise \(1\)
1. Think about someone you trust such as a parent, professor, friend, classmate, or colleague. Describe why you trust him or her. Now, think about that person again. Would she say that she trusts you? How would she describe why she trusts you?
2. Ask a classmate to describe his background and then describe yours for five minutes each. Write a summary of his background based on what he or she said and ask your classmate to do the same. How accurate was each of your summaries? How many details did each include in the summaries? What did you learn about listening skills?
3. Discuss the sentence, “Salespeople are communicators, not manipulators.” What does it mean? Why is it important to know the difference in sales?
4. Describe at least three characteristics of a good salesperson. Do you have any or all of these characteristics? What is appealing to you about a profession in selling? What is not appealing to you about a profession in selling?
5. Invite a salesperson to visit your class (in person or via Skype) to discuss his career in sales, what he thinks is most rewarding, and what he finds most challenging. | textbooks/biz/Marketing/The_Power_of_Selling/02%3A_The_Power_to_Choose_Your_Path_-_Careers_in_Sales/2.01%3A_Introduction.txt |
Learning Objectives
• Understand the different types of selling channels and selling environments.
If you had an accident and broke your leg, you would go to an orthopedic surgeon to have a cast put on it. However, if you had a skin rash you would go to a dermatologist to get relief and clear up the rash. Several doctors may have a role in helping you manage your health, so it makes sense that not all doctors conduct the same procedures. Some perform surgery and others diagnose, monitor, and recommend tests or further steps. Just as doctors play different roles in the health care field, the same is true for salespeople in the business arena. Different people perform different functions in the selling process.
Is It B2B or B2C?
There are two major distribution channels, or organizations or group of organizations involved in the process of making products and services available to customers in which personal selling is conducted.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin), 10. Personal selling involves communication between a customer and a salesperson with the intention of providing information for the customer to make a buying decision. Business-to-business (also referred to as B2B) is when businesses sell products or services to other businesses for consumption by the ultimate consumer. For example, Whirlpool sells washers and dryers to Sears and makes them to the specifications determined by Sears for the Kenmore name before they are sold in Sears and K-Mart stores. Other examples of B2B selling include parts or ingredients, such as when Intel sells computer chips to Toshiba to manufacture laptop computers or when a fabric company sells cotton fabric to Gap to make their T-shirts.
Many B2B companies, such as Intel, have branded their products so that these products are quickly identified by consumers even though the products are only sold to businesses. These companies believe so strongly in the power of branding (which you learned about in Chapter 1) that they are willing to invest in building the awareness and perception of their brand name despite the fact that you can’t go to a Web site or store and buy their product; you can only buy their product because it is a part of another product.
On the other hand, the transactions in which you as a consumer participate are business-to-consumer (also called B2C), which means that a company is selling a product or service directly to you as the ultimate consumer. In the example above, when Sears and K-Mart sell the Kenmore washers and dryers to consumers, it is B2C personal selling. Other examples of B2C selling include a waiter taking your order at a restaurant, a salesperson helping you find jeans in your size at American Eagle Outfitters, or a real estate agent showing you a house.
Some companies engage in both B2B and B2C selling, such as Staples, FedEx, Microsoft, and Geek Squad, since they serve business customers as well as the ultimate consumer. Many manufacturers such as Dove, Coke, and Oscar Meyer don’t actually participate in B2C personal selling, but these brands use B2C marketing to make consumers aware of their brands. Meanwhile, their B2B personal selling organizations focus on selling these products to retailers such as Safeway, CVS, and Sam’s Club (i.e., their customers), which in turn, sell their products in B2C channels to consumers like you.
There are some important differences between B2B and B2C selling. B2B selling engages with fewer customers (which makes sense because there are fewer businesses than there are consumers). At the same time, however, B2B selling involves much larger purchases. Companies purchase parts, ingredients, or supplies to service many consumers, while consumers only purchase a product or service for their own consumption or that of their family and friends. Since B2B purchases are larger in value than consumer purchases, the selling process is usually longer. This is as a result of the size of the purchase, and in many companies, there are multiple people involved in the purchasing decision, as you will learn about in Chapter 6.
Types of B2B and B2C Selling
When you go to McDonald’s and a salesperson asks you if you want fries with your order, there is not much involved on the part of the salesperson. In fact, you may not have even considered the person who took your order to be a salesperson. This is a selling situation that matches the needs of the buyer efficiently with the operation, but it doesn’t require a personal relationship or detailed product information to consummate the sale.Gerald L. Manning, Barry L. Reece, and Michael Ahearne, Selling Today: Creating Customer Value, 11th ed. (Upper Saddle River, NJ: Pearson Prentice Hall), 10. The product or service is of low dollar value and no additional contact is required for the sale. This is called transactional selling, and it occurs in B2C situations like this one, as well as B2B situations.Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 55.
On the other hand, consultative selling, also called relationship selling, takes place when there is a long-term or ongoing relationship between the customer and the seller, and the salesperson takes on the task of truly understanding the customers’ needs and providing solutions to meet those needs. In this type of selling situation, adaptive selling takes place. This occurs when a salesperson changes selling behavior during a customer call to improve the exchange or outcome.Gerald L. Manning, Barry L. Reece, and Michael Ahearne, Selling Today: Creating Customer Value, 11th ed. (Upper Saddle River, NJ: Pearson Prentice Hall), 12. Consultative selling takes place in both B2B and B2C environments. For example, if you were working with a financial advisor to develop a retirement plan, the advisor would be consulting you on the best ways to save and how to best invest your money. She would adapt to your needs based on your feedback. If you told her, “I don’t want to be in such high-risk investments,” this would prompt her to adapt her selling behavior to better match your needs.
In some cases, the selling relationship goes beyond consultative selling and establishes a true method for mutual benefit; this is called a strategic alliance. In this situation, sellers and buyers work together to develop opportunities and points of difference that wouldn’t exist without the relationship.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin), 36. This type of relationship is usually found in B2B environments because a strategic alliance typically involves two companies that have something to gain by each taking an appropriate risk.
For example, before introducing the iPhone, Apple contracted AT&T to be the exclusive service provider. Each company had something to contribute to the relationship, and each one had something to gain. In this case, AT&T pays Apple for each new customer it receives. Apple increases its revenues, and AT&T gains new customers. Both companies had to invest in research and development to make the relationship happen. Both companies “had skin in the game,” so both worked hard to ensure success through public relations, advertising, personal selling, and follow-up customer service. As a result, the relationship has been extremely successful for both parties, as a strategic alliance should be.Leslie Cauley, “AT&T: We’re All About Wireless,” USA Today, July 31, 2008, www.usatoday.com/tech/wireless/phones/2008-07-31-att-iphone-stephenson-apple_N.htm?csp=34 (accessed June 25, 2009). It’s important to note that not all strategic alliances are exclusive deals like the iPhone with AT&T. Although the deal between the two companies includes exclusivity until 2010, it’s not definite that exclusivity will expand beyond that.Justin Sorkin, “AT&T Urging Apple to Extend Its iPhone Exclusive Agreement until 2011,” TopNews.com, April 15, 2009, topnews.us/content/24841-att-urging-apple-extend-its-iphone-exclusive-agreement-till-2011 (accessed June 25, 2009).
Power Point: Lessons in Selling from the Customer’s Point of View
But Do the Customers Like It?
Satisfied customers are the true measure of success in selling. The University of Michigan publishes the American Customer Satisfaction Index every quarter, which measures customer satisfaction in a number of industries. It’s no surprise that in the fast food category, smaller chains led the pack in actual satisfaction scores with Domino’s as the highest-rated larger chain restaurant in the May 2009 survey. McDonald’s, Wendy’s, and Taco Bell also got the thumbs-up from customers.American Customer Service Index, “Rise in Consumer Satisfaction Continues—Now Followed by Other Economic Indicators,” First Quarter 2009, http://www.hotelnewsresource.com/article38884ACSI__Customer_Satisfaction_Rises_Again__Now_Joined_by_Other_Economic_Indicators.html (accessed June 23, 2009).
Is It Inside or Outside Sales?
What is the difference between the salesperson with whom you live-chat on BestBuy.com and the person you talk to in the store? Although both are salespeople for Best Buy, the person with whom you conducted live chat is considered an inside salesperson; the salesperson you spoke with in the store is considered an outside salesperson. Inside salespeople rarely, if ever, meet face-to-face with customers, whereas outside salespeople communicate with customers in a variety of ways, including in-person meetings.Michael Levens, Marketing: Defined, Explained, Applied (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 184.
For many B2B and B2C companies, the outside salespeople are generally the primary drivers of sales and costs of sales, since the outside salespeople travel to meet in person with customers to learn more about their needs, build relationships, and provide consultation and solutions. Inside salespeople usually perform more tactical selling functions such as providing product information (as in the Best Buy example above), following up on details, and keeping the customer informed of basic information.
Companies have traditionally used inside salespeople because they are part of a strategy that helps keep selling costs low. Today, many companies are converting outside salespeople to inside salespeople to further reduce selling costs. Advances in technology are blurring the lines between inside and outside salespeople by providing platforms for inside salespeople to be more collaborative and consultative with tools such as video conferences, Webinars, wikis, and more. Traditional thinking is changing, as evidenced in a recent study conducted by the International Data Corporation (IDC), a sales consulting firm, which found that currently 30 percent of revenues are influenced by inside salespeople.Heather Baldwin, “What Does Sales 2.0 Mean for You?” Selling Power Sales Management eNewsletter, March 3, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=801 (accessed March 16, 2010). As more companies leverage technology and think differently about customer relationships, the concept of inside and outside salespeople will evolve around the most mutually efficient and beneficial customer relationships, rather than the physical location of the salespeople.
Video Clip
Bad Day
Selling is a challenging profession, especially when you say the wrong thing. If you think you are having a bad day, watch this video to hear about some actual selling blunders. It will make you feel as if your day isn’t so bad after all!
A bad day in sales.
http://www.sellingpower.com/content/video/?date=11/3/2006
Source: SellingPower.com
What Kind of Job Can I Get in Sales?
You have the power to choose your career. Do you want to travel across the country or around the world to meet with customers and understand their needs and develop new business opportunities for your company? Or would you rather be a technical specialist, or a subject matter expert, and talk to customers about exactly how your product or service works? No matter what you want to do, chances are there’s a sales role that you will enjoy. Table \(1\) shows a snapshot of several different types of B2B and B2C sales positions that you might want to pursue and the industries in which you might find them.
Table \(1\): Types of B2B and B2C Sales Positions
Title Description Industries
Sales representative, account executive, account manager, marketing representative, sales consultant, sales associate
• Responsible for a group of customers with primary responsibility to develop and maintain close relationships with existing customers by understanding their needs and providing solutions
• Identifies and develops new customers
• Meets revenue and profit goals
• B2B: Technology, IT services manufacturing, hospitality, pharmaceutical, telecommunications, media, packaged goods, real estate, professional services
• B2C: Real estate, high-value retail, financial services
Territory manager
• Same as above, but customers are all in the same geographic area, or territory
• B2B: Technology, manufacturing, hospitality, pharmaceutical, telecommunications, media, packaged goods
• B2C: Not widely used in B2C
Business development manager
• Responsible for identifying, prospecting, and developing new customers
• After the customer signs the contract (or buys the product or service), the account manager takes over the day-to-day contact with the customer
• Meets revenue, profit, and new customer acquisition goals
• B2B: Technology, IT services, manufacturing, hospitality, pharmaceutical, telecommunications, media, packaged goods, business services, professional services, transportation
• B2C: Not widely used in B2C
Customer relationship manager
• Responsible for the overall satisfaction of the customer
• Usually a part of selling organizations that provide long-term professional services
• B2B: Technology, IT services, manufacturing, hospitality, pharmaceutical, telecommunications, media, professional services, transportation
• B2C: Not widely used in B2C
Product specialist, technical specialist
• Expert in a specific product or service area
• Participates in sales calls after the customer shows an interest to demonstrate or describe use and applications of the product or service
• B2B: Technology, IT services, manufacturing, hospitality, pharmaceutical, telecommunications, media, professional services
• B2C: High-value retail, financial services
Customer service representative
• Takes orders, provides product information, processes orders internally, and follows up as necessary with the customer
• May also provide outbound calls to customers to follow up
• B2B: Technology, IT services, manufacturing, hospitality, pharmaceutical, telecommunications, packaged goods, professional services, health care
• B2C: Retail (including online selling), packaged goods
Telesales representative
• Makes outbound or inbound contact with customers over the phone
• Activities include identifying prospective customers, providing information, completing a sale, and performing any necessary follow-up
• B2B: Technology, IT services, telecommunications, media, professional services
• B2C: Retail, insurance, financial services, publishing, political parties, causes
Just from the summary in Table \(1\), you can see that there are a variety of different types of sales positions in many industries. You might find it helpful to think about the overall roles and functions that each performs. For example, customer service reps and telesales reps are considered order-takers because they interact with customers to consummate a sale, but their role does not require planning or consultative selling. On the other hand, positions such as account manager, territory manager, customer relationship manager, and business development manager are order-getters because they actually work to develop a relationship and solve customers’ problems on an ongoing basis.Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 11. Sometimes, account managers, account executives, territory managers, and other similar roles perform missionary selling, which means that they call on customers who are not the ultimate purchaser. For instance, if you were a professor and an account manager from a textbook company called on you and brought you a copy of a new book on sales management for next semester’s class, that would be considered missionary selling because the sales rep would be telling you about the textbook, but you are not the ultimate purchaser. In this case, the sales rep is calling on you so that you adopt the textbook, put it on your syllabus, and as a result, your students purchase the textbook.
Power Selling: Lessons in Selling from Successful Brands
What’s in a Name?
Nike no longer uses the title “sales rep” for people in their sales force; their titles are now “account executive” and “account manager.” The change in titles is a reflection of their recent change in selling strategy. Nike realized that simply bringing new samples to retailers isn’t enough in this competitive marketplace. They consider planning to be a major part of the selling process, and the sales team plays a key role in planning in two ways: helping customers, such as retailers, plan their business and providing feedback and insights back to Nike to help plan the next generation of products. At Nike, your title says it all.Anna Muoio, “Sales School,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/19/one.html?page=0%2C3 (accessed June 23, 2009).
If you are considering a career in sales, the Selling Power magazine “50 Best Companies to Sell For Now” is an excellent resource to identify prospective employers.
Link
Selling Power Magazine
“50 Best Companies to Sell For Now” (subscription required)
http://www.sellingpower.com/content/newsletter/index.php
You can also learn more about specific descriptions of sales positions by reviewing some job postings on Monster.com, Yahoo! HotJobs, or CareerBuilder.com using sales in the keyword search.
Direct Selling
You may have been invited to a “party” at a friend’s or relative’s house to see the new line of Nutrilite Ocean Essentials vitamins and supplements. You have heard good things about the products from your friend. You didn’t realize that Nutrilite also made sports drinks and energy bars. You have a great time trying the products and talking to everyone at the party, so you decide to try the Nutrilite ROC 20 Antioxidant Enhanced Drink Mix, and you order it in three flavors.
You just experienced the direct selling process, “the sale of a consumer product or service away from a fixed retail location.”Direct Selling Association, “About Direct Selling,” http://www.dsa.org/aboutselling/what (accessed June 21, 2009). Some of the most well-known direct selling companies are Amway, Mary Kay Cosmetics, Avon, and Pampered Chef. There are over 15 million people in the United States who sell products or services via direct selling, which is almost four times more than twenty years ago. In 2007, the industry generated \$30.8 billion in sales in the United States.Alina Cho, “Avon, Mary Kay Making Comeback,” CNN American Morning, June 17, 2009, amfix.blogs.cnn.com/2009/06/17/avon-mary-kay-making-comeback (accessed June 21, 2009).
What makes direct selling so appealing is the fact that you can run your own business using the power of an established brand name and without the costs of manufacturing or providing the product or service. More important, you are your own boss. Although direct selling usually requires an initial purchase of products or services, called starting inventory, many direct sellers have been able to supplement their incomes and in some cases make it their full-time job, earning more than six figures a year. Given the opportunities, you probably aren’t surprised to learn that direct selling is growing as a result of the uncertain job market. Recent grads, retirees, and everyone in between are turning to direct selling as a way to safeguard them during the recession. It’s attractive because those who sell or distribute the products (also called independent business owners [IBOs]) make a percentage on the products they sell.
Link
Popular Career
Learn about the current trends in direct selling.
amfix.blogs.cnn.com/2009/06/17/avon-mary-kay-making-comeback/
But direct selling isn’t lucrative for everyone. Not all IBOs maintain their focus and develop their network. It’s hard work running your own business. It takes time, discipline, effort, focus, and passion. In fact, only 10 percent of IBOs work full-time or at least thirty hours a week.Charisse Jones, “Want a Recession-proof Job? Think Direct Sales,” USA Today, May 14, 2009, 1B.
Many direct selling companies engage in network marketing, also called multilevel marketing (MLM), which allows IBOs to invite other people to sell the products and earn money based on the sales of those they recruited. If you think about the concept of social networking on Web sites such as Facebook, it’s easy to understand MLM. You can expand your network of contacts simply by tapping into the network of your friends; MLM operates on the same principle. If you sell to your friends and they sell to their friends, your opportunity to earn money expands significantly with every contact. So if you were an IBO for The Body Shop and you recruited your friend Jessica to be an IBO, and she recruited her friend Lashanda to be an IBO, you would not only make commission on your product sales, but also on the product sales of Jessica and Lashanda. You can see how being a part of an MLM company can offer significant earning potential.“Multilevel Marketing,” Inc., www.inc.com/encyclopedia/multilevel-marketing.html (accessed June 21, 2009).
Unfortunately, there have been some unscrupulous people involved in the MLM business, and some have created pyramid schemes in which many people have lost money. As a result, most states have laws against “pyramiding,” a practice that offers incentives simply for recruiting new members of the network or IBOs. The laws require incentives to be paid only when sales are generated.Federal Trade Commission, “The Bottom Line about Multilevel Marketing Plans and Pyramid Schemes,” www.ftc.gov/bcp/edu/pubs/consumer/invest/inv08.shtm (accessed June 21, 2009).
You might want to check out the top multilevel marketing companies worldwide at the Web site noted here.
Link
Top Multilevel Marketing Companies
http://www.mlmrankings.com
Other Selling Environments
You’ve now seen how B2B, B2C, and direct selling work. Still, there are some other selling environments that you may also want to explore.
Entrepreneurial Selling
Martha Stewart (Martha Stewart Living Omnimedia), Mark Zuckerberg (Facebook), and Jeff Bezos (Amazon) each had a unique idea for a product or service. And while good ideas are key to building a business, what ultimately made each of these people successful was their ability to sell their idea to their customers and to their investors.
If you have the passion and vision to start your own business, you will need selling skills no matter what business you decide to create. Being an entrepreneur can be exhilarating, invigorating, and exciting. But it can also be challenging, time-consuming, and frustrating. That’s why successful entrepreneurs, like successful salespeople, plan, do their homework, listen to customers, and make ideas and solutions come alive. It’s no surprise that the traits of a successful salesperson discussed earlier in this chapter are the same traits that are required of an entrepreneur. Just like the different types of sales positions covered previously, there are virtually unlimited types of businesses that can be started by entrepreneurs. Consider the fact that the Internet levels the playing field because it provides business opportunities to all businesses regardless of size. Many of these entrepreneurial business opportunities were not available even a few years ago (and will undoubtedly provide new opportunities that don’t even exist yet). So whether you are a Power Seller on eBay or a dog-walker in your neighborhood, you have the power to start the business of your dreams. This course will give you the invaluable skills and the insights necessary to do so. In fact, Chapter 15 is devoted entirely to entrepreneurial selling.
Domestic versus Global Selling
Does technology eliminate the need for salespeople, or does it create opportunities to connect the dots between the company and the customer? Are salespeople more important domestically or globally? Is there a different expectation for global selling? Although these are complex questions that could take an entire course to address, you might find it helpful to know that the outlook for personal selling both in the United States and internationally is very strong. According to a study of executives from the United States, France, and Mexico, “Personal selling is not going to go away and the future looks bright.” Furthermore, the study found that with the use of technology, and in many cases because of it, it’s even more important that salespeople not only know the product and the customer, but also the industry and the environment. The diversification of product lines and customers’ needs for ancillary products such as service agreements, maintenance contracts, and multilingual options, make a skilled salesperson even more important in the transaction.John F. Tanner, Jr., Christophe Fournier, Jorge A. Wise, Sandrine Hollet, and Juliet Poujol, “Executives’ Perspectives of the Changing Role of the Sales Profession: Views from France, the United States, and Mexico,” Journal of Business and Industrial Marketing 23, no. 3 (2008): 193.
Companies expand internationally for several reasons, one of which is that business in the United States is extremely competitive, so companies need more opportunities to increase sales and profits. In some cases, the only opportunity for growth is to expand internationally. But international selling presents an additional level of challenges, including cultural, political, legal, demographic, and economic issues. Nonetheless, countries such as Brazil, Russia, India, and China, often referred to as the BRIC nations, are quickly transforming the global economy. China and India account for one-third of the world’s population, and so they represent a huge opportunity for global companies.George E. Belch and Michael A. Belch, Advertising and Promotion: An Integrated Marketing Communications Perspective, 8th ed. (New York: McGraw-Hill Irwin, 2008), 653–57. It’s likely that a company for which you sell will be doing business internationally, and if it’s not now, it will be some time soon. Some global companies include a one- to three-year sales assignment based in a foreign country.
Nonprofit Selling
Nonprofit organizations are those that use their proceeds to reinvest in the cause and are granted “tax-exempt” status from federal and other taxes.Carter McNamara, “Starting a Nonprofit Organization,” Free Management Library, http://managementhelp.org/strt_org/strt_np/strt_np.htm#anchor516676 (accessed June 23, 2009). Religious organizations, charitable organizations, trade unions, and other specifically defined organizations may qualify as nonprofit.Internal Revenue Service, “Tax Information for Charities & Other Non-Profits,” www.irs.gov/charities/index.html (accessed June 23, 2009). In fact, your school may be a nonprofit organization.
You might be wondering what selling has to do with nonprofit organizations. The fact is that fund-raising and the development of endowments are actually the lifeblood of nonprofit organizations. Your school may have a director of alumni relations and development. This is the person who secures donations for the continued development of the school and facilities; for example, if your school needs a new athletic facility or classroom building, much of the funding would likely come through the alumni office. Just like for-profit businesses, selling is the engine of nonprofit organizations as well. If you have a passion for a particular cause, such as the green movement, breast cancer, literacy, or education, among others, and want to focus on making a contribution by choosing a career in the nonprofit sector, you can find selling opportunities at many organizations. Although you may want to volunteer for some organizations before you make a career choice, there are paying career fund-raising and development positions in the nonprofit sector. Check out these Web sites to see jobs and job descriptions in the nonprofit sector.
Links
Learn more about nonprofit job opportunities and job descriptions.
Opportunity Knocks
http://www.opportunityknocks.org/
Idealist
http://www.idealist.org/
Nonprofit Job Scoop
www.nonprofitjobscoop.org/
Key Takeaways
• Companies sell to customers in business-to-business (B2B) or business-to-consumer (B2C) channels. The type of channel is based on the type of consumer who is buying.
• B2B selling differs from B2C selling because there are relatively few customers, larger purchases, and longer selling cycle.
• When you are engaged in consultative selling, you build a relationship and tailor solutions according to your customers’ needs. When you are engaged in transactional selling, you are focused on a single sale or transaction.
• There are many different types of selling positions that may vary by industry. You may be involved in outside sales, which includes meeting face-to-face with your customers or you may be involved in inside sales, which includes contact by phone, e-mail, text, instant messaging (IM), or fax, as well as sales support activities.
• Other selling environments include direct selling (independent sales agents), entrepreneurial selling (a business started by an individual), global selling (selling in countries outside the United States), and nonprofit selling (also called fund-raising or development).
Exercise \(1\)
1. Identify two companies that sell in both business-to-business and business-to-consumer channels. Discuss at least two ways in which they sell differently to businesses as opposed to consumers.
2. Identify a company that uses both transactional selling and consultative selling. Discuss the difference in the types of products that are sold in each example. Discuss the difference in the customer experience in each example.
3. Discuss the different types of sales positions you learned about in this section. Which type is attractive to you as a possible career? Why?
4. Discuss the reasons why someone might want to pursue a career in sales. Discuss the reasons someone might not want to pursue a career in sales.
5. Research companies and identify which offer some of the sales positions described in this chapter.
6. Contact a salesperson at a company in your area. Ask him to describe his role in the company, what type of customers he sells to, and what it takes to be successful in sales.
7. Visit the Web site of one of the multilevel marketing companies such as Pampered Chef (http://www.pamperedchef.com), Amway (www.amway.com/en), or Silpada Designs (www.silpada.com/public/). Discuss the pros and cons of being an independent business owner (IBO). Discuss the type of selling used by the IBO; is it transactional or consultative? | textbooks/biz/Marketing/The_Power_of_Selling/02%3A_The_Power_to_Choose_Your_Path_-_Careers_in_Sales/2.03%3A_Sales_Channels_and_Environments_-_Where_You_Can_Put_Your_Selling_Skills_to_Work.txt |
Learning Objectives
• Learn how to position your education and experience to create a résumé and cover letter to get the job you want.
Think about how you first learned about the new Palm Pre smartphone or that Gatorade had changed its name to simply “G.” How did you know that Pre had even more capabilities than the iPhone or that Gatorade was “moving to the next level”? Chances are it was some kind of advertising or public relations that made you aware of these products before you even tried them.
Now think about your personal brand. How will employers know about you and what you have to offer? A résumé and cover letter serve as your “advertising” campaign to prospective employers. Just like there are lots of ads about products and services, there are an overwhelming number of résumés and cover letters that employers have to review before inviting someone in for an interview. How do you make yours stand out? How do you increase your chances of being one of the people who are interviewed? How do you use your cover letter and your résumé to get the job you want?
There are a few important steps to follow to create the résumé and cover letter that will make you different and compelling to a prospective employer. You will use both of these to apply for jobs online and to send to people with whom you are networking, and you will even send them directly to companies for whom you would like to work. You only have an instant (think nanosecond) to make a lasting impression. If you think you only need a résumé to get a job, you should think again. Your cover letter can play an even more important role than your résumé. Here are some steps to help you create a cover letter that gets read and a résumé that gets you the interview. If you already have a résumé and cover letter, it’s worth reviewing this section because you will learn some important tips to improve them.
Five Steps for a Résumé That Stands Out
Looking for the right job to start your career is a process that includes preparing your résumé and cover letter, getting your cover letter and résumé to the right people, going on interviews, and negotiating and accepting the right offer. You are at the beginning of the process; you’ll learn about the rest of the process throughout the Selling U sections in this book. This section focuses entirely on creating your résumé and cover letter. Keep in mind that the only purpose for a résumé and cover letter is to get an interview. So your résumé and cover letter need to be crafted in a way that tells what your personal brand has to offer, or your brand story, in a concise and compelling way.
Step 1: Define Your Three Brand Points That Make You Unique and Provide Value to a Prospective Employer
If this sounds familiar, it should be. This was covered in detail in Chapter 1, but it is such an essential concept that it deserves repetition here. If you haven’t identified your three brand points, you should go back and review the section. Your brand points are actually the foundation of your résumé and cover letter; it is in their summary that you compose your brand story.
You might think of creating a résumé that is a chronological summary of your background. This is good, but it is not compelling enough to differentiate yourself amid the sea of résumés. There are two important things to remember when creating your résumé:
1. Tell your brand story with your brand points.
2. Your brand points should be clear at a glance (literally).
Let’s say your three brand points are leadership experience, academic excellence, and community service. Those three brand points make up your brand story, the story that you want to tell about yourself, so your résumé headings should highlight these areas.
To see what this means, review the two versions of the same résumé for Julianna Lanely in Figure \(7\) and Figure \(8\). The first one was written using a standard résumé approach; the second one was built by incorporating her brand points of marketing and event planning experience, academic excellence, and creative mind-set. Can you see the difference? Which résumé do you think is more compelling? Before you create (or refine) your résumé, identify your three brand points.
Step 2: Choose Your Résumé Format and Font
Now that you have the foundation of your résumé message (or your three brand points), it’s time to choose a résumé format. Executives in all industries encourage students and young professionals (those who have been working for five years or less) not to exceed one page for your résumé. In some cases, it may be difficult to keep all of your experience and accomplishments to one page, so choose those that best tell your brand story. As one executive said, “It better be worth my while to turn to page two.”Connie Pearson-Bernard, “Careers in Communications Night,” presentation at West Chester University, West Chester, PA, March 23, 2009.
There are several appropriate résumé templates available at your campus career center or in Microsoft Word. The downside to some templates is that they are difficult to adjust or adapt. The most important thing to consider when you are choosing your résumé format is to be sure it is easy for the reader to skim. Some formats with horizontal lines separating the categories, or those with dates that precede company and position information, are harder to skim because the reader has to work too hard to see the brand story. See the comments in Figure \(7\) to recognize some things to avoid in your résumé.
It’s easy to create a résumé that looks like Julianna Lanely’s revised résumé shown in Figure \(8\). Simply watch this short video and see how you can format it.
Video Clip
Résumé Formatting
click to see video
See how easy it is to format your résumé using a table in Word.
Once you choose the format you want to use, you should choose a font that you will use for your résumé and cover letter. The font should be easy to read like Arial or Times New Roman (Arial is a bit more contemporary; Times New Roman is more traditional). It’s best to use twelve-point type (or eleven-point at the smallest) for ease of readability. If you need a little more space on your résumé, consider adjusting the margins slightly, keeping at least 0.7 for each margin. You don’t want your résumé to feel crowded or that it is an effort to read.
Step 3: Choose Your Headings and Put the Most Important Ones First
Now that you’ve done your groundwork, it’s time to actually create your résumé. Think about your brand points and then determine the headings you want to use. Use headings that help you tell your brand story at a glance. Don’t focus yet on what you will write in each heading; that will be covered in Step 4.
There are some headings that are standard to include such as “Objective,” “Education,” and “Experience,” but other headings should be used to support your brand story. For example, instead of having a heading for “Work Experience,” be more specific and use “Sales Experience” to highlight that if it is one of your brand points.
One of the most critical things to remember is to put the most important things first. Start with a heading for “Objective,” then “Education.” As you gain more experience in your career, your education will move to the bottom. But at this point, it is a key selling point for your brand.
Now, it’s time to put your brand points to work by choosing headings that tell your story. For example, if academic excellence is one of your brand points, you might consider adding a heading after “Education” called “Scholarships and Awards” or “Honors” to highlight honors and awards that demonstrate your academic excellence. This is the ideal place for things like dean’s list, National Honor Society, or any other awards, honors, or scholarships that you have received.
It’s a good idea for your next heading to reflect one of your brand points such as “Leadership Skills” or “Sales Experience” (or any other specific type of experience). If leadership skills are one of your brand points, it’s better to not make the reader go all the way to the bottom of the page to read about your leadership skills under a generic heading called “Activities.” If it’s important to your brand story, bring your skills into focus in the first part of your résumé with a strong heading like “Leadership Skills.” This section could include athletic, school or professional organization, or any other type of leadership position. If you don’t have leadership skills, don’t worry—you still have a lot to offer. Follow your brand points to tell your story.
Next, include your work experience. This is where you can really make your brand story come alive. Don’t be restricted to a traditional chronological order of your jobs. If you have had an internship in marketing, sales, or other area that supports your brand points, make a separate heading for it, such as “Marketing Experience” or “Sales Experience.” If you have had other jobs, you can simply add another heading after it called “Work Experience” below it. Or if your work experience has a common theme, you might want to name your heading “Retail Experience,” “Customer Service Experience,” or “Hospitality Experience.” This approach tells the reader at a glance that you have valuable experience in the area you want to pursue. You should know that employers look for people who have worked in retail and in restaurants because they know that they can sell and work with customers. Use this type of experience to sell yourself.
If you have participated in projects or activities to support the community, you may want to include a heading for “Community Service.” If you have additional activities that are worth noting, you might consider a heading for “Activities.” It’s best to avoid a long list of generic activities at the end of your résumé, so think about how they tell your brand story. It’s best to include your most recent activities. Although you may include some key activities from high school, it’s better if you can replace those with your more recent activities. It’s not necessary to include the dates of your involvement.
It’s a good idea to have a final heading for “Skills” at the end of your résumé. This should include computer software in which you are proficient such as Microsoft Word, PowerPoint, Excel, Access, Adobe Acrobat, and others. It’s a good reminder to your prospective employer that you are skilled for any position. Although it may seem second nature to you to use these software products, there are employers who didn’t learn them in school so they may not be aware that you are proficient in them.
A few things that should not be included on your résumé are “References available upon request,” “Hobbies and Activities,” or a photo. Prospective employers expect to check your references, you should have more substantial things to put on your résumé than hobbies and activities, and many companies cannot consider résumés with photos as it would be considered discrimination.
See Rakeem Bateman’s résumé shown in Figure \(9\) to see how headings are used effectively to highlight his brand points of leadership skills, sales experience, and a committed work ethic.
Step 4: Write Your Bullet Points
Once you have determined your headings, it’s time to make your brand points come alive with bullet points under each heading. Bullet points are better than a narrative format because they are easier for the reader to skim. But, since the reader is skimming, each bullet point is that much more important. Keep your bullet points concise, but specific, so that each delivers powerful information.
Start with your objective and write a short, specific goal. One sentence is perfect; you don’t have to be flowery or profound. Something that helps the reader understand what you are looking for is best. For example, if you want to get a job in pharmaceutical sales, your objective might be, “To obtain a sales position at a pharmaceutical company.” Or you might want to get a job in an advertising agency so your objective might be, “To obtain a full-time position in account management at an advertising agency.” Short, sweet, to the point, and effective.
For your education, include the formal name of your college or university, city and state, formal degree (e.g., Bachelor of Arts, Communication Studies), and year or expected year of graduation. It’s not necessary to include the range of years you attended school. Now that you are in college, it’s best to remove your high school education. See Figure \(9\) for an example of how to list your education. You may be interested to know that your grade point average is not a requirement on a résumé. Generally, if your GPA is 3.5 or above, you may want to include it.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 156. The fact is most business people don’t recognize the significance of a GPA unless it’s 4.0. So, if academic achievement is one of your brand points, you should consider adding a heading for “Scholarship and Awards” to demonstrate your accomplishments and make them come alive for the reader. If academics aren’t your strong suit, don’t include your GPA; just list your education.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 156. If you have studied internationally, you might consider a heading or subheading named “International Study.” Include the program name, school, and countries visited, as well as the dates of the travel.
Awards or honors can be listed as bullet points under the “Scholarship and Awards” heading. For experience headings such as “Leadership Experience,” “Sales Experience,” or “Customer Service Experience,” list the name of the company, city and state, your title, and dates of employment. If you use boldface for the company name, it stands out and helps the reader see at a glance where you have worked. The bullet points in these sections are critical to setting yourself apart; they should be concise and specific, but descriptive, and they should focus on accomplishments and contributions, not a listing of activities or tasks. This will most likely take some time to write these bullet points, but it will be time well spent. Consider the difference between these two bullet points to describe a position at a restaurant:
• This statement can be more powerful when restated with quantitative details:
• Provided customer service to over 100 patrons during every shift, including taking orders by phone and at table-side; named Associate of the Month in August 2009
Consider the difference between these two bullet points to describe administrative responsibilities at an office:
• This line can be more powerful when restated in the following manner:
• Provided administrative support for the 30-person office; created new work flow for processing invoices that reduced turnaround time by 2 days
Consider the difference between these two bullet points to describe responsibilities as a bank teller:
• This statement can be more powerful when restated as the following:
• Processed over 80 customer transactions daily with 100% accuracy.
Your bullet points should help reinforce your brand points with details of how you delivered on those points. It might be helpful to write down all the things you did at each job and then identify the stories you can tell for each job. This is how you demonstrate traits such as ability to multitask, organizational skills, teamwork, and other skills.
Step 5: Review, Check Spelling, Proofread, and Repeat
It’s true that some résumés are never even considered because of a typo or grammar error. After you finish your résumé, take a break, and then review it objectively. Does it clearly tell your brand story? Are your brand points the most important topics? If someone read your résumé, what would that person think you have to offer? Make any necessary adjustments. Then spell-check and proofread it carefully. It’s a good idea to ask some people you trust—perhaps at your campus career center, a parent, professor, or mentor—to review and proofread your résumé. You can’t be too cautious.
When you are satisfied that your résumé is perfect, print it on twenty-four-pound paper (you can buy it at your campus bookstore or any office supply store or Web site).
You’ve Got the Power: Tips for Your Job Search
How to Save It
It’s best to save your résumé and cover letter in several formats. A Word document is standard for sending résumés and cover letters. However, online job posting boards remove formatting, so it’s best to also save your documents as .txt files in Microsoft Word (File, Save As, for file type choose “Plain Text (*.txt).” Click OK when the dialogue box appears. Check your document to be sure elements are still in place; adjust accordingly, then save). It’s also helpful to save your documents in PDF format by going to Acrobat.com.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 224. It’s a good idea to use a file name such as “John Jones Résumé” because it lets the reader know exactly what file he or she is opening and doesn’t give away your working name.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 226. Avoid file names such as “Official Résumé,” or “Résumé January 2010” as they don’t include your name and are not professional.
Three Steps for a Cover Letter That Gets Noticed
If you haven’t prepared a cover letter to send with your résumé, you should consider writing one. According to a recent article in the New York Times, “Cover letters are still necessary, and in a competitive market they can give you a serious edge if they are written and presented effectively.”Phyllis Korkki, “A Cover Letter Is Not Expendable,” New York Times, February 15, 2009, business section, 10. A cover letter is key if you need to set yourself apart, whether you are seeking an internship or a full-time position.
Step 1: Start with Your Three Brand Points
Maybe you are dreading the thought of writing a cover letter. It’s easier than you think, since you have already identified your brand points. Write a summary statement for each of your three brand points. In other words, if you only had one minute to talk about your three brand points, what would you say about each one? Write two concise sentences for each point. It might be rough right now, but it will become the core of your cover letter.
Step 2: Understand the Elements of a Cover Letter
Now you just need to know how to structure your brand story to make it come alive for the reader. A cover letter has three major sections:
1. First paragraph. Introduction and purpose for your letter.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 162.
2. Second paragraph. Reasons why you will bring value to the company (this is where you include your brand points).Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 162.
3. Third paragraph. Closing and follow-up.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 162.
Since business people skim cover letters and résumés, it’s a good idea to use boldface to highlight your brand points.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 162. Take a look at the cover letter in Figure \(10\) to see how your brand points become the focus of your cover letter. It’s important to repeat the highlights of your résumé in your cover letter so the reader can see at a glance how you can bring value as a prospective employee. Since you only have a few seconds to “sell” the reader on the fact that you are the right person for the job, you want to introduce the highlights in the cover letter and then provide the details in your résumé. Your cover letter and résumé work together to tell your brand story.
Besides the three core paragraphs of your cover letter, you will also want to know about the appropriate way to format a cover letter. Your cover letter should be limited to a single page and should include the same font that you used for your résumé. See Figure \(11\) for all the elements of a formal cover letter.
Step 3: Write Your Cover Letter
With your brand points in mind and the structure of a cover letter clearly defined, now you can get to writing. This is the place where you are able to demonstrate you personality and your selling skills. You can make your cover letter a powerful lead-in to your résumé and sell your prospective employer on the reasons why you should come in for an interview. As with your résumé, be sure to spell-check and proofread your cover letter carefully. Review your cover letter and résumé together to be sure your brand story is clear and powerful. Look at Rakeem Bateman’s cover letter and résumé together in Figure \(12\) to see how the two documents can work together and really set you apart just at a glance.
This cover letter can be the basis of the letter you use for most situations. Now that you have your cover letter, you should adapt it and personalize it for every situation. For example, if you are applying for a job that is posted online, adapt the letter to show how your brand points address the needs of the position. You may even want to create one or two new brand points that also define your brand that you can change based on the job posting.
It’s best to use your cover letter whenever you send your résumé to someone, whether you are responding to a job posting, networking, or sending out letters to your target companies. The Selling U section in Chapter 8 includes several ways to get your cover letter and résumé out to prospective employers.
Key Takeaways
• Your résumé and cover letter are your “advertising” tools for your personal brand.
• There are five steps that help you write a résumé that stands out from the crowd.
1. Your brand points are the basis of your résumé because they define your brand and the value you can bring to a prospective employer.
2. You can choose a résumé format that is easy for the reader to skim and see your brand points.
3. The headings on your résumé help provide a framework to tell your brand story.
4. The bullet points under each entry on your résumé should focus on your accomplishments and achievements, not just a listing of job tasks.
5. Always spell-check and proofread your résumé carefully. In fact, it’s a good idea to have several people review your résumé for accuracy before you send it to prospective employers.
• Your résumé should always be sent with your cover letter. Your cover letter highlights your brand points, which are further reinforced in your résumé.
• A cover letter contains three major parts: the first paragraph that acts as an introduction, the second paragraph that highlights the value you can bring to the company, and the third paragraph that is the closing.
Exercise \(1\)
1. Visit your campus career center and learn about different formats for your résumé. Which ones do you like? Why? Which one will you use? Is it easy for the reader to skim and see your brand story?
2. Visit your campus career center and learn about the format for a cover letter. What elements are included in a formal cover letter, which are not included in a casual e-mail? | textbooks/biz/Marketing/The_Power_of_Selling/02%3A_The_Power_to_Choose_Your_Path_-_Careers_in_Sales/2.04%3A_Selling_U_-_Resume_and_Cover_Letter_Essentials.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand the following opportunities that are available for a career in selling.
• You can understand what traits it takes to be a successful salesperson.
• You can describe the difference between business-to-business and business-to-consumer selling.
• You can discuss other selling environments such as direct, entrepreneurial, global, and nonprofit selling.
• You can create your résumé and cover letter so they quickly tell your brand story and focus on the value you can bring to a prospective employer.
Test Your Power Knowledge (Answers Are Below)
1. Name at least four of the traits of successful salespeople that are discussed in the chapter.
2. What is WII-FM, and what role does it have in a career in selling?
3. What does pay-for-performance mean in selling?
4. Which is better, a job that pays more or a job that you enjoy?
5. Identify whether each of the following is a B2B or a B2C selling channel:
1. ____ Selling a fence to a dog-training company.
2. ____ Selling business cards to a small business owner.
3. ____ Selling food to a school for the cafeteria.
4. ____ Selling energy drinks to spectators at a race.
6. Are there selling opportunities in a nonprofit organization?
7. What are the foundation of your résumé and cover letter?
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. The following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
Trust Me?
Role: Seller of a home
You are the owner of a four-bedroom home in a very nice part of town. The home has a spectacular view and impeccable landscaping. It is decorated so well that everyone who comes over wishes his or her house could look like yours. You and your spouse have decided that you want to sell your home even though the market is soft. You think you have found the real estate agent with whom you want to list the house. You want to get top dollar for your home.
• What characteristics will you look for when you choose a real estate agent?
• What role do you have to help ensure a successful sale of your home?
• Is this a B2B or B2C sale?
Role: Real estate agent
You are a seasoned real estate agent with a loyal clientele in this part of town. You have a track record of selling very expensive homes and reaping the benefits. You have done very well because of your referral business. But lately, the soft economy has taken its toll on your sales. You believe that keeping the prices as low as possible will attract new buyers.
• Is this a B2B or B2C sale?
• If you are the real estate agent, how would you approach the sellers to get the listing at the price you want?
• What characteristics does the real estate agent need to be successful?
• What characteristics do the sellers need to be successful?
ACTIVITIES
1. Follow the five steps in the chapter to create your résumé. Review your résumé with someone at the campus career center, a professor, a parent, or a mentor and get feedback as to how you might refine and improve it.
2. Follow the three steps in the chapter to write your cover letter. Review your cover letter and résumé with someone at the campus career center, a professor, or a mentor and get feedback as to how well they tell your brand story.
3. Use your cover letter and résumé to apply for an internship or job you want online. Adjust the cover letter to personalize your cover letter for the requirements of the position.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Character and ability to build trust, ability to connect, listening skills, ability to ask the right questions, willingness to learn, drive to succeed, resilience and positive attitude, risk taking, ability to ask for the order, independence and discipline, flexibility, and passion.
2. WII-FM is the radio station that everyone listens to: What’s In It For Me. It’s always important to think about what you want out of life, and a career in selling has a lot of advantages for you, including financial opportunity, chance for advancement, and personal satisfaction.
3. Pay-for-performance is a term that describes the fact that you make more money based on selling more. Many sales positions include a pay-for-performance compensation structure, which means that the more you sell, the more money you make. Conversely, if you don’t meet your objectives, your paycheck will be smaller.
4. Although compensation is important, it’s not the only measure of a good job. Choosing a job that you enjoy with opportunities to achieve what you want and working in the environment that you like with people you like are important elements in evaluating a position.
5. a. B2B; b. B2B; c. B2B; d. B2C
6. Yes, fund-raising and development (as in creating and building endowments) are some of the selling opportunities available in the nonprofit sector.
7. Your brand points are the foundation of your résumé and cover letter. | textbooks/biz/Marketing/The_Power_of_Selling/02%3A_The_Power_to_Choose_Your_Path_-_Careers_in_Sales/2.05%3A_Review_and_Practice.txt |
• 3.1: Introduction
• 3.2: The Power of Relationship Selling
• 3.3: Putting Adaptive Selling to Work
Adaptive selling takes place in many situations in business and in life. It is the selling skill that allows you to adapt your communications to a person or situation. Chances are you already use adaptive selling in your everyday life, but you may not realize it. Do you approach your parents differently than your friends? Do you speak to a professor differently than you do to your roommate? These are examples of adaptive selling.
• 3.4: Selling U - Networking—The Hidden Job Market
id you know that 80 percent of jobs are filled through networking? Networking is sometimes referred to as the “hidden job market” because many jobs are filled before they are ever posted. This is true now more than ever because of the challenging economy. But you might be wondering where you start and exactly how you network effectively. Like everything else in selling, you need to develop a plan.
• 3.5: Review and Practice
03: The Power of Building Relationships- Putting Adaptive Selling to Work
The Power of Building Relationships: Putting Adaptive Selling to Work
Video Ride-Along with Tonya Murphy, General Sales Manager at Radio Station WBEN-FM
Meet Tonya Murphy. Tonya has been in sales for seventeen years and has developed long-term relationships with her customers. She is a general sales manager and responsible for the salespeople that sell advertising for WBEN-FM. Customers include national advertisers such as Toyota, AT&T, and Comcast as well as local businesses that want to build awareness and drive traffic to their stores. Tonya believes that building trust is key to building relationships and ultimately building sales. Listen to Tonya share her insights about why she believes relationships are so important in selling and her tips for building successful relationships.
Ride along with Tonya and hear her insights about the power of relationships in selling.
3.02: The Power of Relationship Selling
Learning Objectives
• Understand why relationships are so important in selling.
• Explain how relationships bring value through consultative selling.
• Identify who wins in the win-win-win relationship model.
• Explain how networking builds relationships and businesses.
It was 4:00 p.m. on Christmas Eve and Ray Rizzo’s father, in town for the annual family get-together, had forgotten to bring his suit. What made the situation even more challenging was that Ray’s father is rather portly with a forty-eight-inch waist and even broader shoulders, a build that requires a fifty-three-short jacket. Ray and his father rushed to Mitchells, a local clothing store in Connecticut, and asked Jack Mitchell, the owner, for his help. It was hard to imagine that Ray’s father would possibly be able to get a suit or even a sport jacket tailored to fit in time for the family gathering. After all, it was Christmas Eve, and the store would be closing in an hour. Jack didn’t hesitate and immediately enlisted Domenic, the head tailor, and before 6 o’clock that evening, the largest pair of pants and jacket in the store were tailored to fit Ray’s father perfectly. Needless to say, Ray is a customer for life.Jack Mitchell, Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results (New York: Hyperion, 2003), 22.
This situation is what Jack Mitchell calls a hug. If you go shopping for clothes at Mitchells or Richards in Connecticut, you will get hugged. Maybe not literally, but you will most definitely get “hugged” figuratively. Jack Mitchell, the CEO of Mitchells/Richards and author of Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results, says, “Hugging is a way of thinking about customers. To us, hugging is a softer word for passion and relationships. It’s a way of getting close to your customers and truly understanding them.”Jack Mitchell, Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results (New York: Hyperion, 2003), 28.
From Personal to Problem Solving
Think about your best friend. You know her so well that you can just about finish each other’s sentences. You know her favorite flavor and brand of ice cream, and you can sense when she is having a bad day. You text and talk to her all the time; you even go out of your way to surprise her sometimes with a gift that you know she will like. You have a great relationship with her.
Now think about the last time you went into your favorite restaurant. Was it the same kind of experience? Did the host greet you by name and seat you at your favorite table? Did the waitperson remember that you like to drink raspberry-flavored iced tea? Was your fish served with the sauce on the side, just the way you like it? Were you delighted with a new flavor of cappuccino after dinner? When these things happen, the people at the restaurant make you feel special; after all, you are the reason they are there. When you have a relationship like this with the people at the restaurant, you are more inclined to return to the restaurant again and again. If these things don’t happen, it is easier for you to choose a different restaurant the next time you go out.
The bottom line is that to be successful in selling, any kind of selling, you have to make selling personal. People do business with people, not with companies. Even in the business-to-business (B2B) selling channel, it is people who are making decisions on behalf of the company for which they work. Every sale starts with a relationship. If your relationship is strong, there is a higher likelihood of a sale and a loyal repeat customer. That means you have to get to know your customer on a one-to-one basis to understand what he wants, what he needs, and what resources he has. This concept is called relationship selling (or consultative selling).Claire Sykes, “Relationship Selling,” Surface Fabrication 12, no. 1 (January–February 2006): 58. It is defined by working personally with your customer to understand his needs, put his needs first, and provide consultation to help him make the best decision for himself or his business.
You might be thinking that selling is about the product or service, not about relationships. But that’s not true. You may have heard someone say, “He’s just a pushy salesman,” or you may have experienced someone trying to give you the “hard sell.” The fact is that selling has evolved dramatically over the past thirty years. Business is more competitive. The use of technology and the expanded number of product and service offerings have developed a need for consultative selling in more industries than ever before. It used to be that salespeople wanted to simply make a sale, which meant that the sale began and ended with the transaction. But now, it’s not enough to just make the sale. In today’s competitive world, it’s how you think about the customer that matters.Jack Mitchell, Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results (New York: Hyperion, 2003), 16. It’s the difference between giving the customer what she needs rather than what you want to sell her.Jack Mitchell, Hug Your Customers: The Proven Way to Personalize Sales and Achieve Astounding Results (New York: Hyperion, 2003), 20. The fact is that the sale is just one small part of the relationship. The real essence of selling is in the relationship.Jeffrey Gitomer, “The Difference between an Account and a Relationship,” Long Island Business News, August 3, 2007, http://libn.com/blog/2007/08/03/the-difference-between-an-account-and-a-relationship/ (accessed June 29, 2009).
The salesperson has a new role in most companies. The days of the salesperson as “product pusher” are just about gone. Customers in B2B and business-to-consumer (B2C) environments want and demand more. Consider the evolution of some major industries. Many of the leading hotel chains keep your preferences in a database so that their front desk sales team can recognize you personally at check-in and provide the queen-sized bed in a nonsmoking room on the quiet side of the property that you prefer. Restaurants work hard to learn, remember, and greet you by your name, maintain your favorite table, wine, and entrée, and prepare to anticipate your every need. Airlines have tools to recognize you and the fact that you like an aisle seat as far forward as possible in the plane.Jim Sullivan and Phil Roberts, Service That Sells! The Art of Profitable Hospitality (Denver: Pencom Press, 1991), 151. All these tactics are steeped in the theory that customers make choices on the relationship they have with brands. In each one of these situations, the salesperson is the difference that sets a brand apart at the moment of truth, the moment the customer comes in contact with the brand.Howard Lax, “Fun, Fun, Fun in a Customer Experience Way,” Banking Strategies 84, no. 6 (November–December 2008): 64. Some brands understand how important each moment of truth is when creating relationships with customers. For example, Southwest Airlines makes their Web site easy to use, has humans answer the phone, and has flight and ground attendants that make it a pleasure to travel with them.
Power Selling: Lessons in Selling from Successful Brands
Boot Camp
Johnson Controls, manufacturer of heating and air conditioning systems, thinks that consultative selling is so important that it holds a Basic Boot Camp for the company’s territory managers at its headquarters in Norman, Oklahoma, that focuses on leveraging relationships in selling. The classroom-style “boot camp” includes interactive exercises, product training, and business support training. The company’s commitment to consultative selling doesn’t end there. Participants who score at least an 85 percent on their final grade for the Basic Boot Camp and spend six months out in the field can qualify to attend the elite Special Operations Training, which is by invitation only.“Johnson Controls Runs Boot Camp,” Heating & Refrigeration News 233, no. 6 (April 14, 2008).
Relationships are so important in selling that one study surveyed one hundred top B2B salespeople and found that they attribute 79 percent of their success to their relationships with customers.Tom Reilly, “Relationship Selling at Its Best,” Industrial Distribution 25, no. 9 (September 2006): 29. It is the relationship with a customer that allows you to bridge the gap between a customer’s problem and the solution. The relationship is the framework for consultative selling; it’s what allows you to have an open, honest dialogue, ask the right questions, understand your customer’s needs, and go beyond advising to helping your customer make the decision that’s right for her.Demmie Hicks, “The Power of Consultative Selling,” Rough Notes 151, no. 7 (July 2008): 701.
Common Ground
Selling relationships start as personal relationships. Making a personal connection is vital in the two to ten minutes of a customer encounter or meeting.Cathy Berch, “Consultative Selling: Ask, Don’t Tell,” Community Banker 18, no. 4 (April 2009): 261. Think about the last time you bought a new cell phone. Chances are, if the person didn’t establish rapport with you from the start, you probably walked away and bought the phone from a different salesperson, maybe even at a different store. The relationship includes a sincere bond that goes beyond business and includes common interests and goals.Tom Reilly, “Relationship Selling at Its Best,” Industrial Distribution 25, no. 9 (September 2006): 29. If you are selling medical imaging equipment to hospitals, you want to build relationships with the administrators, doctors, and nurses who will be using your equipment in each hospital. When you build a relationship starting with what’s important to each person individually, it’s easier to expand that relationship to sharing information and problem solving from a business perspective. As Bob Fitta, a manufacturer’s rep for several tool companies said about Paul Robichaud, owner of Robi Tools, “I got to know him as a business person and a real person, and that relationship has endured.”Brad Perriello, “Relationship—Selling at its Best,” Industrial Distribution 97, no. 9 (September 2008): 34.
But consultative selling is more than simply building rapport. In fact, consultative selling goes beyond the product or service you are selling; it even goes beyond the selling process. It is the “X factor,” the intangible element that makes a customer choose your product or service even when the competition is priced lower. Consultative selling is about your personal involvement and sincere focus on problem solving that goes beyond selling to true partnership with the customer.
Consultative selling doesn’t start and stop at specific times during the relationship. In fact, it defines the relationship before the sale, during the sale, and after the sale.Cathy Berch, “Don’t Wing It,” Community Banker 18, no. 2 (February 2009): 18. You will learn about the seven steps of the selling process in Chapter 7 through Chapter 13 and how building long-term relationships and consultative selling are the basis of each step. The concept of building professional relationships is apparent in this example: If you are selling insurance, consider the fact that your customer may eventually buy a home, have a family, or purchase a second property. So the relationship you develop when you sell him car insurance as a young single man could and should be nurtured and developed over time to provide solutions that answer his needs as his lifestyle changes. Having this long-term view of customer relationships is called focusing on lifetime value. It means that you consider not just one transaction with a customer, but also the help and insight you can provide throughout the entire time frame during which you do business with him. So, although you may only provide him with basic car insurance now, over the course of more than twenty-five years that you do business with him, you may ultimately sell him thousands of dollars of insurance and investment products that meet his changing needs. But that won’t happen if you don’t continue your relationship and keep in touch, focusing on topics and events that are important to him. If you focus only on the immediate sale, you will miss a lot of business, not to mention future referrals.
There are several elements that can be included in the calculation of the lifetime value of a customer. However, a simple formula is
$\text{dollar value of purchase} \times \text{gross profit percent} \times \text{number of purchases}. \nonumber$
For example, if a customer shopped at a retailer and spent $75 on one purchase that had a gross profit of 30 percent, the lifetime value of that customer would be$22.50, calculated as
$\75 × 30\% × 1 = \22.50. \nonumber$
If the customer made five purchases for $75 each over the course of the time she shopped with the retailer (let’s say five years), at a gross profit of 30 percent, the lifetime value of the customer would be$112.50, calculated as
$\75 × 30\% × 5 = \112.50. \nonumber$
Michael Gray, “How Do You Determine Customer Lifetime Value?” Profit Advisors, May 20, 1999, http://www.profitadvisors.com/busfaq/lifetime.shtml (accessed November 30, 2009).
So you can see that the concept of retaining a customer for more than one purchase can provide financial benefits. In addition, working with the same customer over the course of time provides an opportunity to learn more about the customer’s needs and provide solutions that better meet those needs.
CRM Tools Help You Manage Relationships
With so many demands on your time as a salesperson, sometimes it’s easy to lose track of some customers and not follow up, which means that you may only be developing short-term relationships. Or you might unintentionally let your relationship with a customer “lapse into laziness,” which means that you let the relationship run on autopilot, relying on your established relationship to keep the business going. In this case, there’s usually no pressing reason to change; you might think that as long as the customer is happy, everything is OK. But it’s best to avoid complacency because the world is constantly changing. While you are enjoying a comfortable, easy relationship, there are probably new business challenges that you should be learning about from your customer. Or worse, you may open the door to a competitor because you weren’t bringing new and relevant ideas to your customer and he began to think of you more as a nice guy than a resource for advice and new ideas.Claire Sykes, “Relationship Selling,” Surface Fabrication 12, no. 1 (January–February 2006): 58.
Many companies use customer relationship management (CRM) tools, which are technology solutions that organize all of a customer’s interactions with a company in one place. In other words, CRM is a customer database that holds all the information regarding a transaction (e.g., date; products purchased; salesperson who sold the products; and name, address, and contact information of the customer). In addition, it captures all communication the customer has had with the company, including calls made to the company call center, posts and reviews made to the company Web site, and the details of each sales call made by a salesperson. Some CRM tools are extremely sophisticated and help the salesperson and the company to manage relationships with prospects and customers. Other CRM tools are simpler and are focused on helping the salesperson manage her relationship with prospects and customers.SearchCRM.com, “CRM (Customer Relationship Management),” searchcrm.techtarget.com/definition/CRM (accessed November 30, 2009).
A CRM tool works in a variety of ways. Here are a few examples. A construction contractor calls a toll-free number for a plumbing supply company after seeing an ad in a trade journal. The prospect inquiry is sent via e-mail to the appropriate salesperson. The salesperson reviews the CRM system to see if there have been any previous contacts with the customer and if there is any information about the customer and his business. Then he returns the prospect’s phone call and sets up a date to meet him to learn more about his business needs. The salesperson makes a note in the CRM system about the phone call and the date of the meeting and sets a follow-up reminder for himself for the meeting and for three days after the meeting. When the salesperson meets with the prospect, he learns that the prospect has five developments that he manages. The salesperson makes a note in the CRM system so everyone from the company who comes in contact with the prospect, such as other salespeople or customer service, know this information about the prospect.
CRM tools can be extremely helpful in managing customer relationships, especially where there are multiple people in the company who come in contact with prospects and customers. CRM tools also make it easier to understand the lifetime value of a customer since all purchases, inquiries, and other contacts are included in the system. It is the information that is gathered in a CRM system that helps a salesperson better understand customer behavior, communication patterns, and short- as well as long-term needs. For example, many companies offer loyalty programs as a tactic to increase sales but also to gather information about customer preferences to offer more relevant messages and offers. CRM tools are used to manage loyalty programs, such as Best Buy Rewards Zone, Southwest Airlines Rapid Rewards, and the Safeway card for their different local grocery chains. This information is then used for marketing and selling purposes. Best Buy can identify all the recent purchasers of Hewlett-Packard (HP) printers and send them an e-mail for HP ink cartridges. CRM tools are used to manage customer relationships in other ways. For example, Starbucks uses Salesforce.com, a widely used CRM tool, to power their MyStarbucksIdea Web site. The Web site is a collaboration and feedback tool that engages customers in providing ideas to the company. To manage the relationships with customers online, Starbucks uses a CRM tool. This allows Starbucks to provide personal feedback to each customer on all the ideas they submit.
Face Time
So you might think that customer relationships are easy to maintain with text messaging, e-mail, and other technology-based methods of communication. After all, that’s how you communicate with your friends. But while technology can enhance an established relationship because it allows you to provide information and insight at a moment’s notice, the fact is that most significant customer relationships, especially in B2B selling, require face-to-face communication.Susi Geiger and Darach Turley, “The Perceived Impact of Information Technology on Salespeople’s Relational Competencies,” Journal of Marketing Management 22, no. 7 (August 2006): 827.
In this world of high-tech instant communication, some relationships can easily become “low-touch,” or missing the human element. Meeting with and entertaining customers is an important part of the selling process. It helps you get to know customers in an environment outside the office, in a casual or social place such as a restaurant, sporting event, or concert. These can be excellent opportunities for you and your customer to “let your hair down,” relax, and enjoy each other’s company. Many sales positions include an entertainment budget for this reason. Taking someone out to eat is not the only part of a selling relationship, but it’s an important part of building and developing a connection. One sales manager said that he can tell when one of his salespeople is struggling simply by reviewing his expense reports. He looks for activities that take place outside business hours because those are the activities that build relationships. In fact, according to one study, 71 percent of top-achieving salespeople use entertainment as a way to get closer to their customers.Tom Reilly, “Relationship Selling at Its Best,” Industrial Distribution 25, no. 9 (September 2006): 29.
Fore Relationships
What makes golf a good way to build a business relationship? During eighteen holes of golf, the typical golfer actually hits the ball for only two and a half minutes during a four-plus hour round of golf.“How to Use Golf as a Business Tool,” video, BNET, www.bnet.com/2422-13722_23-323018.html (accessed July 27, 2009).
Speaker and author Suzanne Woo describes the secrets of using golf to build business relationships.
www.bnet.com/2422-13722_23-323018.html
Source: BNET
R-commerce
You’ve probably heard of e-commerce, selling products and services on the Internet, and m-commerce, selling products and services via mobile devices such as cell phones and smart phones. But you probably haven’t heard of r-commerce, a term that refers to relationship marketing, which establishes and builds mutually beneficial relationships.
Terry L. Brock, an international marketing coach and syndicated columnist, says salespeople have the opportunity to make the difference in their relationships with the little things. Sending a thank-you note after a meeting, forwarding an article or video on a topic you discussed, remembering the names of your customer’s children, even providing a personal suggestion for a vacation spot are all examples of little things that can set you apart from every other salesperson. You might think that these “little things” aren’t important when you get into the big world of business. But Harvey Mackay, renowned author, speaker, and business owner, says it best: “Little things mean a lot? Not true. Little things mean everything.”Terry L. Brock, “Relationship-Building Skills Pay Off for Your Bottom Line,” Philadelphia Business Journal, June 12–18, 2009, 25. Developing your own r-commerce strategy can help set you apart in sales. It’s expected that you will make phone calls and follow up; it’s the extra personal touch that makes your customer feel special and helps establish a strong relationship.
It’s the Little Things
Here’s an idea for a small activity that can turn into big opportunity along the way: every day take fifteen minutes at the beginning of the day to write three notes or e-mails—one to a customer, one to a prospect, and one to a friend just to say hi, follow up, or send an article of interest. At the end of the week, you will have made 15 contacts and 750 by the end of the year. What a great way to build relationships by doing the little things that make you stand out.Andrea Nierenberg, “Eight Ways to Say ‘Thank You’ to Customers,” Manage Smarter, February 6, 2009, www.crystal-d.com/eight-key-ways-to-say-thank-you-to-customers (accessed July 3, 2009).
Trust Me
“The check is in the mail.” “The doctor will see you in ten minutes.” “I’ll call you tomorrow.” How many times have you heard these promises, or ones like them? When people make promises that they don’t keep, you lose trust in them. It’s unlikely that you will trust a person who doesn’t deliver on what he or she says.
Trust is a critical element in every relationship. Think again about your best friend. Is she someone you can trust? If you tell her something in confidence, does she keep it to herself? If you need her for any reason, will she be there for you? Chances are, you answered “yes,” which is why she is your best friend. You believe that she will do what she says she will do, and probably more.
You can see why trust is so important in selling. If your customer doesn’t believe that you will actually do what you say you are going to do, you do not have a future in selling. Trust is built on open and honest communication. Trust is about building partnerships. Salespeople build trust by following up on their promises. They are accessible (many times 24/7), and they work to help their customers succeed. Customers trust you when they believe you have their best interest at heart, not your personal motivation. According to Tom Reilly, author of the book Value Added Selling, “Consultative selling is less about technique and more about trust.” Trust is what gives a relationship value. It is the cornerstone of selling. Trust creates value. In fact, one B2B customer described his salesperson by saying he was like an employee of the company. Another described her salesperson in terms of problem ownership by saying, “When we have a problem, he has a problem.”Tom Reilly, “Relationship Selling at Its Best,” Industrial Distribution 25, no. 9 (September 2006): 29. Trust is equally important in B2C selling. For example, at Zen Lifestyle, a salon in Edinburgh, United Kingdom, the approach to customers is described as soft sell with a focus on educating customers and providing information. Customers are encouraged to try products in the smallest size to determine whether they like the product. It is only after they have liked it that larger and more economical sizes are suggested. “This helps develop a relationship between customers and therapist built on trust, which in turn will generate future sales from recommendations,” according to salon owner Fiona Macarthur.Annette Hanford, “Best Sellers Tell All,” Health & Beauty Salon 25, no. 12 (December 2003): 50. In every business, these are all powerful testaments to great salespeople.
Power Player: Lessons in Selling from Successful Salespeople - Sign of Trust
Imagine not even bringing in product samples or literature with you on your first sales call with a customer. That’s what Susan Marcus Beohm, a sales manager for a handheld dental instrument manufacturer suggests. “I don’t go in as a salesperson—I go in looking to see how I can help them. Not bringing my goods and wares with me says, ‘I’m here to find out what you need,’ and it makes an impact.” When salespeople are too eager to start talking about features and benefits before they listen to the customer, they make it more difficult to establish trust.“A Foundation Built on Trust,” Selling Power Sales Management eNewsletter, August 8, 2001, http://www.sellingpower.com/content/newsletter/issue.php?pc=146 (accessed March 16, 2010).
People buy from people they trust. Consider the fact that customers put their trust in salespeople with their money and, in the case of business-to-business selling, with their business and ultimately their reputation. Customers actually become dependent on you, and their buying decisions are actually based on the fact that they trust you and believe what you say. Thus, the relationship can be even more important than the product.Brian Tracy, “Teaming Up with Your Customers,” Agency Sales 34, no. 2 (February 2004): 59. It is said that you can give a customer the option to buy a product from a salesperson she knows or buy the same product for 10 percent less from someone she doesn’t know, and in almost every case she will buy from the salesperson she knows.“Building Trust,” Selling Power Presentations Newsletter, February 25, 2002, http://www.sellingpower.com/content/newsletter/issue.php?pc=186 (accessed March 16, 2010).
Trust is such an important topic that sales guru Jeffrey Gitomer has written a book dedicated to the topic of gaining and giving trust titled Jeffrey Gitomer’s Little Teal Book of Trust: How to Earn It, Grow It, and Keep It to Become a Trusted Advisor in Sales, Business, and Life. The following video provides the highlights.
Jeffrey Gitomer on Trust
Learn the two important questions that can give you insight on trust.
Source: Buy Gitomer, Inc.
Underpromise and Overdeliver
One of the tenets of selling is establishing trust and setting expectations. The best salespeople underpromise and overdeliver. In other words, they say they will do something by a certain day, and then not only do they do it, but they deliver it one day early. Here’s a way to think about the power of this approach: if you order a new pair of jeans online and the estimated date of delivery is Tuesday, but you receive them on Monday, you are delighted. You are pleased that they came early. However, if the jeans were promised for Tuesday delivery, but they arrived on Wednesday, you would be disappointed and probably would not trust that Web site for timely delivery in the future. You can imagine how this strategy builds trust with customers—not only can you rely on the salesperson to do what she said, but she never lets you down and even delivers earlier than promised sometimes. That’s how trust is built between salesperson and customer, and the relationship goes to the next level: partnership.
When Times Are Tough
No one likes to deliver bad news. But it’s not always good news that you will have to tell a customer. The best antidote for bad news is a good relationship. If you have nurtured your relationship with the customer and built trust, it is much easier to deliver bad news. When it’s time to deliver bad news, like a delayed delivery, a cost increase, or a discontinued product line, don’t put it off. Use the same practices that you use to build your relationships: open, honest, and timely communication.
As soon as you learn about information that may be bad news for your customer, contact her by phone to discuss the situation: “I realize we set Thursday as the installation date for phase one, but there have been some delays in development. Can we reschedule it for next Tuesday? I’m confident that everything will be complete by then. I apologize for any inconvenience. Let’s talk about any challenges this may cause on your end. I have some ideas about how we might work around them.” The sincerity in your voice and the dialogue you have with the customer can help avoid turning bad news into a serious problem. Because you have always made a point of underpromising and overdelivering, there is a high likelihood that your customer will respond positively to your ownership of the problem and solution-based conversation. It’s always best to include a realistic solution to the problem and, if you don’t have a solution, let the customer know exactly when you will get back to her with an update.
The Good News about Bad News
Here are tips for five ways to deliver bad news the right way.
Source: Sally Cordova, McKee Consulting, LLC
Win-Win-Win: The Ultimate Relationship
If you do volunteer work for an organization such as Autism Speaks, you get involved because you believe in raising awareness of autism to increase funds for research for the cure. Those who have autism and their families benefit from your involvement. This is win #1. You also benefit because you gain the satisfaction of helping people. This is win #2. You help build the strength of the organization, in this case, Autism Speaks. The more people that are involved, the more people they can reach with their message, and the more money they can raise to reach their goal of curing autism. This is win #3.
The above example is an illustration of the win-win-win concept in relationships. In other words, in the ultimate relationship, all parties have something to give and something to gain. This same win-win-win occurs in successful selling relationships. Your customer wins because he gets your advice and expertise to help him find a product or service that meets his needs. You win because you have enhanced your relationship and made a sale; and your company wins because the relationship, the sale, and the repeat sales help it achieve its goals.
Although the win-win-win may sound like a simple concept, it is a critical one to keep in mind in any business position, especially in selling. This art of collaboration actually results in more business with your existing customers because you have become a partner in solving their problems, and it brings you new business in the form of referrals. The win-win-win also plays a significant role in the negotiating process (covered in Chapter 12). The best business relationships and negotiations are based on the win-win-win model, not the win-lose model in which one party loses so that the other can win.Stephen R. Covey, “Win-Win Strategies,” Training 45, no. 1 (January 2008): 56.
A Seat at the Table
The seat at the table is given to those salespeople who deliver value, not sell products or services. They develop the relationship to assist customers in implementing their business strategies.J. D. Williams, Robert Everett, and Elizabeth Rogol, “Will the Human Factors of Relationship Selling Survive in the Twenty-First Century?” International Journal of Commerce & Management 19, no. 2 (2009): 158. Customers want value in the form of strategic thinking around issues that are important to them and their company goals. As a result, your goal as a salesperson should be to help your customers create demand, secure a competitive advantage, and identify a new niche. When you deliver this kind of value, your customers will no longer see you as a salesperson; they will see you as a “business person who sells.” It’s this kind of thinking and value creation that earn you a seat at the table. The seat at the table also helps you expand your business because you will be integrated into your customer’s business. That allows you to deliver your core products or services and be a part of developing the new opportunities. It helps cement the relationship and establishes a partnership that delivers value for all involved.Marc Miller, “A Seat at the Table,” American Salesman 54, no. 5 (May 2009): 9.
Every salesperson wants “a seat at the table”; she wants to be a part of the decision-making process. That is the epitome of consultative selling: you are included in the process from the beginning. You want to be included as a valued partner with your business-to-business customers to discuss their company’s strategic questions like “How will we grow our business in the next three years while technology is driving down the average selling price of our product?” “How can we extend our relationship with our customers beyond our contract period?” or “How can we expand to new markets and minimize our risk?” These are not traditional sales questions; they are strategic issues that companies wrestle with. When you are a true partner with your customers, you will be given a seat at the table when direction-setting issues are discussed. This allows you to participate fully as a trusted advisor and asset to the customer and to help shape the strategy of the company. It changes your relationship with the contact and the company from salesperson to partner. Although it may seem like a lofty goal, consider this: If you want to have a seat at the table, not only will you need to solve your customer’s problems and anticipate her needs, but according to Tim Conner, sales trainer and author, you will also need to be a creative problem creator. That means that you will be in constant pursuit of identifying problems that your customer didn’t even know she had. In other words, it means that you have to think ahead of your customer, not just along with her.Tim Conner, “Sales Strategies of Six-Figure Salespeople,” TimConnor.com, www.timconnor.com/articles_sales.html (accessed June 29, 2009).
Networking: Relationships That Work for You
You probably use Facebook frequently to keep in touch with your friends. If you want to know who took a particular course with a particular professor, you can ask your friends on Facebook. If none of your friends took the course, one of their friends may have taken it and could give you some insight about the course and the professor. Whether you realize it or not, you are networking.
Networking is the art of building alliances or mutually beneficial relationships.“What Is Networking?” The Riley Guide, www.rileyguide.com/network.html#netprep (accessed July 3, 2009). In fact, networking is all about relationships and exchange. In the example above, while you are looking for feedback on a class from someone you know, someone else may be considering seeing a movie and wants to know if you’ve seen it and if you thought it was good. This is a value exchange. Although networking isn’t exactly quid pro quo (something for something), it does include the element of exchange: if someone is looking for something, someone else can provide the information. What makes the network function is the fact that people in the network at some point have a need and at some point may be able to help someone else with his need. Said another way, networking is based on mutual generosity.Meredith Levinson, “How to Network: 12 Tips for Shy People,” CIO, December 11, 2007, www.cio.com/article/164300/How_to_Network_Tips_for_Shy_People?page=1 (accessed July 3, 2009).
Networking is an important part of the business world and an even more vital part of sales. It’s no longer a question of “if” you should network; it’s a requirement to stay competitive because it’s virtually impossible to do your job alone. Just as in social networking, professional networking allows you to leverage the people you know to expand your relationship to people you don’t know. Building strong relationships with customers is an excellent way to build your network. Satisfied customers will refer you to other people who might become potential customers.
It’s best to always be networking rather than networking only when you want something. It makes it easier to network and expand your relationships when you’re not asking for something. It also gives you the opportunity to help someone else first, which can go a long way when you need help in the future.
Networking Tips of the Trade
Today, networking can be done in person as well as online. Don’t limit yourself to just one method. Networking is best done both in person and online to be truly effective. Here are a few tips for networking in person.
Start with People You Know
Make a list of all the people you know, starting with your current customers, family, friends, friends’ family, and others. Include people such as your hair stylist, car mechanic, and others. Get to know everyone in your extended network as each can be a lead for a potential sale or even a job.Meredith Levinson, “How to Network: 12 Tips for Shy People,” CIO, December 11, 2007, www.cio.com/article/164300/How_to_Network_Tips_for_Shy_People?page=1 (accessed July 3, 2009).
Join and Get Involved in Professional Organizations
If you want to meet people who are in the same business or profession as you, professional organizations such as Sales & Marketing Executives International, Advertising Club of New York, Home Builder’s Association, and so on are the best places to be. Joining is good, but getting involved in one of the committees is even better. It helps demonstrate your skills and knowledge to the other people in the organization. Since most professional organizations are made up of volunteers, it’s usually easy to be invited to participate on a committee.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 176.
Attend Industry Events
Make an effort to attend industry or other professional events. Arrive early and work the room. If you come with someone, be sure to branch out to meet and mingle with other people. Set a time and a place to meet the person with whom you came so you can both maximize your networking. According to Peter Handel, the chairman and CEO of Dale Carnegie & Associates, a smile can be your greatest asset when networking in person. He suggests always asking questions of the people you meet; it helps keep conversation going and gives you more insight into their background and how you might work together in the future. But the other side of asking questions is listening; that’s how you will learn. And always have your business cards handy. Give out your business card to those you talk to, and don’t forget to get their business cards, too.Meredith Levinson, “How to Network: 12 Tips for Shy People,” CIO, December 11, 2007, www.cio.com/article/164300/How_to_Network_Tips_for_Shy_People?page=1 (accessed July 3, 2009).
Keep in Touch
Many people think that networking is just about collecting business cards. Networking is so much more than that. Networking is about creating mutually beneficial relationships. It’s best to use one of the basic practices for building relationships when networking: keeping in touch. That means dropping an e-mail to someone with whom you have networked just to find out how their big project is going, how their twins’ birthday celebration went, or even just to say hi. Go beyond the e-mail by inviting someone to lunch. It’s the perfect way to build a relationship, share common ground, and learn more about the person.Donna Rosato, “Networking for People Who Hate to Network,” CNNMoney.com, April 3, 2009, http://money.cnn.com/2009/04/02/news/economy/networking_jobs.moneymag/index.htm (accessed July 3, 2009). Many people are gung ho about networking and meeting people, but rarely keep in touch. It almost defeats the purpose of networking if you don’t keep in touch.
Online Professional Social Networking
Online professional social networking can be an equally powerful tool to build your contacts. But just like networking in person, you can’t be passive and expect to expand your network. Consider a situation that Austin Hill, Internet entrepreneur and founder of the angel investment firm Brudder Ventures, encountered when his firm was trying to get access to someone in a specific department at a vendor. It was a large company, and he kept getting the runaround. But after going onto LinkedIn and getting introductions to the right people, within two days they were able to start doing business with the company.Lisa LaMotta, “How to Network Like a Pro Online,” Forbes, August 9, 2007, http://www.forbes.com/2007/08/09/google-microsoft-walmart-ent-tech-cx_ll_0809networking.html (accessed July 3, 2009).
Create a Profile on the Major Professional Social Networks
LinkedIn, Ryze, ZoomInfo, and Plaxo are all online professional social networks that have a substantial number of members. You can also use Facebook MySpace, and Twitter to create profiles, peruse job boards, and join the conversation.
Join The Power of Selling Group on LinkedIn
You can join the conversation about careers in sales created for this course on LinkedIn. Visit http://www.linkedin.com and go to http://www.linkedin.com/groups?gid=2566050&trk=myg_ugrp_ovr. Or go to “Search Groups,” search for “The Power of Selling,” select it from the groups that are displayed, and click on “Join Group.” Once you’ve joined the group, you can connect with sales professionals and other students across the country. You will be able to listen to the conversation, ask questions, and start or join discussions. This group is an excellent way to network and find people who work at companies that you may want to work at.
Start your professional networking now and network with sales professionals that want to help you.
Connect to People You Know, Then Network Personally
The number of connections you have is not a badge of honor. Take the time to connect to all the people you know, and network within their networks. If you only add people for the sake of having a lot of connections, you won’t know who can really help you in your network. When you do make a connection, make it personal; don’t just send a group invitation to join your network. It’s always best to keep in mind that the foundation of your network is relationships.Clare Dight, “How to Network Online,” Times Online, February 21, 2008, http://business.timesonline.co.uk/tol/business/career_and_jobs/graduate_management/article3402745.ece (accessed July 3, 2009).
Source: Mig Pascual
Be Proactive
Ask for introductions to people with whom you want to network and ask your boss, colleagues, and customers to write recommendations for you. It’s a good idea to use the features included on the professional social networking sites such as groups, discussions, and “Answers” on LinkedIn, which allows you to ask questions of your network.Lisa LaMotta, “How to Network Like a Pro Online,” Forbes, August 9, 2007, http://www.forbes.com/2007/08/09/google-microsoft-walmart-ent-tech-cx_ll_0809networking.html (accessed July 3, 2009).
Mind Your Manners
Just a word of caution about professional social networking: Be professional in all of your communications. You are participating in a professional forum so be aware that everything you “say” and do reflects on you and your company.
Key Takeaways
• Consultative selling is the process by which you get to know a customer personally, understand her needs, and put her needs first in the relationship.
• Relationships are vital to success in most selling situations. When you understand what the customer wants and needs, you can provide solutions to help your customer meet his goals.
• Lifetime value is a term that refers to the amount of business that you do with a single customer over the course of the relationship. When you have a long-term view of your relationships with customers, you have an opportunity to realize even greater success.
• R-commerce, or establishing and developing relationships with customers, focuses on the “little things” you can do to take advantage of opportunities and set yourself apart.
• Trust is the cornerstone of every relationship. If you don’t have trust, you don’t have a relationship.
• A solid relationship is essential, especially when delivering bad news. Always be honest and timely with customers when you have to communicate news that might not be what they want to hear. They will respect you and trust you for it.
• The win-win-win is when all parties in a relationship win: your customer, you, and your company or organization.
• Networking, the art of building mutually beneficial relationships, is an indispensable business tool.
Exercise $1$
1. Identify a situation in which a salesperson has developed a relationship with you. Do you trust her more since you know her better? Identify at least one way she puts your needs first in the relationship.
2. Name a situation in which a salesperson provided you with information to make your purchasing decision. Did you trust him to provide this information? Why did you trust him?
3. Think about a situation in which a salesperson underpromised and overdelivered. How did your perception of the salesperson and the company change because of your experience?
4. Go to http://www.linkedin.com and create your profile. Then use the search box to search groups and search for “The Power of Selling.” Click on the “Members” tab and search for members that you want to connect with and add them to your professional network. Click on the “Discussions” tab to begin or join into a discussion.
5. Research professional organizations that might be of interest to you that have a chapter on campus or in your local community. What is the mission of each organization? What events are scheduled soon? How can you become a student member of the organization? | textbooks/biz/Marketing/The_Power_of_Selling/03%3A_The_Power_of_Building_Relationships-_Putting_Adaptive_Selling_to_Work/3.01%3A_Introduction.txt |
Learning Objectives
• Explain the concept of adaptive selling and how to use it.
• Understand how the social style matrix can help you be more effective in sales.
Adaptive selling occurs when a salesperson adapts, changes, and customizes her selling style based on the situation and the behavior of the customer.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 151. Adaptive selling allows you to truly listen, understand the customer’s needs, and then adapt your conversation and presentation accordingly. On the other hand, if you were giving a canned presentation, you wouldn’t be able to learn what the customer thinks is important. For example, if you were selling landscaping to a customer, you wouldn’t know if the customer wanted the landscaping to provide privacy or create a view. The only way you would find out is by listening, asking questions, and adapting your recommendations and presentation accordingly. Adaptive selling is much easier to do when you establish a relationship with the customer.
Adaptive selling takes place in many situations in business and in life. It is the selling skill that allows you to adapt your communications to a person or situation. Chances are you already use adaptive selling in your everyday life, but you may not realize it. Do you approach your parents differently than your friends? Do you speak to a professor differently than you do to your roommate? These are examples of adaptive selling.
It’s also likely that you interact with each of your friends differently. Do you have a friend that needs tons of information to make a decision, while another friend makes a decision in an instant? Do you know people who want to talk about their decisions before and after they make them and those who just decide and don’t say a word? Understanding diversity, or the different ways people behave, is the cornerstone of adaptive selling.
The Social Style Matrix
What makes people so different in their style, perceptions, and approaches to things is defined in the social style matrix. It is an established method that helps you understand how people behave so you can adapt your selling style accordingly. The social style matrix is based on patterns of communication behavior identified by David Merril and Roger Reid.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 155. It plots social behavior based on two dimensions: assertiveness and responsiveness. In the matrix below, the x axis is assertiveness, which indicates the degree to which a person wants to dominate or control the thoughts of others. The y axis represents responsiveness, which is the degree to which a person outwardly displays emotions or feelings in a relationship.Rick English, “Finding Your Selling Style,” San Diego State University, Marketing 377 class notes, chapter 5, www-rohan.sdsu.edu/~renglish/377/notes/chapt05 (accessed July 7, 2009). In Figure \(4\), you can see the four quadrants; each quadrant represents one of four social styles: analytical, driver, amiable, and expressive. Each of these styles describes a different type of behavior.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 151.
Each of the social styles has specific characteristics that are important to keep in mind as you prepare and present your sales presentation. Adapting to someone’s social style demonstrates the law of psychological reciprocity, which says that when you adapt to someone’s style, that person will move toward your style. In short, you are inspiring trust by acting according to the old adage of the golden rule.Ron Zemke, “Trust Inspires Trust,” Training 10, January 1, 2002. So, whether you are asking to borrow your mother’s car or asking someone on a date, understanding the social style matrix is important to get the result you want.
Analyticals: They Want to Know “How”
Do you know someone who only wants the facts to make a decision? Perhaps it’s your father or mother or a professor. Analyticals are all about the facts. They are defined by low responsiveness and low assertiveness. In other words, they like to hear about the pros and cons and all the details before they decide. They are likely to have a financial or technical background, and they pride themselves on being an expert in their field. They want to hear about the tangible results, timelines, and details before they make a decision. In fact, they are the ones who will actually read the directions before they put together a new grill or set up a wireless home network. They are so focused on facts that they prefer to disregard personal opinions in their decision making. They like to understand all the facts before they decide so they know exactly how the product, service, or contract arrangement will work.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 158.
You might have some visual cues that will help you identify an analytical. She probably dresses conservatively and has her achievement awards proudly displayed on her office wall. She is organized and focused on work activities.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 159.
If you are selling to a customer who is an analytical, she will ask you very specific questions about all the details, and she will respond positively if you make her feel as if she is right. In other words, don’t challenge her facts and point of view. Rather, provide history, data, financial details, and other facts in an organized, structured format. She will ask many questions so that she clearly understands the product or service. Since it’s important for her to make the right decision, she will take the time to gather all the facts. Because she puts so much effort into making the right decision, she tends to be loyal to the people from whom she buys, believing she doesn’t need to reevaluate the same facts.
Adapt your style to an analytical by focusing on the “how.” Slow down your presentation and let her take it all in; don’t make her feel rushed. Use facts, historical data, and details to be sure she has all the information she needs to make the decision. Use guarantees or warranties to reduce any perceived risk. Give her the time she needs to analyze, evaluate, and decide.Sandra Bearden, “The Psychology of Sales: Savvy Selling Means Tailoring to Type,” UAB Magazine 20, no. 2 (Fall 2000), main.uab.edu/show.asp?durki=41089 (accessed February 13, 2010).
Drivers: They Want to Know “What”
You’ve probably watched Super Bowl champion Peyton Manning, quarterback for the Indianapolis Colts play football on television or the Internet. One of the traits that makes him a champion is the fact that he is focused exclusively on winning each game. When he is on the field, everything else is in second place in his mind. Peyton Manning is a driver.
Drivers have some characteristics that are the same as analyticals in that they like to have all the facts to make their decision. However, drivers are different from analyticals because they make decisions quickly. On the social style matrix, they are in the low responsiveness, high assertiveness quadrant. These are the people who are “control freaks”; they are decisive and controlling. They work with people because they have to; they see other people only as a means to their end of achievement. They are smart, focused, independent, and competitive. They have little regard for the opinions of others; a driver is rarely described as a “people person.” They are high achievers who are in a hurry to meet their goals.Rick English, “Finding Your Selling Style,” San Diego State University, Marketing 377 class notes, chapter 5, www-rohan.sdsu.edu/~renglish/377/notes/chapt05 (accessed July 7, 2009). They don’t want facts just for the sake of having them; they want relevant information that will help them decide quickly.
Like the analyticals, drivers dress conservatively and display their achievement awards on the wall of their office. A calendar is usually prominent to keep focus on how long it will take to achieve something. Because they are not focused on the feelings or attitudes of other people, drivers usually do business across the desk rather than on the same side of the desk.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 158.
The best way to adapt to a driver is to be professional and to the point. Don’t spend too much time on small talk; get to the point quickly. Provide options so that he can feel as if he is in control. Include a timeline so he can see how quickly he can get results.
Amiables: They Want to Know “Why”
Actress Reese Witherspoon was recently named the Honorary Chairperson of the Avon Foundation for Women because of her ability to unite women around the cause of breast cancer.Avon Foundation for Women, “Reese Witherspoon Joins Avon Foundation for Women and San Francisco General Hospital to Celebrate 5th Anniversary of Avon Comprehensive Breast Center,” press release, May 11, 2009, http://www.avoncompany.com/women/news/press20090511.html (accessed July 8, 2009). She rallies people and brings them together by focusing on the greater good, but she doesn’t assert herself. She is an amiable.
An amiable is most likely to be described as a “people person.” Amiables are team players who focus on innovation and long-term problem solving. They value relationships and like to engage with people whom they feel they can trust. They are less controlling than drivers and more people oriented than analyticals because they are in the low assertiveness, high responsiveness quadrant of the matrix.
Amiables provide some visual clues because their offices are typically open and friendly. They often display pictures of family, and they prefer to work in an open environment rather than sitting across the desk from you. They tend to have a personal style in their dress, being casual or less conservative than analytics or drivers.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 159.
When you are presenting to an amiable, establish a personal relationship. She will be more likely to discuss issues with you. When you demonstrate your personal commitment, she will be open to doing business with you.
Expressives: They Want to Know “Who”
An expressive is intuitive, charismatic, persuasive, nurturing, and engaging. Oprah Winfrey is an expressive; she has excellent rapport with people, even people she has never met. Relationships are important to her, but only to help her achieve her higher goal of giving her viewers inspiration and a better way to live their lives.
Expressives are creative and can see the big picture clearly; they have a vision and use their style to communicate it and inspire people. They don’t get caught up in the day-to-day details. Expressives build relationships to gain power, so people like employees, viewers, or voters are very important to them. Status and recognition are also important to them.
Since expressives are not big on details, you might find their offices to be a bit disorganized, even cluttered and messy. Their offices are set up in an open format, as they would prefer to sit next to you rather than across the desk from you. They avoid conservative dress and are more casual with their personal style. They want to engage with you and talk about the next big idea.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 159.
When you are selling to an expressive, take extra time to discuss everything. Give them recognition and approval. Appeal to their emotions by asking them how they feel about the product or service; focus on the big picture of what is possible as a result of buying your product or service. If you try to dazzle them with facts and figures, you won’t get very far.
Table \(1\): Selling Style Summary
Social Style You’re Selling to How to Adapt
Analyticals
• Focus on “how”
• Include facts
• Communicate the pros and cons
• Provide history, data, financial details
• Don’t challenge her facts
• Demonstrate results
• Mention guarantees and warranties
• Give her time to decide
Drivers
• Focus on “what”
• Get to the point quickly
• Provide options
• Use facts
• Focus on results
• Provide timelines
• Make him feel as if he is in control
Amiables
• Focus on “why”
• Establish a personal relationship
• Demonstrate personal commitment
• Work as a team
Expressives
• Focus on “who”
• Take extra time to discuss everything
• Give her recognition and approval
• Ask her how she feels about the product or service
• Focus on the big picture
• Use facts and figures to demonstrate what is possible
Source: Todd Duncan, “Your Sales Style,” Incentive, December 1, 1999, 64–66.
What Is Your Selling Style?
Before you think about the social styles of other people, you might find it helpful to think about your own social style. Are you very emotional when you express your opinions, or are you more reserved and formal? Are you the type of person who agrees with everyone, or are you extremely interested in the details? You might want to take a few minutes to take the Keirsey Temperament Sorter to understand your social style. But don’t stop here; visit your campus career center as it most likely offers several assessment tools that can help you identify your social style.
Link
Take the Keirsey Temperament Sorter to Determine Your Social Style
www.keirsey.com/sorter/register.aspx
It would be easy to get stuck in your own style preference. But getting out of your comfort zone and adapting quickly to your customer’s style preference can make the difference between a sale and a “no thanks.” It’s important to note that most people are a combination of styles, but when you understand the basic behaviors of each style and how to adapt, you can increase your chances for success.Todd Duncan, “Your Sales Style,” Incentive, December 1, 1999, 64–66.
Key Takeaways
• Adaptive selling occurs when you adapt and customize your selling style based on the behavior of the customer.
• The social style matrix is based on patterns of communication that characterize communication behavior based on two dimensions: assertiveness and responsiveness.
• Analyticals focus on facts, details, and analysis to decide but are reserved in their interactions with people. They want to know the “how.”
• Drivers are similar to analyticals in that they like facts, but only the ones that will quickly help them achieve their goals. They are people who are in a hurry and don’t really care about personal relationships, except as a means to their goal. They want to know the “what.”
• Amiables focus on personal relationships in their communication style. They like to agree with everyone and focus on team building. They want to know the “why.”
• Expressives enjoy building relationships, but don’t like focusing on day-to-day details; they like to paint a vision and inspire everyone to follow it. They like to focus on the “who.”
• Most people use a combination of styles, depending on the situation.
Exercise \(1\)
1. Think about your professor for this course. What social style would you use if you went to see her about your grade on the midterm exam? Discuss why you would choose this style.
2. Using the social matrix in this section, identify a situation in which you would use each style. Discuss why you would choose the style for each situation.
3. For each of the following situations, identify the social style of the buyer and suggest how you would adapt to appeal to the buyer:
• You are a salesperson for a floral wholesaler. Your customer owns a flower shop. When you arrive to meet her you notice her office is a bit messy (in fact, you can’t understand how she finds anything), but she is very cordial and takes the time to hear about your product.
• You are a salesperson for a company that specializes in social networking software for retailers. Your customer is the chief information officer for a growing online retailer. He was very precise about the meeting time and agenda. You hope you can establish rapport with him quickly as he was a bit brusque on the phone.
• You are a commercial real estate agent. Your customer is the founder and CEO of a start-up Web site development company. Her enthusiasm is contagious as she describes her vision for the company and her office needs for the next five years. | textbooks/biz/Marketing/The_Power_of_Selling/03%3A_The_Power_of_Building_Relationships-_Putting_Adaptive_Selling_to_Work/3.03%3A_Putting_Adaptive_Selling_to_Work.txt |
Learning Objectives
• Understand the role of relationships and networking in your job search.
Did you know that 80 percent of jobs are filled through networking?Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 171. Networking is sometimes referred to as the “hidden job market” because many jobs are filled before they are ever posted. This is true now more than ever because of the challenging economy. Traffic at job boards like Monster.com, CareerBuilder.com, and Yahoo! HotJobs is up 37 percent over last year, which means that companies are deluged with résumés. Despite the influx in résumés, companies are using more networking—traditional and online—to fill their open jobs. In fact, about 50 percent of Facebook’s new hires come from referrals from existing employees. According to Molly Graham, manager of Facebook Human Resources and Recruitment, “One of our main philosophies is to get smart and talented people. They tend to be connected.”
Zappos, a billion-dollar online retailer of shoes and apparel that was recently purchased by Amazon, has taken employee referrals to the next level and has implemented software that lets employees use their LinkedIn and Twitter contacts. The software uses an algorithm to identify people who might have a skill set and experience match for open positions and then allows employees to invite the prospective candidate to apply.Joseph De Avila, “Beyond Job Boards,” Wall Street Journal, July 2, 2009, http://online.wsj.com/article/SB10001424052970203872404574260032327828514.html (accessed July 3, 2009).
So now you can see why networking can be a very effective method to potentially learn about or land the job you want. But you might be wondering where you start and exactly how you network effectively. Like everything else in selling, you need to develop a plan.
Create a Networking Plan
Before you start, it’s a good idea to review exactly what networking is and what it isn’t. Just as in selling, networking is about building relationships that are mutually beneficial; it is about the exchange of value between people, usually over the course of time. Someone might help you now, and you might help that same person or someone else later. It requires a relationship and ongoing commitment. Networking isn’t a quick, easy way to get a job. Although it can be instrumental in helping you get a job, it isn’t easy, and it might not be quick. You should approach networking for the long term and realize that you will help some people and some people will help you. You have the power to help other people and to ask for help; that’s how networking works. To help guide you, here are six power networking tips.
Power Networking Tip #1: Network with Confidence
Don’t think of networking as begging for a job. Start building relationships with people—family, friends, professors, and executives—now. That will give you the opportunity to build relationships and potentially help someone even before you begin your job search. When you do begin networking to find a job, be yourself and get to know as many people as possible using the methods described earlier in the chapter (e.g., professional organizations, events). Keep in mind that you may have the opportunity one day to help the person with whom you are networking, so network with confidence.Meredith Levinson, “How to Network: 12 Tips for Shy People,” CIO, December 11, 2007, www.cio.com/article/164300/How_to_Network_Tips_for_Shy_People?page=1 (accessed July 3, 2009). You will be surprised at how many people are willing to help you because you ask. The fact is people want to help you; they want to see you succeed.
Power Networking Tip #2: Join Professional Organizations
There’s no better place to meet people you want to work with than to go where they go. Professional organizations such as your local chapter of Sales & Marketing Executives International, American Marketing Association, Entrepreneurs Organization, Public Relations Society of America, and others provide the perfect environment to meet people in the industry in which you want to work. Start by exploring the professional organizations on campus. Many are local chapters of national organizations designed to encourage students to get involved. If you don’t know which organization is best for you, ask a professor; she will be happy to provide some insight. Or go to a meeting and check it out; most organizations allow nonmembers to attend at least one meeting or event at no charge. A good number of professional organizations offer student membership rates that are designed for student budgets. Besides providing an excellent method to network, being a member of a professional organization also enhances your résumé.
But don’t just join—get involved. You can impress people with your skills, drive, and work ethic by getting involved in a committee, planning an event, working on the organization’s Web site, or other project. It’s a great way to build your experience and your résumé and impress prospective employers. At the same time, you can be developing professional references to speak on your behalf.
Power Networking Tip #3: Create Your Networking List
Networking, like selling, is personal. So make a list of all the people you know with whom you can network. Don’t disqualify anyone because you think they can’t help. You never know who knows someone who might be the link to your next job. Follow the same strategy for your personal networking as you would use for networking for selling: write down the four Fs—friends, family, friends’ family, and family’s friends using a format like the example shown in Table \(2\). Howcast, “How to Network,” video, http://www.youtube.com/watch?v=Y9VUqB7wQpY (accessed July 27, 2009). But don’t stop there; include your manicurist, insurance agent, hairstylist, and anyone else with whom you have a relationship. Don’t forget to visit your school alumni office. It’s always easier to start networking with people with whom you already have a relationship.
Table \(2\): Sample Networking List
Name Relationship E-Mail Phone Date of Contact Follow-Up Date
Manny Romeo Dad’s friend at Crane, Inc. [email protected] 616-787-9121 March 4 Need to touch base again at end of the month
Marie Jennings Mom’s friend [email protected] 616-231-0098 March 6 Early April (April 6)
Jamal Isper Dad’s friend at Polk & Polk [email protected] 791-887-9091 March 10 March 17
Shalee Johnson Hairstylist Not available; will talk to her on my next appointment 616-765-0120 April 7 To be determined based on first contact
Rajesh Sumar Director of Alumni Relations at school [email protected] 891-222-5555 ext. 2187 March 12 To be determined based on first contact
Annette Roberts General Sales Manager, Castle Controls [email protected] 888-989-0000 ext. 908 March 12 To be determined based on first contact
Source: Howcast Media, Inc.
Power Networking Tip #4: Know What to Say
Everyone tells you to do networking, but after you create your list, what do you say? You will be delivering your brand message to everyone with whom you are networking, so be specific about what you are looking for. Always take the opportunity to expand your network by asking for the names of other people whom you might contact. For example, assume you are networking with Vera, a friend of the family:
You: I really enjoy marketing and advertising. In fact, I’m looking for an internship at an advertising agency in account management. Do you know of anyone who might be looking for an intern for the summer?
Vera: I don’t really know anyone at an advertising agency.
You: Thanks. I was wondering if you might know anyone who might know someone who works at an advertising agency.
You will be surprised at how many people may be able to give you the name of someone you can contact. Not everyone will give you a name, but if you don’t ask, most people won’t think about whom they might know.
You might also network with someone who gives you the name of someone to contact. For example,
You: I’m going to graduate from State College in May with a degree in business administration. I really enjoy the idea of helping people increase their company’s sales, so I’m looking for a job in selling. Do you know of anyone who might have an opportunity in sales?
Jon: Have you talked to anyone at Universal Parts? They have a great training program, and the sales reps get a company car. You might want to touch base with Chris Reddy, who is one of the sales managers. I can give you his contact information.
You: Jon, I really appreciate your help. Can I mention your name when I contact him?
Jon: Sure. Chris is a great leader and is always looking for good people.
When you contact Chris Reddy, it’s best to make contact by phone, if possible. That way you have an opportunity to create a relationship (remember how important relationships are in selling, especially when you are selling yourself). A phone call might start like this:
You: Hello, Chris. My name is Rakeem Bateman. Jon Keller suggested I give you a call.
Chris: Hello Rakeem. Jon and I have known each other for several years. How do you know Jon?
You: I met him at a Sales & Marketing Executives International event last week. He was one of the speakers. I enjoyed hearing what he had to say so much that I stayed to talk to him after the event. I’m going to graduate from State College in May with a degree in business administration. I really enjoy the idea of helping people increase their company’s sales, so I’m looking for a job in selling. Jon suggested that I touch base with you to find out if Universal Parts might be looking to expand their sales organization.
If someone has referred you, always include that as part of your introduction. If your networking takes place via e-mail, you should do the same thing. When you send your résumé to someone with whom you are networking via e-mail, it’s best to include your three bullet points from your cover letter as the body of the e-mail (review the Selling U section in Chapter 2). That allows the person to whom you are sending the letter to see at a glance that he wants to open your résumé. In most cases the person to whom you are sending your résumé is forwarding it to someone else. Writing a short, easy-to-skim note helps tell every recipient what you have to offer. For example, see Figure \(5\) for a sample e-mail to Chris Reddy.
You can see that when you are networking you want to focus on being specific about what you are looking for, asking for names of people with whom you might network, and creating a relationship with those people.
Power Networking Tip #5: Online Professional Social Networking
Social networking sites can be a more powerful job search tool than most people realize, and their power can go both ways: The sites can work in your favor, but they can also work against you. When you’re preparing to apply for jobs, keep in mind that a growing number of employers search social networking sites like Facebook and MySpace to weed out applicants who might not fit with their company culture. In fact, 22 percent of employers claim to use social networking sites when considering potential hires, and of those employers, 34 percent said they chose not to hire a candidate based on the information they had dug up about that person online.Mike Hargis, “Social Networking Sites Dos and Don’ts,” CNN.com, November 5, 2008, http://www.cnn.com/2008/LIVING/worklife/11/05/cb.social.networking/index.html (accessed May 16, 2010). One human resources manager based in Seattle, says she has turned down an otherwise promising job candidate’s application on a number of occasions after visiting the applicant’s networking profile. “Sometimes there are compromising photos or videos posted out there where anyone can find them,” she says. “When that happens, those applications go right in the trash.”Elizabeth Lee, personal communication, June 26, 2009. You can find out all kinds of things about a person from his MySpace profile that you couldn’t necessarily learn from his cover letter or résumé! As social networking expert Patrice-Anne Rutledge says, before you go on the job market, make sure you “get rid of your digital dirt.” In particular, look through any videos or photographs you may have uploaded to your profile, any Web sites you may have linked to, and any personal information you reveal that may be controversial or reflect on you in a negative light.Mike Hargis, “Social Networking Sites Dos and Don’ts,” CNN.com, November 5, 2008, http://www.cnn.com/2008/LIVING/worklife/11/05/cb.social.networking/index.html (accessed June 25, 2009).
You’ve Got the Power: Tips for Your Job Search
Clean Up Your Pages
“Get rid of your digital dirt”Mike Hargis, “Social Networking Sites Dos and Don’ts,” CNN.com, November 5, 2008, http://www.cnn.com/2008/LIVING/worklife/11/05/cb.social.networking/index.html (accessed June 25, 2009). now, before you even start applying for jobs. Your Facebook or MySpace profile could negatively impact your chances of getting a job at your chosen company. Gauge the appropriateness of the videos, photographs, and comments on your pages and decide whether it would be a problem if a potential employer saw them. Many employers will search your social networking profiles to learn the things your résumé and cover letter don’t reveal.
On the other hand, professional social networking sites are tools you can leverage to great advantage in your job search if you use them proactively. LinkedIn is the biggest and most frequently used networking site, but there are a number of others, including Jobster, Ryze, ZoomInfo, and Plaxo, that allow you to create a professional profile and find contacts in your target industry or at target companies.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 134. Although it’s easy to create an account on these sites, you won’t get the full benefit unless you do two things: make the effort to keep your profile up-to-date and make the effort to grow your network. Here are a few social networking tips to keep in mind:
• Make yourself stand out. Think about the skills and qualities that make you unique. What sets you apart as your own distinctive brand? Your online networking profile should reflect this. Don’t just reproduce your résumé; make your profile into your “elevator speech,” highlighting your interests and using power words to describe your experience and talents. Your network profile is searchable on Google, so give some thought to the keywords you use to describe yourself.Diana Dietzschold Bourgeois, “Six Steps to Harnessing the Power of LinkedIn,” Magic Marketing USA, January 7, 2009, http://magicmarketingusa.wordpress.com/2009/01/07/linkedin (accessed May 16, 2010).
• Publicize your profile. LinkedIn allows you to search your e-mail address book for contacts that also have accounts, so you can easily grow your network. You should also be willing to ask people you know in your industry, including professors and mentors, to join your network. These people are well connected and want to see you succeed. In addition, you can start using your LinkedIn profile badge on outgoing e-mails, and, if you have one, on your Web site. When you publicize yourself this way, people will start linking to you.Diana Dietzschold Bourgeois, “Six Steps to Harnessing the Power of LinkedIn,” Magic Marketing USA, January 7, 2009, http://magicmarketingusa.wordpress.com/2009/01/07/linkedin (accessed May 16, 2010). Many companies and recruiters are accelerating their use of LinkedIn. “We could not believe the candidates we got” from LinkedIn, says Scott Morrison, director of global recruiting programs at software giant Salesforce.com.Matthew Boyle, “Enough to Make a Monster Tremble,” BusinessWeek, June 25, 2009, http://www.businessweek.com/magazine/content/09_27/b4138043180664.htm (accessed June 25, 2009).
• Ask for recommendations. As you begin to build a professional network online, you can use it the same way you would use a regular social network. Ask people for recommendations of your work and for referrals to new contacts. Maybe a former professor knows the marketing manager at a company where you want to work; ask her to introduce you. Making a request like this can be terrifying at first, but have confidence. Keep in mind that your professors, mentors, and fellow professionals want to help you, and when they can help you, they will. But you won’t get the help if you don’t ask for it.
• Join groups. Start by joining The Power of Selling group on LinkedIn. Sites like LinkedIn have thousands of groups that are specific to interest, location, hobbies, and industry. Join your local professional group—the Chicago Sales and Marketing Executives group, for instance—and join your school’s alumni association. Your alumni group is an extremely important connection to make because people are almost always eager to help their fellow alumni succeed. But don’t stop there; search for other groups that are in the industry you want to pursue. You can just listen to the conversation and then jump in when you feel comfortable.
• Create content. Think about when you are considering making a major purchase. What do you do? You probably conduct research online to determine the pros and cons of each alternative. Employers do the same thing, so be sure your profile is compelling and up-to-date. In addition, use your social networking pages to create content to demonstrate your skills. For example, write a blog and link it to your Facebook page or post tweets on Twitter about a project on which you are working, a topic about which you are passionate, or even your job search. Get people to follow you and engage in the dialogue. Direct them to your personal Web site, samples of your work, or the content you have created. Social networking gives you the opportunity to show and sell with content that you create.
• Search the social networking job boards. More and more employers are using professional social networking sites to post jobs and seek out prospective employees.Matthew Boyle, “Enough to Make a Monster Tremble,” BusinessWeek, June 25, 2009, http://www.businessweek.com/magazine/content/09_27/b4138043180664.htm (accessed June 25, 2009). It’s worth your time to review the job postings using the appropriate keywords.
Power Networking Tip #6: Follow-Up
It might seem like networking doesn’t always work. It’s good to keep in mind that networking is all about exchange of value. Sometimes, you may not find people who want the value you have to offer at the time you are offering it. Don’t be discouraged. Follow-up is important in every part of your job search, so follow up with everyone with whom you network. Sometimes, people are simply distracted or overwhelmed at the time you first contacted them. Or sometimes their situation has changed, even in just a few days; you won’t know this unless you follow up.
It’s best to follow up by phone within one week of a contact. It may seem easier to follow up by e-mail, but you increase your likelihood of being successful and building a relationship when you follow up by phone. Don’t simply leave a voice mail message as it is unlikely that someone will return your call. Continue to call until your contact answers the phone, or leave a voice mail and tell her when you will call back along with your e-mail address. Then, call back when you say you will. You will be pleasantly surprised at the results.
Keep in mind that networking is an ongoing process, whether you are looking for a job or not. When you establish a relationship with someone, keep in touch with her. You should touch base with people in your network at least once every four to six weeks. It’s good to call to catch up, but an e-mail can be just as powerful. Send a link to an article or video that you think she will like. It’s a perfect reason for keeping in touch and helps establish you as someone who delivers value, even when you are not looking for something.
Key Takeaways
• Creating a networking plan will help make your networking efforts more effective.
• Networking is about exchanging value, not collecting business cards. It’s best to begin networking even before you are looking for a job so you can get to know people and provide value to them; it will help you when you begin your job search.
• Always network with confidence. You are not asking for a favor—you are simply tapping into a reciprocal business practice.
• It’s a good idea to create a networking list including friends, family, family’s friends, friends’ family, and everyone else you know. Write down their names and contact information so you don’t miss anyone.
• Practice what you want to say when you network with people. It’s best to be specific about what you are looking for and always ask for another person with whom you can network.
• Online professional social networks such as LinkedIn, Plaxo, and other networking sites including Facebook and Twitter can help you expand your network and build relationships with many people who might be able to help put you in touch with the right people.
• Your social networking pages represent your personal brand. Be sure that all words, pictures, and videos are appropriate for prospective employers to view.
• Follow-up is the key to making networking work; don’t assume that because you haven’t heard back from someone that he doesn’t want to talk to you. Take the time to follow up within one week of every contact.
Exercise \(1\)
1. Choose one of your classmates. Review his social networking pages and do a search on major search engines to see what his personal brand communicates online. Is it appropriate for a prospective employer? What changes would you recommend?
2. Create your networking list. Identify at least fifteen people that you can contact about your internship or job search. How can you expand your network to include twenty-five people?
3. Assume you were at a campus networking event and met someone who works at a company where you would like to work. What would you say to her to try to learn about potential opportunities with the company? If she said nothing was available, what would you say to be able to contact her at a later time?
4. Review your LinkedIn profile and identify ways that you can stand out. Ask a professor or other professional to give you some feedback on your profile and other professionals you can add to your network. | textbooks/biz/Marketing/The_Power_of_Selling/03%3A_The_Power_of_Building_Relationships-_Putting_Adaptive_Selling_to_Work/3.04%3A_Selling_U_-_NetworkingThe_Hidden_Job_Market.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand the importance of relationships in selling and how to develop effective relationships.
• You can understand why building relationships is important to selling.
• You can describe how consultative selling works.
• You can identify ways to develop long-term, effective relationships.
• You can understand how to build trust in a relationship.
• You can list the ways to network to build relationships.
• You can recognize how to use adaptive selling.
• You can understand how to integrate networking into your job search.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. Describe consultative selling and why it is different from transactional selling.
2. Describe lifetime value and why it is important in consultative selling.
3. Explain how to communicate bad news to a customer.
4. Who wins in the win-win-win relationship?
5. What is networking, and why is it important in selling?
6. Describe adaptive selling and why it is important.
7. If your customer is a driver, what is the best way to adapt your selling style?
8. Name at least three ways you can use networking to get the job you want.
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. The following are two roles that are involved in the same selling situation; one role is that of an interviewer and the other is that of the aspiring salesperson. This will give you the opportunity to think about this networking situation from the perspective of both the networker and the person with whom he is networking.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
Networking That Works
Role: Pharmaceutical sales manager
You are a sales manager at a major pharmaceutical company. You are always looking for extraordinary people—the ones who really stand out. You judge people by your first impression of them. Even if you are not hiring, you usually take the time to meet with people who impress you, or at the very least, you refer her to someone you think may be hiring. If you are not impressed, you are courteous to the person, but leave it at that.
• What would impress you if a potential candidate called to network with you?
• What information would you expect him to know about you?
• How would you respond to the networking phone call?
Role: College student
You are you. You are looking for a job in pharmaceutical sales, and you are networking to find any job opportunities in that area. You have been given the name and phone number of a sales manager at a major pharmaceutical company. You are not sure if the company is hiring right now, but the sales manager is well connected in the industry so he is a good person with whom to build a relationship and put your networking skills to work. You don’t know much about him, but you learned on his LinkedIn profile that he went to the University of Florida and also volunteers for The Boys and Girls Clubs of America.
• What other research would you do before you called the sales manager?
• What is your objective for calling the sales manager?
• Assume you are calling the sales manager to network. How would you start the conversation?
• How would you wrap up the conversation?
• What would you do after the conversation?
ACTIVITIES
1. Identify at least one professional organization on campus and one organization off campus that you can join to enhance your networking opportunities. Go to the campus student services office or career center. Also, talk to a professor and a librarian to conduct your research to identify the organizations.
2. Contact at least five people a week on your networking list. Ask for the names of additional people to contact and to build your network.
3. Set up a profile on LinkedIn (if you haven’t already done so). Connect to at least fifteen people to start (use your networking list to build your LinkedIn connections). Ask for at least three introductions a week from people in your network. Contact each one personally and share what type of career you would like to pursue. Ask each one for additional names of people you can network with.
4. Using LinkedIn, ask at least three professional people to recommend you. Consider people such as previous supervisors, professors, and internship coordinators.
5. Create an account on Twitter. Follow at least twenty professional people in the industry in which you would like to get a job.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Consultative selling occurs when you develop a one-to-one relationship with your customer and truly understand his needs, wants, and resources; it means putting the customer first. Consultative selling helps you develop short-term and long-term solutions for your customer. Transactional selling focuses on a single transaction with no input from or relationship with the customer.
2. Lifetime value means that you consider not just one transaction with a customer but also the help and insight you can provide throughout the entire period that you do business with him. A customer that has only limited needs right now may develop into a lucrative customer over the course of time based on your advice and guidance.
3. It’s best to deliver bad news in person or over the phone when time permits. This tells your customer that you think this is important. You should always communicate in an open, honest, and timely manner and provide a realistic solution to the problem. If you don’t have a solution, let the customer know when you will get back to her with an update.
4. The customer, you, and your company all win in a win-win-win relationship.
5. Networking is the art of building alliances or mutually beneficial relationships. Networking is built on the concept of exchange. In selling, you can expand the number of people you know, which can expand your business. When what you need provides value to someone else in your network, networking works. The more you provide value to other people, the higher the likelihood that they will go out of their way to help you.
6. Adaptive selling occurs when a salesperson adapts and customizes her selling style based on the behavior of the customer. If you adapt to the customer’s social style, you can increase the chances that he will be open to hearing your message.
7. Be professional; focus on facts and timelines that will allow your customer to see how quickly she can achieve her goal. Provide options that allow her to be in control.
8. Create a networking list, join professional organizations, use online professional social networks, publicize your profile, ask for recommendations, join groups, create content, and follow up. | textbooks/biz/Marketing/The_Power_of_Selling/03%3A_The_Power_of_Building_Relationships-_Putting_Adaptive_Selling_to_Work/3.05%3A_Review_and_Practice.txt |
Business Ethics: The Power of Doing the Right Thing
Video Ride-Along with Paul Blake, Vice President of Sales at Greater Media Philadelphia
You met Paul Blake in Chapter 2. With over twenty years of experience in selling, Paul has been in challenging situations when his ethics were at stake. He knows the importance of doing the right thing, even when it’s not the easy thing to do. Because your ethics may be put to the test at any time by your co-workers, customers, or even your boss, Paul shares his thoughts on ethics in selling.
Ride along with Paul as he discusses doing the right thing.
4.02: Business Ethics - Guiding Principles in Selling and in Life
Learning Objectives
• Understand ethics and what composes ethical behavior.
• Discuss the role of values in ethics.
• Understand how you define your personal code of ethics.
It seemed like a straightforward decision at the time—you could either pay ninety-nine cents per song on iTunes, or you could download for free from a peer-to-peer network or torrent service. After all, artists want people to enjoy their music, right? And besides, it’s not like Kanye West needs any more money. So you pointed your browser to ThePirateBay.org.
Of course, that isn’t the whole story. The MP3s you downloaded have value—that’s why you wanted them, right? And when you take something of value without paying the price, well, that’s theft. The fact that you’re unlikely to get caught (and it isn’t impossible; people are arrested, prosecuted, and ordered to pay massive judgments for providing or downloading music illegally) may make you feel safer, but if you are caught, you could pay from \$750 to \$150,000 per song.Elianne Friend, “Woman Fined to Tune of \$1.9 Million for Illegal Downloads,” CNN.com, June 18, 2009, http://www.cnn.com/2009/CRIME/06/18/minnesota.music.download.fine/index.html (accessed February 13, 2010). Other variables can further complicate the situation. If you downloaded the MP3s at work, for example, you could lose your job. Acting unethically is wrong and can have enormous practical consequences for your life and your career.
What Is Ethics?
Ethics is moral principles—it is a system that defines right and wrong and provides a guiding philosophy for every decision you make. The Josephson Institute of Ethics describes ethical behavior well: “Ethics is about how we meet the challenge of doing the right thing when that will cost more than we want to pay. There are two aspects to ethics: The first involves the ability to discern right from wrong, good from evil, and propriety from impropriety. The second involves the commitment to do what is right, good, and proper. Ethics entails action; it is not just a topic to mull or debate.”John C. Maxwell, There’s No Such Thing As “BusinessEthics (New York: Center Street, 2003), 23–24. Is it right? Is it fair? Is it equitable? Is it honest? Is it good for people? These are all questions of ethics.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “What Is Ethics?” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/whatisethics.html (accessed August 31, 2009). Ethics is doing the right thing, even if it is difficult or is not to your advantage.[citation redacted per publisher request]. Carly Fiorina, former CEO of Hewlett-Packard, discusses the importance and impact of ethics on business.
Personal Ethics: Your Behavior Defines You
Ethics comes into play in the decisions you make every day. Have you ever received too much money back when you paid for something in a store, didn’t get charged for something you ordered at a restaurant, or called in sick to work when you just wanted a day off?College Confidential, talk.collegeconfidential.com/california-institute-technology/427749-ethical-dilemma-question.html (accessed August 31, 2009). Each of these is an ethical dilemma. You make your decision about which path to take based on your personal ethics; your actions reflect your own moral beliefs and moral conduct.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “What Is Ethics?” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/whatisethics.html (accessed August 31, 2009). Your ethics are developed as a result of your family, church, school, community, and other influences that help shape your personal beliefs—that which you believe to be right versus wrong.Manual Velasquez, Claire Andre, Thomas Shanks, and Michael J. Meyer, “Ethics and Virtue,” Santa Clara University, http://www.scu.edu/ethics/practicing/decision/ethicsandvirtue.html (accessed August 29, 2009). A good starting point for your personal ethics is the golden rule: “Do unto others as you would have them do unto you.” That is, treat people the way that you would like to be treated. You would like people to be honest with you, so be honest with others.
Your strong sense of personal ethics can help guide you in your decisions. You might be surprised to find yourself with an ethical dilemma about something that is second nature to you. For example, imagine that you’re taking a class (required for your major) that has an assignment of a twenty-page paper and you’ve been so busy with your classes, internship, and volunteer work that you really haven’t had the time to get started. You know you shouldn’t have waited so long and you’re really worried because the paper is due in only two days and you’ve never written a paper this long before. Now you have to decide what to do. You could knuckle down, go to the library, and visit the campus Writing Center, but you really don’t have the time to do all that and still write the entire twenty pages. You’ve heard about some people who have successfully bought papers from this one Web site. You’ve never done it before, but you are really desperate and out of time. “If I only do it this one time,” you think, “I’ll never do it again.”
But compromising your ethics even just once is a slippery slope. The idea is that one thing leads naturally to allowing another until you find yourself sliding rapidly downhill. Ethics is all about the art of navigating the slippery slope: you have to draw a line for yourself, decide what you will and won’t do—and then stick to it. If you don’t have a strong set of ethics, you have nothing to use as a guidepost when you are in a situation that challenges you morally. A highly developed set of personal ethics should guide your actions. The only way to develop a strong sense of ethics is to do what you believe in, to take actions consistent with your principles time and time again.
So if you buy the paper and get caught, you will not only fail the class, but you may also find yourself expelled from school. If you’re tempted to consider buying a paper, take a minute to read your school’s academic dishonesty policy, as it is most likely very clear about what is right and wrong in situations like this.
Even if you get away with using a paper that is not your own for now, it’s always possible that you’ll be found out and humiliated even decades after the fact. Southern Illinois University (SIU) had three high-ranking officials—a university president and two chancellors—revealed as plagiarists in a two-year period.Margaret Soltan, “Southern Illinois University an Official Laughingstock,” Inside Higher Ed, August 30, 2007, www.insidehighered.com/blogs/university_diaries/southern_illinois_university_an_official_laughingstock (accessed February 18, 2010). Even more embarrassing, the committee formed to investigate the charges of plagiarism against Chancellor Walter Wendler developed a new plagiarism policy whose parts were plagiarized—specifically, it copied its academic dishonesty policy from Indiana University without citing that source.Wendy Weinhold, “SIU Accused of Copying Plagiarism Policy,” Daily Egyptian, January 29, 2009, web2.collegepublisher.com/se/daily-egyptian/siu-accused-of-copying-plagiarism-policy-1.1318397 (accessed February 18, 2010). SIU was made a laughingstock, and its reputation has suffered considerably. Academic dishonesty is not a gamble worth taking; though many students are tempted at some point, those who give in usually regret it.
Do the Right Thing
If you rationalize your decisions by saying, “Everyone does it,” you should reconsider. Unethical behavior is not only what you believe to be right and fair, it is a reflection of your personal brand and what people can expect from you personally and professionally. Even celebrities such as Wesley Snipes, Willie Nelson, and Darryl Strawberry have fallen from grace in the eyes of the public and learned the hard way that unethical—and in their cases, illegal—behavior such as tax evasion can result in a prison term.Stefanie Fontenez, “Tax-Troubled Celebrities, Politicians, Outlaws,” CNN.com, April 15, 2008, http://www.cnn.com/2008/LIVING/wayoflife/04/15/famous.tax/index.html (accessed August 29, 2009). The consequences of unethical behavior can range from embarrassment to suspension, loss of job, or even jail time, depending on the act.
Eliot Spitzer, the governor of New York, admitted that he violated his personal ethics and those of his office when he resigned in March 2008 because of alleged involvement in a sex ring. Ironically, he built his reputation as the “sheriff of Wall Street” due to his efforts to crack down on corporate misdeeds.Danny Hakim, “Eliot Spitzer,” New York Times, Times Topics, August 31, 2009, http://topics.nytimes.com/topics/reference/timestopics/people/s/eliot_l_spitzer/index.html (accessed August 31, 2009). His disgrace was the topic of many conversations about ethics.
You have no doubt heard the expression “Do the right thing.” It is the essence of ethics: choosing to do the right thing when you have a choice of actions. Being ethical means you will do the right thing regardless of whether there are possible consequences—you treat other people well and behave morally for its own sake, not because you are afraid of the possible consequences. Simply put, people do the right thing because it is the right thing to do. Thomas Jefferson summed up ethics in a letter he wrote to Peter Carr in 1785: “Whenever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the world looking at you, and act accordingly.”Gerhard Gschwandtner, “Lies and Deception in Selling: How to Tell When Customers or Prospects Are Lying to You,” Selling Power 15, no. 9, http://www.sellingpower.com/content/article.php?a=4256 (accessed March 16, 2010).
Ethical decisions are not always easy to make, depending on the situation. There are some gray areas depending on how you approach a certain situation. According to Sharon Keane, associate director of marketing at the University of Notre Dame, people have different approaches, so there may be multiple solutions to each ethical dilemma,“An Education in Ethics,” Selling Power Sales Management eNewsletter, April 17, 2002, http://www.sellingpower.com/content/newsletter/issue.php?pc=197 (accessed March 16, 2010). and every situation may have multiple options. For example, if one of your best friends told you in confidence that he stole the questions to the final exam would you say nothing, use them, or report him? Certainly, using the questions would not be ethical, but your ethical dilemma doesn’t end there. Reporting him would be the right thing to do. But if you didn’t report him, would it be unethical? You might not consider that unethical, but what if you just didn’t say anything—is that still ethical? This is the gray area where your personal ethics come into play. Looking the other way doesn’t help him or you. While you might be concerned about jeopardizing your friendship, it would be a small price to pay compared with jeopardizing your personal ethics.
Business Ethics: What Makes a Company Ethical?
Ethics apply to businesses as well personal behavior. Business ethics is the application of ethical behavior by a business or in a business environment. An ethical business not only abides by laws and appropriate regulations, it operates honestly, competes fairly, provides a reasonable environment for its employees, and creates partnerships with customers, vendors, and investors. In other words, it keeps the best interest of all stakeholders at the forefront of all decisions.[citation redacted per publisher request].
An ethical organization operates honestly and with fairness. Some characteristics of an ethical company include the following:
• Respect and fair treatment of employees, customers, investors, vendors, community, and all who have a stake in and come in contact with the organization
• Honest communication to all stakeholders internally and externally
• Integrity in all dealings with all stakeholders
• High standards for personal accountability and ethical behavior
• Clear communication of internal and external policies to appropriate stakeholders[citation redacted per publisher request].
Source: McDonald’s Corporation
High-Profile Unethical Behavior in Business
While ethical behavior may seem as if it is the normal course of business, it’s unfortunate that some business people and some businesses do not operate ethically. Enron, WorldCom, Tyco, HealthSouth, and Lehman Brothers among other companies, have been highlighted in the news during the past several years due to unethical behavior that resulted in corporate scandals and, in some cases, the conviction of senior executives and collapse of some companies. While business has never been immune from unethical behavior, it was the fall of Enron in 2001 that brought unethical business behavior on the part of senior executives to the forefront. Enron began as a traditional energy company in 1985. But when energy markets were deregulated (prices were determined based on the competition rather than being set by the government) in 1996, Enron grew rapidly. The company began to expand to areas such as Internet services and borrowed money to fund the new businesses. The debt made the company look less profitable, so the senior management created partnerships in order to keep the debt off the books. In other words, they created “paper companies” that held the debt, and they showed a completely different set of financial statements to shareholders (owners of the company) and the government (U.S. Securities Exchange Commission [SEC]). This accounting made Enron look extremely profitable—it appeared to have tripled its profit in two years. As a result, more people bought stock in the company. This lack of disclosure is against the law, as publicly traded companies are required to disclose accurate financial statements to shareholders and the SEC. There began to be speculation about the accuracy of Enron’s accounting, and on October 16, 2001, the company announced a loss of \$638 million. On October 22 of that year, the SEC announced that Enron was under investigation. The stock price continued to fall, and the company was unable to repay its commitments to its shareholders. As a result of this unethical and illegal behavior on the part of senior management, the company filed for chapter 11 bankruptcy protection.NewsHour Extra, “What Happened to Enron?” Paul Solman, PBS, January 22, 2002, www.pbs.org/newshour/extra/features/jan-june02/enron_past.html (accessed December 6, 2009). The unethical (and illegal) behavior of the senior management team caused a ripple effect that resulted in many innocent people losing their money and their jobs. As a result of the Enron scandal, a new law named the Sarbanes-Oxley Act (for Senator Paul Sarbanes from Maryland and Representative Michael Oxley from Ohio) was enacted in 2002 that requires tighter financial reporting controls for publicly traded companies.SearchCIO, “Sarbanes-Oxley Act,” http://searchcio.techtarget.com/sDefinition/0,,sid182_gci920030,00.html (accessed December 6, 2009).
The epitome of unethical (and illegal) behavior was Bernard Madoff, who was convicted of running a \$65 billion fraud scheme on his investors. For years, he reported extremely high returns on his clients’ investments, encouraging them to reinvest with even more money. All the time he was stealing from his clients and spending the money. He cheated many clients, including high-profile celebrities like actor Kevin Bacon and his wife Kyra Sedgewick and a charity of Steven Spielberg’s.“Bernie Madoff Ponzi Scheme: Victim List Grows,” Huffington Post, December 15, 2008, http://www.huffingtonpost.com/2008/12/15/bernie-madoff-ponzi-schem_n_151018.html (accessed December 6, 2009). He was arrested, tried, and sentenced to 150 years in jail, and his key employees were also sentenced to similar terms.Julie Creswell and Landon Thomas Jr., “The Talented Mr. Madoff,” New York Times, January 24, 2009, www.nytimes.com/2009/01/25/business/25bernie.html (accessed August 31, 2009).,Jack Healy and Diana B. Henriques, “It Was All Fake: Madoff Aide Details Scheme,” New York Times, August 12, 2009, http://dealbook.blogs.nytimes.com/2009/08/12/madoff-aide-reveals-details-of-ponzi-scheme/?scp=2&sq=madoff%20sentencing&st=cse (accessed August 31, 2009).
Ethical Dilemmas in Business
Not all behavior that is unethical is illegal. Companies frequently are faced with ethical dilemmas that are not necessarily illegal but are just as important to navigate. For example, if a travel company wants to attract a lot of new customers, it can honestly state the price of a trip to Disney World in its advertising and let customers decide if they want to purchase the trip. This would be ethical behavior. However, if the company advertises a free vacation in order to get customers to call, but the free vacation package includes a \$500 booking fee, it is unethical. Or if an appliance store wants to get new customers by advertising a low-priced refrigerator, it is an ethical way to let customers know that the company has competitively priced appliances as well. However, if the store only has a higher-priced refrigerator in stock and tries to sell that one instead, it is unethical behavior.
Sometimes ethical behavior can be a matter of disclosure, as in the case of Enron, Bernie Madoff, or the examples above. Business ethics can also be challenged based on business practices. For example, in the 1990s Nike was accused of exploiting workers in third-world countries to manufacture their products. The low wages they were paying the workers made Nike’s profits higher.Aaron Bernstein, “Nike’s New Game Plan for Sweatshops,” BusinessWeek, September 20, 2004, http://www.businessweek.com/magazine/content/04_38/b3900011_mz001.htm (accessed December 6, 2009). While this is not illegal behavior—they were paying the workers—it was considered unethical because they were paying the workers less than what is reasonable. Another example of unethical behavior is not disclosing information. For example, if a car salesperson knows that a used car he is selling has been in an accident but says that it has not been involved in an accident, that is unethical. Bribing an executive, saying or promising things that are knowingly untrue, or treating employees unfairly are all examples of unethical behavior in business.
Corporate Social Responsibility
You may choose to shop at companies because of their business practices. For example, you might like The Body Shop because of its commitment to selling products that do not use animals for testing. This is a case of ethical behavior that is socially responsible. In fact, corporate social responsibility (CSR) is when companies operate in a way that balances the interests of all stakeholders including employees, customers, investors, vendors, the community, society, and any other parties that have a stake in the company. While corporate social responsibility may seem easy, it’s not always as easy as it looks. Keep in mind that in order to be socially responsible a company has to balance the social, economic, and environmental dimensions, which means generating a profit for investors while serving the best interest of all parties that have a stake in the operations of the company. When companies measure the impact of their performance along the three dimensions of social, economic, and environmental impact, it is called the triple bottom line. To learn more about McDonald’s social responsibility, watch the following video.
McDonald’s Commitment to Social Responsibility
(click to see video)
See how the triple bottom line is part of the company culture.
Source: McDonald’s Corporation
There are many companies that make a commitment to social responsibility and the triple bottom line.
Link
Most “Accountable” Companies for Socially Responsible Practices
http://money.cnn.com/popups/2006/fortune/g500_accountability/index.html
Good Ethics = Good Business
The impact of ethical behavior by companies cannot be underestimated. It’s no surprise that companies that consistently demonstrate ethical behavior and social responsibility generate better results. In successful companies ethics is so integrated into the organization that it defines how every employee from CEO to the lowest-level employee behaves. Ethics is not a separate topic but is incorporated into company strategy. The company makes ethics part of every activity from strategic planning to operational execution.Jeremy Dann, “Business Ethics Integral to Corporate Strategy, Says Stanford’s Malhotra,” BNET, July 1, 2009, blogs.bnet.com/mba/?p=927&tag=content;col1 (accessed August 29, 2009). For example, Target has been committed to the triple bottom line even before it was in vogue when the company’s founder, George Draper Dayton, established a foundation to give back to the community. The company’s commitment has grown, and since 1946 it has donated 5 percent of its income every year. Target’s Corporate Responsibility Report is information that the company makes available to everyone on its Web site.
Target’s commitment to ethics and social responsibility are especially impressive given the current economic challenges. It is times like these that can challenge many companies that do not have this kind of ethical commitment. With pressure on short-term results, many companies set unrealistic goals and employees feel extreme pressure to meet them or face the possibility of losing their jobs. Professor Neil Malhotra of the Stanford Graduate School of Business calls this an “overemphasis on instant gratification.” In fact, he feels that is the root cause of the current economic crisis.Jeremy Dann, “Business Ethics integral to Corporate Strategy, Says Stanford’s Malhotra,” BNET, July 1, 2009, blogs.bnet.com/mba/?p=927&tag=content;col1 (accessed August 29, 2009). But business ethics, just like personal ethics, mean doing the right thing even when it is a difficult choice or doesn’t appear to be advantageous.
But ethical behavior and integrity are clearly linked to profitability. In a study of seventy-six Holiday Inn franchises around the country conducted by Tony Simons, associate professor in organization management at Cornell University and author of the book The Integrity Divided, Simons found that the behavior of the hotel manager was the “single most powerful driver of profit.”Heather Baldwin, “There’s a Price on Your Integrity,” Selling Power Sales Management eNewsletter, September 16, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=867 (accessed March 16, 2010).
Ethical Behavior in Sales
One of the most visible positions in any organization in terms of ethics is sales. That’s because it is the salesperson that comes in contact directly with the customer. What the salesperson says and does is a direct reflection of the organization and its ethics.
Consider this ethical dilemma if you were a real estate agent. You have just landed a fantastic listing: a home that in the hot neighborhood that will surely sell quickly and yield a nice commission for you. The seller tells you that the home inspector suspects there is insect damage to the siding of the house, but the seller says she has never had any problems. Also, the seller feels so strongly about not disclosing this information to prospective buyers that she said she would rather go with a different agent if you insist on disclosing the possible insect damage. What would you do?
In a situation like this, it’s best to remember that doing the right thing can be a hard choice and might not be advantageous to you. Although you really don’t want to lose this listing, the right thing to do is to disclose anything that affects the value or desirability of the home. Even if you think it might not be a major issue, it’s always best to err on the side of honesty and disclose the information. Buck Wargo, “5 Everyday Ethical Dilemmas,” Realtor, March 2007, www.realtor.org/archives/feat2200703?presentationtemplate=rmo-design/pt_articlepage_v1_print&presentationtemplateid=1b18c0004a12c9a4b7e1ffbdd1ec736f (accessed August 29, 2009). Either withholding or falsifying information is lying and therefore unethical.Gerhard Gschwandtner, “Lies and Deception in Selling: How to Tell When Customers or Prospects Are Lying to You,” Selling Power 15, no. 9, http://www.sellingpower.com/content/article.php?a=4256 (accessed March 16, 2010).
Imagine that you are a financial planner responsible for managing your clients assets. You make your income on commission, a percentage of the value of your clients’ portfolios; the more you increase his portfolio, the more money you make. One of your clients is a very conservative investor; right now you are not making much money from his account. You have an opportunity to sell him a high-return investment, but the risk is far greater than you think he would normally take. You think you can sell him on it if you leave out just a few details during your conversation. The investment will actually be good for him because he will get a significant return on his investment, and besides, you’re tired of spending your time on the phone with him and not making any money. This could be a win-win situation. Should you give him your pitch with a few factual omissions or just make the investment and tell him after the money starts rolling in? After all, he doesn’t look at his account every day.Mark P. Cussen, “Ethical Issues for Financial Advisors,” Investopedia, investopedia.com/printable.asp?a=/articles/financialcareers/08/ethics-for-advisors.asp (accessed August 29, 2009). What should you do?
Even though the result of the investment could be a good one, it is your obligation to provide full disclosure of the risk and let the customer make the investment decision. You should never make assumptions and decisions on behalf of your customers without their consent. If you are frustrated about your lack of income on the account, you might not be the best financial planner for him. You should have an honest conversation with him and perhaps suggest a colleague or other planner that might be a better fit for his investment strategy. Sometimes it’s better to part ways than to be tempted to behave unethically.
Just Say No
What if your employer asked you to do something that you are not comfortable doing? For example, if your employer asked you to complete the paperwork for a sale even if the sale hasn’t been made, what should you do? It’s best to say that you are not comfortable doing it; never compromise your personal ethics even for your employer. It’s also a good idea to see someone in the human resources department if you have any questions about the best way to handle a specific situation.
What if you were a salesperson for a textbook company and you are only \$1,000 away from your \$1 million sales goal. If you make your goal, you’ll earn a \$10,000 bonus, money you’ve been counting on to put a down payment on your first house. But the deadline is only two days away, and none of your customers is ready to make a purchase. You really want the bonus, and you don’t want to wait until next year to earn it. Then you remember talking to one of the administrators, and she mentioned the need for donations. What if you made a \$1,000 donation to the school. It would help the school during this challenging financial crisis and it would be more inclined to make a purchase quickly. After the donation, you would still have \$9,000. This could be a good move for everyone. Would you make the donation to “buy” your bonus?
When you are in sales, you are not only representing yourself, but you are also representing your company. Although it appears that all parties will benefit from the donation, it is not ethical for the school, you, or your company to make an exchange like that. Products such as textbooks should be purchased based on the organization’s buying process. Donations should be made with no strings attached. You might miss the opportunity to earn your bonus this year, but you will learn valuable lessons to make next year an even better sales year.Shel Horowitz, “Should Mary Buy Her Own Bonus?” Business Ethics, November 11, 2009, http://business-ethics.com/2009/11/11/should-mary-buy-her-bonus (accessed February 18, 2010).
Imagine that you are a sales rep for a software company and you’ve just taken a customer to lunch. It was an expensive restaurant, and the two of you thoroughly enjoyed yourselves; you had steak, wine, and a chocolate dessert. Now you’re filling out an expense report, and you need to fill in the amount of tip you left. In fact, you left a twenty-dollar bill—but forty dollars wouldn’t have been an unreasonable amount to leave for outstanding service. You could fill in the higher amount and use the difference to take your girlfriend to the movies; you’ve been meaning to spend more time with her. After all, you make a lot of money for the company and have been working a lot of nights and weekends lately. You also didn’t submit your expense account for the mileage you traveled last week, so this should make up for it. Is it OK to submit the additional tip money on this expense report?
It’s no surprise that it’s never acceptable to falsify information on an expense report (or any report for that matter). If you have legitimate expenses, they should be submitted according to the company policy. While it’s hard to keep up with the paperwork, it’s the right way to report and be reimbursed for company expenses. This can be another one of those slippery slope arguments; if you do it once, you might be tempted to do it again. Many people in many companies have been fired for providing false information on their expense reports.
Personal ethics and business ethics are a part of everyday selling. It’s a good idea to remember the words of Peter Drucker, famous management consultant and author, “Start with what is right, rather than what is acceptable.”Dr. Frank Crane, “The Truth in Business,” Selling Power, http://www.sellingpower.com/html_newsletter/motivation/article.asp?id=2691&nDate=November+20%2C+2006&lid=SP69444 (accessed August 29, 2009).
Power Point: Lessons in Selling from the Customer’s Point of View
Is the Customer Always Right?
The customer is always right, except when he asks you to do something unethical. What should you do to uphold your ethics and maintain your relationship? SellingPower.com suggests the following four steps:
Evaluate the situation with a clear head. Most unethical behavior is driven by emotions such as fear, greed, stress, and status. Identify what is causing the behavior but wait until you have some time to reflect. Don’t jump to conclusions; identify the circumstances. You might not know the entire story so determine what you know and what you don’t know. Identify the criteria you are using to make this judgment. Is the behavior against company policy? Is it against the law? Is it against your personal code of ethics? Seek counsel. Always ask a trusted colleague, supervisor, or human resources representative for advice. Chances are, she has experienced the same situation and can provide insight from the company’s perspective and policies.
Understanding Values
Ethics are defined by moral principles; they are actions that are viewed by society as “right,” “just,” or “responsible.”BNET Editorial, “Understanding Your Values,” BNET, www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009 Values define what is important to you: they are your guiding principles and beliefs, they define how you live your life, and they inform your ethics. While certain values might be important to you, they may not be important to your best friends or even every member of your family. While family, friends, and your environment have a significant influence, you develop your own set of values. Consider the list below, which includes some examples of values:BNET Editorial, “Understanding Your Values,” BNET, www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009).
• Honesty
• Open communication
• Teamwork
• Integrity
• Prestige
• Security
• Helping others
• Loyalty
• Social responsibility
• Impact on society
• Creativity
• Achievement
• Global focus
• Religion
Values provide your personal compass and your direction in life. When something is not in line with your values, you feel unhappy and dissatisfied.BNET Editorial, “Understanding Your Values,” BNET, www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). Many people feel passionately about their values and want to have their environment align with their values. Examples of this are evident during political elections when people take sides on issues such as education, health care, and other social issues that reflect personal values.
You might be surprised to learn that your values are not set in stone. Your personal values will evolve and may even change drastically based on your experiences.BNET Editorial, “Understanding Your Values,” BNET, www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). For example, Nikki Tsongas, wife of the late Senator Paul Tsongas from Massachusetts, got involved in public service after the death of her husband. She is now a congresswoman from the fifth district of Massachusetts.“Niki Tsongas: Long Bio,” tsongas.house.gov/index.cfm?sectionid=54§iontree=2,54 (accessed September 1, 2009). She may have never considered serving in public office, but the death of her husband had a dramatic impact on her values.
You have a set of values that inform your ethics, which in turn inform your decision making. No one can tell you what your values are; that’s something you’ll have to decide for yourself. John C. Maxwell, in his book There’s No Such Thing as “Business” Ethics, lists the values that he lives by, such as “put your family ahead of your work (having a strong and stable family creates a launching pad for many other successes during a career and provides a contented landing place at the end of it)”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 102–3. and “take responsibility for your actions (if you desire to be trusted by others and you want to achieve much, you must take responsibility for your actions).”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 93–94. If you are looking for a comprehensive list of values, check out HumanityQuest.com, which lists more than five hundred different values.
Link
Learn about What Values Are Important to You
http://humanityquest.com
Values of Organizations
Just like people, organizations have values, too. Values are “proven, enduring guidelines for human conduct” according to Stephen Covey in his book Principles.Thomas E. Ambler, “The Strategic Value of Values,” Center for Simplified Strategic Planning, http://www.cssp.com/CD0402/ValuesAndStrategy/default.php (accessed August 29, 2009). Many companies choose their values and communicate them to employees, customers, and vendors on the company Web site and other company communications. For example, Whole Foods includes the following values, among others: “selling the highest quality natural and organic products available” and “caring about communities and their environment.” You can see their entire values statement on their Web site.
Levi Strauss & Co. identifies four key values for their company: empathy, originality, integrity, and courage. Their values statement is also included on their Web site.
Microsoft includes integrity, honesty, personal excellence, passion for technology, and commitment to customers as part of their values statement on their Web site.
Company values and personal values are important because your values motivate you to work.BNET Editorial “Understanding Your Values,” BNET, www.bnet.com/2410-13070_23-55147.html?tag=content;col1 (accessed August 29, 2009). You will enjoy and excel at your job if you choose a company whose values you share. For example, if the environment is one of your values, it’s best to choose a company that includes a commitment to the environment as part of their values statement. Chances are you won’t be happy working at a company that doesn’t put a priority on the environment.
Mission Statements: Personal and Corporate Guidelines
Ethics and values are major concepts. If you have developed personal ethics and values, you might be wondering how they come together to help provide a roadmap for your life and your career. That’s the purpose of your mission statement; it becomes your roadmap for your decisions, choices, and behavior. You learned about creating your personal mission statement in the Selling U section of Chapter 1. Mission statements such as “To gain experience in the public accounting field toward earning my CPA designation” and “To master the leading Web development tools and become a best-in-class Web developer” may sound simple, but each takes time, thought, and insight to create.“Develop Your Personal Career Mission Statement,” CollegeGrad.com, www.collegegrad.com/book/Job-Search-Prep/Develop-a-Personal-Career-Mission-Statement (accessed September 1, 2009). You may want to review the Selling U section in Chapter 1 if you haven’t already created your personal mission statement.
Just as your personal mission statement is a blueprint for how you make decisions in life, companies also use a mission statement to define their direction, make operating decisions, and communicate to employees, vendors, shareholders, and other stakeholders. In fact, most companies have a formal, written mission that they include on their Web site. A mission statement is different than an advertising slogan or motto. It is based on the company’s ethics and values and provides a broad direction as to what the company stands for. For example, Harley-Davidson’s mission statement is below and can be found on their Web site.
Link
Harley-Davidson Mission Statement
www.harley-davidson.com/wcm/Content/Pages/Student_Center/student_center.jsp?locale=en_US#missionstatement
We inspire and fulfill dreams around the world through Harley-Davidson experiences.Harley-Davidson, “Harley-Davidson Mission Statement,” www.harley-davidson.com/wcm/Content/Pages/Student_Center/student_center.jsp?locale=en_US#missionstatement (accessed August 29, 2009).
FedEx expresses their mission statement a little differently as shown below and includes their mission statement along with their values on their Web site.
Link
FedEx Mission Statement and Values
http://about.fedex.designcdt.com/our_company/company_information/mission_statement
FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.FedEx, “Company Information: Mission, Strategy, Values,” http://about.fedex.designcdt.com/our_company/company_information/mission_statement (accessed August 29, 2009).
The mission statement of the insurance company Aflac is short and to the point as shown below. It can also be found on their Web site.
Link
Aflac Mission Statement
www.aflac.com/us/en/aboutaflac/missionandvalues.aspx
To combine innovative strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.Aflac, “Mission and Values,” www.aflac.com/us/en/aboutaflac/missionandvalues.aspx (accessed September 1, 2009).
Many companies, like Google, put their mission statement or philosophy online—others use a printed manual. The mission statement is made available for the following reasons: employees can use it to aid them in ethical business decision making, investors can evaluate the company’s ethics before making a decision about becoming involved with it, and customers can choose whom they will do business with based on their ethics and purpose. In addition to their mission statement (which you may remember from Chapter 1: “Google’s mission is to organize the world’s information and make it universally accessible and useful”Google, “Corporate Information: Company Overview,” www.google.com/corporate (accessed September 1, 2009).), Google’s Web site gives their philosophy—ten guiding principles, ten “things Google has found to be true,” which are values that reflect how the company conducts business:
• Focus on the user and all else will follow.
• It’s best to do one thing really, really well.
• Fast is better than slow.
• Democracy on the Web works.
• You don’t need to be at your desk to need an answer.
• You can make money without doing evil.
• There’s always more information out there.
• The need for information crosses all borders.
• You can be serious without a suit.
• Great just isn’t good enough.Google, “Corporate Information: Our Philosophy,” http://www.google.com/intl/en/corporate/tenthings.html (accessed September 1, 2009).
These ten things are the principles that Google uses to make decisions as a company; this list, with accompanying explanations, details why they do things the way that they do. It is both practical and concerned with ethics—the idea that “great just isn’t good enough” is part of their values, a declaration that Google wants to do the best that it can in every endeavor—it means that they will not take shortcuts, but will constantly strive to be more ethical, efficient, and user-friendly.
Character and Its Influence on Selling
As you have probably figured out, ethics, values, and missions are all very personal. Together they guide you in the way you behave at home, school, work, or out with your friends. Your character is what sets you apart; it includes the features and beliefs that define you. It’s no surprise that the word has it origin in the Latin word character, which means mark or distinctive quality and from the Greek charaktr, which means to scratch.“Character,” Merriam-Webster Online Dictionary, mw1.merriam-webster.com/dictionary/character (accessed September 1, 2009). The Josephson Institute defines character as being composed of six core ethical values:
• Trustworthiness
• Respect
• Responsibility
• Fairness
• Caring
• CitizenshipJosephson Institute, “The Six Pillars of Character,” Josephson Institute, charactercounts.org/sixpillars.html (accessed September 1, 2009).
This is a comprehensive description of character. Consider how you perceive other people; it’s their character that defines who they are. Can you depend on him? Is she fair? Does he respect you? Just as these ethical pillars define other peoples’ character, they also define your character to other people. Customers ask the same questions about you: Can I trust her? Will he give me fair pricing? Is she honest? Does he care about the best interest of my business?
The Power of Your Reputation
In November of 2008, Tomb Raider: Underworld was released for multiple gaming systems. Knowing how important a game’s reputation can be for sales, public relations firm Barrington Harvey—in an attempt to massage the Metacritic score, a less-than-ethical move—asked reviewers to hold their scores until after the first weekend of the game’s release. “That’s right. We’re trying to manage the review scores at the request of Eidos.” When asked why, a spokesperson for Barrington Harvey explained, “Just that we’re trying to get the Metacritic rating to be high, and the brand manager in the United States that’s handling all of Tomb Raider has asked that we just manage the scores before the game is out, really, just to ensure that we don’t put people off buying the game, basically.”Mike Fahey, “Eidos Trying to Fix Tomb Raider: Underworld Metacritic Scores,” Kotaku, November 21, 2008, http://kotaku.com/5095674/eidos-trying-to-fix-tomb-raider-underworld-metacritic-scores (accessed September 1, 2009). Eidos, the company that published the game, tried to take an ethical shortcut—they wanted to be sure that the game’s reputation could not precede it—but paid for that decision with a great deal of negative publicity that adversely impacted their reputation.
Your overall character as judged by other people is your reputation.“Reputation,” Merriam-Webster Online Dictionary, http://www.merriam-webster.com/dictionary/reputation (accessed September 1, 2009). Consider some celebrities who have had unethical acts negatively impact their reputation: Tiger Woods, known as one of golf’s greats has been reduced to tabloid fodder since the news of his extramarital affairs; Michael Phelps, the only person to ever win eight gold medals in a single Olympic Games, has become the poster boy for marijuana use. Both had stellar reputations and were considered role models. Now both are working to gain back the trust of the public. Reputation isn’t limited to the wealthy or powerful. In high school, you knew that Sharon was a brain and Timothy was the sensitive, poetic type. You may never have had a conversation with either one of them, but you knew their reputations. Meanwhile, you avoided classes with Mrs. Avar because she had a reputation as a hard grader. Your reactions to many of the people in your day-to-day life are affected by their reputations.
Build Your Reputation: Be an Industry Expert
A great way to build your reputation in a specific industry is to become an industry expert: write a blog, tweet regularly about industry issues, be a guest speaker or panelist at industry conferences or events online or in person. Decision makers hear and see you take on a leadership role and seek you out to gain your expertise. You can build your reputation, which, in turn, will help you build your client list.Renee Houston Zemanski, “The Power of Your Reputation,” Selling Power, http://www.sellingpower.com/article/display.asp?aid=SP1900197 (accessed August 29, 2009).
When you work in sales, you are selling yourself; you will have greater success with customers if you are someone they want to “buy.” When customers buy from you, they are investing in your reputation. George Ludwig, author of Power Selling, explains that “you’ve got to live out your identity consistently in every facet of your life and make sure prospective clients bump into that identity everywhere they turn.”Renee Houston Zemanski, “The Power of Your Reputation,” Selling Power, http://www.sellingpower.com/article/display.asp?aid=SP1900197 (accessed August 29, 2009). In other words, every action you take affects your reputation. If you fail to follow up, forget details, or even if you are consistently late for meetings, you may become known as unreliable. On the other hand, if you consistently deliver what you promise, you will be known as reliable; if you always meet your deadlines, you will have a reputation for punctuality.
Power Player: Lessons in Selling from Successful Salespeople
Do the Right Thing
Robert L. Bailey, retired CEO, president, and chairman of the State Auto Insurance Companies, knows how important a salesperson’s reputation can be and the value of consistent ethical behavior. “Back in my corporate days I regularly met with new employees. I would tell them, ‘Regardless of the circumstances, regardless of what the contract says, we always want you to do the right thing. Do you know what it means to do the right thing?’ I would ask.” Bailey knows that any action taken by a salesperson can affect his or her reputation: “If your actions are described on the front page of our local newspaper or USA Today, will most people read the account and say, ‘I think they did the right thing?” That’s the kind of action we encourage and expect.”Robert L. Bailey, “A Story of Two Salespeople,” BNET, April 2008, findarticles.com/p/articles/mi_qa3615/is_200804/ai_n25420875/pg_2/?tag=content;col (accessed February 18, 2010). Your reputation speaks for you; make sure it’s saying what you want customers to hear.
You’re Only as Good as Your Word
Unfortunately, not everyone in sales is ethical or honest. David Chittock, president of Incentra, Inc., discusses one encounter in which a customer shared her view of salespeople: “The prospect’s body language told me she wasn’t just uncomfortable—she was downright hostile to me. Finally, she shared this sentiment out loud: ‘I have to be honest with you. I think that all salespeople are liars, and I don’t trust any of them, and I don’t trust you.’” He goes on to explain that “many (if not all) of our prospects, view salespeople with suspicion, assuming that in attempting to make a sale, we will be self-serving, manipulative, and possibly even untruthful.”David Chittock, “Outside the Box: A Question of Integrity,” Manage Smarter, May 28, 2009, www.presentations.com/msg/search/article_display.jsp?vnu_content_id=1003977677 (accessed February 18, 2010). Chittock and his employees overcome that suspicion by making promises to their customers and then keeping them—sure, it sounds simple, but too many salespeople are willing to promise their customers the moon in order to close the deal.
Dr. Pat Lynch conducted a study that was published in the Journal of Business Ethics in which he asked more than seven hundred businesspeople and graduate business students to rank their values in the workplace; these included competency, work ethic, overcoming adversity, seniority, and promise keeping. Lynch found that keeping promises was that the bottom of people’s lists, whatever their gender, supervisory experience, or religious background.John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003), 121 Honesty is a way to stand out and to build your reputation.
Lying in the Workplace
(click to see video)
This video highlights the problem of lying in the workplace.
Source: NBC Universal, Inc.
If you are committed to finding win-win-win solutions for your customers, you need to be honest with them and with yourself. Figure out what you can realistically guarantee, make the promise, and then keep it. Jack Welch, in his book Winning, declares that “too many people—too often—instinctively don’t express themselves with frankness. They don’t communicate straightforwardly or put forth ideas looking to stimulate real debate. But when you’ve got candor, everything just operates faster and better.”John C. Maxwell, There’s No Such Thing as “BusinessEthics (New York: Center Street, 2003). If circumstances change and you realize that you will be unable to keep your promise, immediately communicate with the customer; explain what has happened, offer a new solution, and apologize. While that can make for an awkward conversation, in the long run, that kind of honesty and openness will help you to build strong business relationships.
Where the Rubber Meets the Road: Facing Challenges
Imagine that you are the buyer for Chez Food, a popular pan-European restaurant on the West Coast. You have good relationships with your suppliers, especially your produce guy, a genial fellow who owns his own business. As the holidays approach, Ray, your produce guy, approaches you with a gift. He tells you that he really appreciates both your business and your friendship, and he hands you two tickets to a Caribbean cruise. The company policy is clear: you aren’t supposed to accept gifts from suppliers, but, you argue to yourself, what could be the harm? After all, you were planning to keep buying from Ray before he offered you the tickets; it’s not as though he’s asking you for anything, anyway. What will you do? Your ethical obligation, of course, is to refuse the tickets—politely. Your relationship with Ray is important, but doing the right thing—and keeping your job—is important too.
At some point in your selling career—in fact, probably at many points—you will be faced with a situation that challenges your ethics. At these times, it is best to follow your code of ethics and the company’s code of ethics; when in doubt, don’t make an exception. If you’re having trouble finding the motivation to refuse a gift or accurately detail your résumé, remember that you will very like be found out—and when you’re found out, you will be very lucky not to lose your job. Is the case of wine from a supplier worth losing your job over? But more important, when you fail an ethical challenge, you trade in your integrity. If you are tempted to inflate your expense report by fifty dollars, ask yourself, “Is my integrity worth more than fifty dollars?” The answer, of course, is that your integrity is worth more than any amount of money—and once gone, it cannot be bought back. Ken Lay, former CEO of Enron, was a man with a great reputation and an oil portrait displayed at his alma mater; once his crimes were discovered, however, his name was forever associated with a willingness to break the law and exploit his own employees.“Ken Lay’s Final Act,” New York Times, July 6, 2006, www.nytimes.com/2006/07/06/opinion/06thurs4.html (accessed September 1, 2009).
Sir Michael Rake, chairman of KPMG International, says in Leading by Example, “Enron had an enormously laudable charter of values in corporate social responsibility, but actually it was almost a smokescreen for abuse…In investigations we’ve done into companies and individuals where things have gone wrong…have crossed from white, to gray, to black. Most of them have to operate in the gray a lot of the time…because of the aggressiveness with which the targets are set of the way in which their achievement of those targets is rewarded, intelligent, honest people suddenly think that this act is OK: because within that environment it seems to be OK. It isn’t OK; they’ve actually done something which is illegal or amoral.”Sir Michael Rake, “Setting the Right Tone at the Top,” Leading by Example (Cambridge, MA: Harvard Business School Press, 2007), 9–11.
Finding yourself in a corrupt corporate culture is not reason enough to violate your own code of ethics or break the law. If you find yourself in a situation where you feel pressured to do something unethical (or even illegal), talk to your supervisor about it. If you don’t feel that you can talk to your supervisor—or your supervisor is part of the problem—talk to someone in the human resources department. Give the company a chance to resolve the situation; if they are not aware of it, they can’t make it right.
If you’re wondering about how the role of human resources works in a situation like this, it might be helpful to think about an analogy: When you were in high school and you went out with your friends, your mother, at some point or another (or perhaps every Friday night!), must have given you a talk that went something like this: “I want you to have a good time with your friends—but if anything happens, just call us and we’ll come pick you up and we won’t be mad. If there’s drinking at the party, or if someone has drugs, just call us if you need to, OK?” While you probably won’t be calling your mom when an ethical problem arises at work (much as you might secretly like to), you can call the human resources department. Human resources departments oversee hiring, promotions, and performance reviews, but they also deal with employee relations and can provide confidential counseling to workers. It is important for a company’s success that employee goals align with corporate goals; when this is the case, the corporate culture is considered “successful.”David Towers, “An Investigation into Whether Organisational Culture Is Directly Linked to Motivation and Performance through Looking at Google Inc.,” extended essay, The University of Birmingham, The Birmingham Business School, 2005–6, www.towers.fr/essays/culture%20performance%20and%20motivation %20review%20and%20the%20google%20case%20study%20success.pdf (accessed September 1, 2009). If your supervisor is involved in the wrongdoing, the human resources department can be an excellent resource for you.
Key Takeaways
• Ethics is moral principles, a system that defines right and wrong.
• Business ethics is ethical behavior applied to a business situation.
• An ethical dilemma is a situation that is presented with options that may be right or wrong.
• Values define what is important to you: they are your guiding principles and beliefs, they define how you live your life, and they inform your ethics.
• A mission statement is a roadmap of where a person or company wants to go.
• Your reputation will affect how people see you throughout your life, which can have either a positive or a negative impact on your career.
• Every action you take defines you; bear that in mind when making decisions.
• If you find yourself in a situation that challenges your ethics, talk to your supervisor. If you don’t feel that you can talk to your supervisor, talk to someone in the human resources department.
• A good rule of thumb is that if you would be ashamed to tell your boss about it, don’t do it.
Exercise \(1\)
1. Watch the following video about ethics and stop it after each scenario is shown. Discuss what you would do in each situation, then play the rest of the video and watch the suggested action.
Source: Elizabethtown College Media Services | textbooks/biz/Marketing/The_Power_of_Selling/04%3A_Business_Ethics_-_The_Power_of_Doing_the_Right_Thing/4.01%3A_Introduction.txt |
Learning Objectives
• Identify how company policies reflect business ethics.
You might be wondering how a company provides guidance to all employees about what behavior it expects from them. Imagine a global company like Wal-Mart, which has over two billion employees worldwide.“Fortune Global 500,” CNN.com, http://money.cnn.com/magazines/fortune/global500/2008/snapshots/2255.html (accessed September 1, 2009). How do all the employees know what is considered ethical behavior by the company? Can they take as much time as they want for lunch? Are they able to take off as many days as they wish? What expenses qualify for reimbursement? All the policies of a company are included in its employee handbook.
Employee Handbooks: Your Practical, Professional How-To
Every company has a highly specific code of ethics governing the actions of its employees. This manual, the employee handbook (sometimes called the code of ethics or code of conduct or other similar name), outlines the company’s policies concerning gift giving, nondisclosure of company information, and other areas of behavior. Starbucks’ code of ethics, Business Ethics and Compliance: Standards of Business Conduct, for example, explains when employees may and may not accept gifts: “You may not encourage or solicit meals or entertainment from anyone with whom Starbucks does business or from anyone who desires to do business with Starbucks. Giving or accepting valuable gifts or entertainment might be construed as an improper attempt to influence the relationship.”Starbucks, Business Ethics and Compliance: Standards of Business Conduct, http://assets.starbucks.com/assets/sobc-fy09-eng.pdf (accessed September 1, 2009). An employee handbook will also include the company’s sexual harassment and nondiscrimination policies, an explanation of procedures including breaks and scheduling principles, a list of benefits for part- and full-time employees, a breakdown of disciplinary policies and grounds for dismissal, as well as rules concerning phone, fax, mail, Internet use, and the permissible use of company vehicles. The handbook will additionally contain information like the history and goals of the company.
While all employee handbooks are slightly different, all include the guidelines and policies that define ethical behavior in that company or organization. You can review several different companies’ policies at the Web sites below:
Starbucks communicates its expectations in terms of ethics in this handbook called Business Ethics and Compliance: Standards of Business Conduct.Starbucks, Business Ethics and Compliance: Standards of Business Conduct, http://assets.starbucks.com/assets/sobc-fy09-eng.pdf (accessed September 1, 2009).
Company Policies
Gap Code of Business Conduct
www.gapinc.com/content/dam/gapincsite/documents/COBC/Code_English.pdf
Source: The Gap, Inc.
McDonald’s Standards of Business Conduct for Employees
www.aboutmcdonalds.com/mcd/investors/corporate_governance/standards_of_business_conduct.html
Source: McDonald’s Corporation
United States Government—Code of Ethics
http://usgovinfo.about.com/blethics.htm
Source: United States House of Representatives Ethics Committee
What Company Policies Say and What They Mean
Whatever company you end up working for will have its own policies with which you will need to familiarize yourself. But most companies include the same basic issues that are frequently encountered in sales: conflicts of interest, bribes, and noncompete clauses. The specifics of these policies will vary from company to company, but this section will give you a good idea of what to expect, the meaning of key terms you will encounter, and some sample policies to study.
A Page from IBM’s Employee Handbook
Most companies include a gift and entertainment policy in its employee handbook. IBM has a specific policy that covers these areas.
No IBM employee, or any member of his or her immediate family, can accept gratuities or gifts of money from a supplier, customer, or anyone in a business relationship. Nor can they accept a gift or consideration that could be perceived as having been offered because of the business relationship. “Perceived” simply means this: if you read about it in your local paper, would you wonder whether the gift just might have something to do with a business relationship? No IBM employee can give money or a gift of significant value to a supplier if it could reasonably be viewed as being done to gain a business advantage. If an employee is offered money or a gift of some value by a supplier or if one arrives at their home or office, a manager should be informed immediately. If the gift is perishable, the manager will arrange to donate it to a local charitable organization. Otherwise, it should be returned to the supplier. Whatever the circumstances, the employee or the manager should write the supplier a letter, explain IBM’s guidelines on the subject of gifts and gratuities. Of course, it is an accepted practice to talk business over a meal. So it is perfectly all right to occasionally allow a supplier or customer to pick up the check. Similarly, it frequently is necessary for a supplier, including IBM, to provide education and executive briefings for customers. It’s all right to accept or provide some services in connection with this kind of activity—services such as transportation, food, or lodging. For instance, transportation in IBM or supplier planes to and from company locations, and lodging and food at company facilities are all right. A violation of these policies may result in termination.Milton Snoeyenbos, Robert Almeder, and James Humber, Business Ethics (Amherst, NY: Prometheus Books, 2001), 133.
A conflict of interest is “a situation in which a person, such as a public official, an employee, or a professional, has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties.”Michael McDonald, “Ethics and Conflict of Interest,” University of British Columbia Centre for Applied Ethics, http://web.archive.org/web/20071103060225/http://www.ethics.ubc.ca/people/mcdonald/conflict.htm (accessed September 1, 2009). There are four types of conflicts of interest that you may encounter in your career: family interests, gifts, private use of employer property, and moonlighting.
Family interests create a conflict when a relative of yours is either someone from whom you might purchase goods or services for your employer or when you have influence over the potential hiring of a family member of yours. It’s best to avoid these types of situations as it can be difficult to make an objective decision.
Gifts create a conflict of interest when they are given to you by someone with whom you do business. Gifts are frequently given at the holidays and may include something small like a case of wine or something more extravagant like a trip.
private use of employer property can be anything from stealing pens to using your work computer to work on editing your vacation pictures to driving the company car on a weekend getaway and then reporting the mileage on a corporate expense report.
Moonlighting is holding down a second job. While that might not sound insidious at first, if you work two jobs in the same field, it is almost inevitable that you will run into ethical problems. Who gets your best ideas? Where does most of your energy go? And if you have inside knowledge of two different corporations, working not to let that information influence you will be terribly difficult.
A bribe, according to Merriam-Webster, is “money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust; something that serves to induce or influence.”“Bribe,” Merriam-Webster Online Dictionary, http://www.merriam-webster.com/dictionary/bribe (accessed September 1, 2009). Soliciting, accepting, offering, or giving a bribe is illegal—even if your offer is refused, you are committing a crime. Bribery can take place in many different venues. Pharmaceutical companies attempt to persuade doctors to prescribe their products by buying them meals and giving them pens and other trinkets as well as trips to medical conventions. Business gifts are considered a form of bribery when they are given by someone who could benefit from having influence on a decision maker. For example, if you are the buyer of electronics at Wal-Mart, you are not able to accept any gifts from vendors or prospective vendors as it might appear to influence your buying decisions for the chain.
A noncompete agreement (sometimes called a covenant not to compete, or CNC) prevents an employee from entering into competition with the employer once his job has ended—in other words, it prevents you from taking a job with a competitor after you’ve quit or been fired. A noncompete agreement may also prevent former employees from starting their own businesses in the same field. The reasoning behind the CNC is the fear that a former executive could take his insider knowledge and trade secrets—as well as his contacts—with him to a new position. No employer wants to expose its strategy to its competitors. Noncompete agreements are generally upheld by the courts as long as they contain reasonable limits as to the time period and geographical space—that is, for example, that you may not compete in the state for two years after your termination. Noncompete agreements are not legal in California, although there are still measures in place in that state to protect trade secrets.“California Non-compete Agreements,” Lawzilla, http://lawzilla.com/content/noncompete.shtml (accessed September 2, 2009). Not every job will ask you to sign a noncompete agreement, and if you haven’t signed one, then there are no restrictions on your future employment. This is one reason it’s so important to read and understand anything you sign. However, even if you don’t sign a noncompete agreement, you may be asked to sign a nondisclosure agreement (or confidentiality agreement) or your company may have a nondisclosure or confidentiality policy that requires you to protect your former employer’s trade secrets; you may not exploit that information in future employment.Gene Quinn, “What Is a Confidentiality Agreement?” IPWatchdog, http://www.ipwatchdog.com/2008/01/03/what-is-confidentiality-agreement/id=31 (accessed September 2, 2009). A trade secret is “any kind of information that allows you to make money because it is not known.”“What Is a Trade Secret and How Is It Different from a Patent or Copyright?” HowStuffWorks, April 30, 2001, http://www.howstuffworks.com/question625.htm# (accessed February 14, 2010). For example, Coca-Cola’s signature formula is a trade secret, as is the recipe for Kentucky Fried Chicken. Information about the internal workings of a company that could only plausibly be gained by working for that company is usually a trade secret.
If you find yourself between jobs and worry about the legality of finding another (having signed a noncompete agreement with your previous employer), bear in mind that noncompete agreements are most likely to be enforceable if your new job is strikingly similar to your old job. If you go from the sales department at Target to the advertising department of Kmart, you are probably (legally) in the clear.Russell Beck, “Noncompete Agreements That Don’t Mean What They Say,” Journal of New England Technology, September 5, 2008, www.masshightech.com/stories/2008/09/01/focus4-Noncompete-agreements-that-dont-mean-what-they-say.html (accessed February 14, 2010). Your new job is different enough that you are unlikely to be seen by the court as exploiting your knowledge of Target’s sales practices. Remember that this is only a concern if you have signed a noncompete agreement previously; while noncompete clauses are common, they are not universal.
What Is Whistle-Blowing?
Jeffrey Wigand, former head of research and development for Brown & Williamson Tobacco Corporation (the third-largest tobacco company in the United States), is one of the most famous whistle-blowers in America. He says of himself, “The word whistle-blower suggests that you’re a tattletale or that you’re somehow disloyal. But I wasn’t disloyal in the least bit. People were dying. I was loyal to a higher order of ethical responsibility.”Chuck Salter, “Jeffrey Wigand: The Whistle-Blower,” Fast Company, December 19, 2007, www.fastcompany.com/articles/2002/05/wigand.html (accessed February 14, 2010). Wigand’s testimony against the tobacco industry, his claims that executives at Brown & Williamson knew that cigarettes were addictive, lied about it under oath, and destroyed documents related to that fact, led directly to the lawsuit brought by forty state attorneys general against tobacco companies.
Whistle-blowing, the act of publicly exposing the misconduct of a company or organization, is a courageous act. Wigand’s reputation was destroyed by a punitive smear campaign conducted by the industry he spoke out against, and the stress resulting from that and the trial destroyed his marriage. Brown & Williamson filed a lawsuit against him for revealing confidential company information (the suit was dismissed as a condition of the \$368 billion settlement against the tobacco industry).Jeffrey Wigand, “Biography,” http://www.jeffreywigand.com/bio.php (accessed September 2, 2009). But Wigand blew the whistle in order to save thousands of lives. The true story was made into a blockbuster movie in 1999 called The Insider.
The movie trailer includes highlights from the movie inspired by a true story. Source: Touchstone Pictures
Another famous whistle-blower is Erin Brockovich, whose story was also brought to life on the big screen in the movie of the same name.
Of course, whistle-blowing exists on a less grand scale. If you know which of your classmates stole the answer key to an exam and you tell the professor, you have blown the whistle. Whistle-blowing doesn’t always involve risking your life, and it doesn’t always involve bringing a corporation to its knees. At its heart, it is action taken to reveal wrongdoings in hopes of seeing justice done.
Only limited protection existed for whistle-blowers until recently; today, the best protection they have (unless they work for the federal government) is the Sarbanes-Oxley Act of 2002, mentioned earlier, which states that “whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title, imprisoned not more than ten years, or both.”Cornell University Law School, “Retaliating against a Witness, Victim, or Informant,” http://www.law.cornell.edu/uscode/18/1513.html#e (accessed September 2, 2009). It’s important to bear in mind that you have no obligation to blow the whistle; you can simply refuse to take part in any unethical or illegal activity. If you know that crimes are being committed at your place of business, you have to decide for yourself what form that refusal will take: you may simply not commit any crimes yourself, you may try to persuade others to behave ethically, or you may feel that you must resign your position. It will depend on your situation and your personal code of ethics.
Ethics and the Law
The ever-changing landscape of technology has created new opportunities to test ethics; spammers, scam artists, and identity thieves have created the need to clearly define legal, and in some cases, ethical behavior online. An increasing number of cases of fraud committed via social networking sites have taken place. There have been cases of people who create Twitter profiles in the names of other, real people. News anchor Keith Olbermann and Tony La Russa, manager of the St. Louis Cardinals, have both been victims of such hoaxes.Danielle Citron, “Twitter Fraud,” Concurring Opinions, June 10, 2009, www.concurringopinions.com/archives/2009/06/twitter-fraud.html (accessed September 2, 2009). If tempted to such behavior yourself, remember: you are what you tweet. Your reputation will be affected by all the things that you do—make sure that you’re making yourself look good.
Tightening Legal Loopholes
One of the best examples of laws being enacted in response to unethical business practices is the Robinson-Patman Act. In 1914, the Clayton Act became the first federal statute to expressly prohibit price discrimination in several forms. Large chain grocery stores used their buying power to negotiate lower prices than smaller, independent grocery stores were offered. The Robinson-Patman Act was passed in 1936, during the Great Depression, as a direct response to that unfair business practice, closing the loophole.Donald S. Clark, “The Robinson-Patman Act: General Principles, Commission Proceedings, and Selected Issues,” Federal Trade Commission Web site, June 7, 1995, www.ftc.gov/speeches/other/patman.shtm (accessed September 2, 1010). Buyers for the big chain stores weren’t breaking the law when they used their influence to get better prices than small stores could, but they were behaving unethically—and the law caught up with them in the end.
Another example of ways in which it can take the law some time to catch up to reality is the CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography And Marketing Act) of 2003.Federal Trade Commission, “The CAN-SPAM Act: A Compliance Guide for Business,” September 2009, www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus61.shtm (accessed February 14, 2010). CAN-SPAM purports to take on spam—that is, unsolicited marketing e-mails, often with sexual or “STAY AT HOME, EARN \$\$\$!!!”–type messages. Perhaps the most famous arrest of a spammer came in 2005, when Anthony Greco was arrested at Los Angeles International Airport and charged with violating CAN-SPAM by sending more than 1.5 million messages to users of the MySpace instant messaging service that advertised pornography and mortgage-refinancing services.Paul Roberts, “Arrest, but No Relief from IM Spam,” InfoWorld, February 22, 2005, http://www.infoworld.com/d/security-central/arrest-no-relief-im-spam-863 (accessed September 2, 2009).
Culture and Ethics
When you are working in a different country, or with professionals from other cultures, there may be different ideas as to what is appropriate and ethical. The Japanese, for example, have a culture of corporate gift giving; kosai hi (literally “expense for friendly relations”)Boye Lafayette de Mente, Japan’s Cultural Code Words (North Clarendon, VT: Tuttle Publishing, 2004), 225. refers to the Japanese business practice of maintaining large expense accounts used for entertaining clients and nurturing other professional relationships. This money is, for example, often used to buy golf club memberships as gifts for people with whom Japanese businessmen and women have valuable working relationships. When you come face-to-face with these different customs, it is important not to be insulting, but you also cannot ignore your company’s policies. “When in Rome” will only carry you so far.
A good rule of thumb is this: if you wouldn’t be comfortable telling your boss about it, or if you’d be embarrassed to tell your mom about it, don’t do it. If you’re working for a company that does business in more than one country, odds are they will have a liaison from each country that can help you to navigate the intricacies of cultural difference. In Middle Eastern countries, there is a custom of baksheesh, a word that encompasses everything from tipping to alms for a beggar to out-and-out bribery. If you are working in the Middle East, there may be an expectation that you will help to grease the wheels; your supervisor should be able to brief you on company policy in such situations.S. E. Smith, “What Is Baksheesh?” wiseGEEK, http://www.wisegeek.com/what-is-baksheesh.htm (accessed February 14, 2010).
One excellent example of the ethical struggles unique to international business can be found in Michael Crichton’s book Rising Sun, which deals with the clash of Japanese and American business practices. At one point, two police officers are discussing how often they are offered gifts by the Japanese: “Giving gifts to ensure that you will be seen favorably is something the Japanese do by instinct. And it’s not so different from what we do, when we invite the boss over for dinner. Goodwill is goodwill. But we don’t invite the boss over for dinner when we’re up for a promotion. The proper thing to do is to invite the boss early in the relationship, when nothing is at stake. Then it’s just goodwill. The same with the Japanese. They believe you should give the gift early, because then it is not a bribe. It is a gift. A way of making a relationship with you before there is any pressure on the relationship.”Michael Crichton, Rising Sun (New York: Ballantine Books, 1992), 136. When you need to decline a gift yourself, apologize and explain that company guidelines prohibit your acceptance of the gift. You should then promptly report the gift to your supervisor.
Key Takeaways
• Your company will make available to you their policies on various ethical issues in the employee handbook; it is your responsibility to read the materials provided and remain familiar with their contents.
• There are four different types of conflicts of interest: family interests, gifts, private use of employer property, and moonlighting.
• Bribery, the use of gifts to influence someone, is both unethical and illegal.
• Many employers will require you to sign a noncompete agreement; be sure that you understand the details before you agree.
• A company’s trade secrets should never be disclosed.
• Whistle-blowing, the exposure of a company’s wrongdoing to the public, is never your ethical obligation—you are obligated only to refuse to participate. However, it can be a deeply noble act. You must analyze the situation yourself and decide what is called for.
• Sarbanes-Oxley Act of 2002 regulates corporate financial practices and provides protection for whistle-blowers.
• While different cultures have different ideas about what is ethical, working in a different country or with a client from another culture does not excuse you from following company policies regarding gifts, and so on.
Exercise \(1\)
1. Review the employee handbook of the company for which you work (or have worked). What are the company policies as they relate to travel expenses? How do you substantiate your travel expenses in order to get reimbursement? What are the company policies as they relate to confidentiality? What kind of information do you know that might be considered confidential?
2. Identify a situation in which you found yourself facing a conflict of interest: perhaps you had two after-school activities with equal claims on your time, or maybe you wanted to use your part-time job to give discounts to your friends. How did you resolve the conflict? Would you handle things differently if faced with the same situation again?
3. Research a whistle-blower not mentioned in this chapter. Who was he or she, and what did he or she expose? Do you agree with his or her decision to blow the whistle? Why or why not?
4. Find an example of someone who took part in bribery and was found out. Who was he or she, and what were the consequences of his or her illegal actions?
5. Describe what is meant by confidentiality. What does a company expect when a company policy states that employees are bound by confidentiality?
6. Describe the difference between unethical and illegal behavior. Is unethical behavior always illegal? | textbooks/biz/Marketing/The_Power_of_Selling/04%3A_Business_Ethics_-_The_Power_of_Doing_the_Right_Thing/4.03%3A_Policies_Practices_and_Cultures.txt |
Learning Objectives
• Learn about the ethics of your résumé.
• Understand how to ask references to speak honestly on your behalf.
You’ve been asked to submit your résumé because your roommate knows someone in the marketing department at a major national food company. You really want this job, but you are concerned that you don’t really have the qualifications yet. As you work on your résumé, you exercise your creativity: “cashier” becomes “marketing representative.” You add to your skills “management of personnel”—of course, you don’t have any management experience, but you just know you’ll be good at it. By the time you’ve finished, you are surprised to realize that, looking at your résumé, you don’t recognize yourself. Maybe this truth-stretching exercise wasn’t such a good idea.
Behaving in an ethical fashion throughout the hiring process only strengthens your personal brand—and that’s just good business.
Selling Yourself versus Stretching the Truth about Your Background and Experience
When you create your résumé, you are selling yourself to potential employers; where do you draw the line between putting your best foot forward and stretching the truth past the breaking point? The difference between “attended Pacific Coast Baptist College” and “received degrees in theology and psychology from Pacific Coast Baptist College” can be the difference between a successful tenure and an embarrassing resignation, as former RadioShack CEO David Edmondson discovered in 2006.Associated Press, “RadioShack CEO Resigns amid Resume Questions,” USA Today, February 20, 2006, www.usatoday.com/money/industries/retail/2006-02-20-radioshack-ceo_x.htm (accessed February 14, 2010). Edmondson, by claiming that he had earned degrees he had not (and, in one case, a degree not even offered by the college), set the stage for the embarrassing scandal that cost him his job. It can be tempting to gamble on the likelihood that an employer won’t do a background check—but even if you get away with a fib once or twice, it’s not something you should bet on for your entire career. Social networking will out you. The Internet has led to professional networks that are incredibly far reaching; your boss may have a connection on LinkedIn to a manager at the company you pretend to have interned for. And, of course, lying on your résumé is unethical; you should sell yourself, not an exaggerated version of yourself.
Your experiences as a waitress, cashier, retail store salesperson, babysitter, or any other part-time or summer job can be very valuable on your résumé. Being able to demonstrate that you can multitask under pressure, resolve problems quickly to customers’ satisfaction, be responsible, or increase sales are the types of skills that prospective employers are looking for from entry-level employees. Use your experience to tell a story about what makes you different and delivers value to your prospective employer. For example, if you want to pursue a career in finance, your experience handling money and balancing the cash drawer at the end of the day is important to highlight on your résumé. It’s also a good idea to put your most important and relevant internships or jobs first on your résumé rather than adhering to the traditional chronological order. Since you are just beginning your career, your most important jobs can be listed first. When you gain more experience, it’s better to use the chronological format. The bottom line is that you have a brand story to tell on your résumé; no matter what your background, you don’t need to stretch the truth.
Prospective employers want to see evidence that you are hardworking and have done things to distinguish yourself by holding part-time jobs, completing internships, participating in professional organizations, performing community service, and gaining other experiences. But one thing to remember about entry-level positions in virtually every industry is that none of the hiring companies expects you to come in and do the job from day one. The company will train you to do the job it wants done. That doesn’t mean that you won’t be asked to “jump in” and do things, because you will. But companies don’t expect you to have skills and experience that you will have after a few years of working. So use your résumé to sell yourself in an honest but compelling way.
Asking References to Speak about Your Personal Brand
References, simply put, are people you can rely on to speak on your behalf; they come in two flavors, personal and professional. Personal references are people like aunts or family friends—professional references are by far the more important and are usually supervisors, professors, or managers. While some prospective employers may accept personal references, you should have at least three professional references available if a prospective employer asks for them.
You might be wondering what employers do when they receive your references. This video is helpful to understand exactly what an employer may ask one of your references.
When choosing references, be sure that the people you have in mind have good things to say about you. It’s a good idea to keep in touch with your former boss from your internship or summer job. People with whom you have had a good working relationship can be excellent references. It’s always best to contact someone whom you would like to be a reference in person or on the phone. That way you will be able to let them know exactly how much you respect her, and it will give you an opportunity to cement your professional relationship. If she shows any kind of hesitation, you may not want to use her as a reference.
When you speak to a prospective reference, be professional and be specific. Here’s an example of a conversation you might have with a professor whom you are asking to be a reference. If you are asking a professor, it’s best to make an appointment or stop by his office.
You: Dr. Feng, I wanted to stop by and give you an update on my job search.
Dr. Feng: Great. I would like to hear about what companies you are interested in.
You: Well, I’ve been trying to get a sales position at one of the pharmaceutical companies in the city. I think that’s what I’d like to do since I enjoy sales and I am very interested in science and medicine. So I’ve sent my cover letter and résumé to all the pharmaceutical companies, and I have a second interview with Ainion Pharmaceuticals next Thursday. I was wondering if you would be a reference for me. They are looking for a sales assistant—someone who is organized, analytical, good with follow-up, and is a creative thinker. I thought that you might be able to speak about my work for the research practicum. I think it’s a great example of my work ethic and drive as well as my attention to detail and ability to solve problems creativity.
Dr. Feng: I would be happy to speak on your behalf. It sounds like the position could be a good fit for your skills. I’ll let you know when someone from the company contacts me.
You: Dr. Feng, thank you very much. I really appreciate all that you have done to help me start my career. I’ll let you know how the interview goes on Thursday.
Once you know whom you’d like for your references, ask them. This is not a situation in which you want to surprise people. Instead, talk with each person; you should personally speak with each person, preferably in person or by phone as opposed to by e-mail. (By all means, avoid the group e-mail requesting references.) Explain what the job is that you are applying for and ask for her permission to list her as a reference. Always personally thank each of your references, even if you don’t get the job. Express your gratitude—preferably in a handwritten note, but you must at least send an e-mail and let them know how things turned out. Don’t feel as if you let down your references if you didn’t get the job. Each of your references was in your situation at one point in time, and she didn’t get an offer from every job interview. Stay positive and keep in touch with your references. They will appreciate it, and you will keep your professional network strong.
If your potential employer wants references, he or she will ask for them; you should have them already prepared, but they should not be listed on your résumé.
You’ve Got the Power: Tips for Your Job Search
Reference Checks
When you are asked to provide references, you will need to provide for each reference: full name, mailing address, phone number, e-mail address, employer, job title, e-mail address, and relationship to you. Have the information collected in a professional document (see Figure \(4\) ). Remember to get someone’s permission before listing him or her as a reference every time; the fact that your internship supervisor was willing to be a reference two years ago doesn’t mean that you can take his assent for granted in the future. Your references are chosen to be advocates for you—in return for their generosity of spirit, do them the courtesy of asking whether they are still willing to speak well of you.
Letters of Recommendation
As you go through classes and internships, collect letters of recommendation for your portfolio; such letters demonstrate that people think highly of you. When you finish a class in which you did well, ask your professor for a letter of recommendation. When you finish an internship, ask your supervisor. Not only will these letters demonstrate your credibility, they will help to build your confidence. It’s a good idea to ask each of your references to write a letter of recommendation for you. That way you can bring the letters to your interview to demonstrate the support you have from professionals. This video gives you more insight into using letter of recommendation in addition to your list of references.
Letters of Recommendation. Letters of recommendation can help sell your personal brand. Source: CollegeGrad.com
Don’t hesitate to reread your letters after you’ve had a career setback. If you’re going to effectively sell yourself, you need to believe in your personal brand. A reminder that Dr. Messimer thinks that you’re awesome could be just the pick-me-up you need in order to dust yourself off and reenter the job market with aplomb.
Key Takeaways
• Lying on your résumé is not ethical and can have catastrophic consequences for your career.
• It is in your best interests to market yourself on your résumé—list your internships first, then your jobs, including any “nonprofessional” jobs that are important to the history of your personal brand.
• Personal references are family and friends; professional references are people whom you have worked with, and are vastly more important.
• Have at least three professional references available. Present your references only if asked for them; do not include them on your résumé.
• Speak to each of your references before you provide their name and contact information to a prospective employer. Get their permission, thank them, and let them know how things worked out.
• Letters of recommendation are important testaments to your character and abilities; when you finish an internship or a class, ask your supervisor or professor for a letter of recommendation. Letters of recommendation are excellent to present with your list of references.
Exercise \(1\)
1. Identify three people you could potentially use as professional references. Create a references sheet using the information for these people.
2. Ask one of your former supervisors or a professor to write a letter of recommendation for you. | textbooks/biz/Marketing/The_Power_of_Selling/04%3A_Business_Ethics_-_The_Power_of_Doing_the_Right_Thing/4.04%3A_Selling_U_-_Selling_Your_Personal_Brand_EthicallyResumes_and_References.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand ethical behavior in selling as well as how to determine what the ethical decision is in a given situation.
• You can understand why behaving ethically is important to selling.
• You can describe how ethical decision making works.
• You can identify different ethical pitfalls, including bribery and conflicts of interest.
• You can understand how to locate and implement company policies.
• You can implement ethical decision making in the workplace.
• You can recognize an ethical challenge and know how to respond.
• You can analyze a company’s ethics based on their mission statement and philosophy.
• You can organize your work experience on a résumé in a way that is both honest and effective.
• You can understand how to integrate references into your job search.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. What is ethical behavior?
2. What is an ethical dilemma?
3. What is an example of personal values?
4. What is an example of corporate values?
5. What is the purpose of a mission statement?
6. Why is your reputation important?
7. Explain how to determine a company’s policies on issues such as gifts, conflicts of interest, and so on.
8. Define a “conflict of interest.”
9. What is whistle-blowing?
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. Following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this ethical dilemma from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role play in groups or individually.
Ethics that Work
Role: Sales rep for Rold Gold, a fine jewelry wholesaler
You are a sales rep for Rold Gold, a jewelry wholesaler that specializes in high-end gold jewelry. The holidays are coming, and one of your best customers, the owner of an independent jewelry store, has sent you an expensive gift in appreciation for all that you have done to help her increase her business over the past year. Your employee handbook makes it clear that you could be fired for accepting it, but you didn’t actually accept it; it just turned up at your home, neatly wrapped, with a card attached. What will you do?
• Since no one will know that you received the gift, should you just keep it?
• If you decide to return the gift, what will you say to your customer?
• Will you write a thank-you note?
• If you decide to return the gift, what is the best way to do so?
• What, if anything, will you tell your sales manager?
Role: Owner, Jewels to the World jewelry store
You are the owner of a popular jewelry store. It has been a challenging year given the state of the economy. One of your sales reps has really gone above and beyond the call of duty to help you increase your business throughout the year with extra training, cost reductions, and promotional ideas. You want to let him know that you appreciate all he does to support your business, so you send him a very generous gift. You are not aware of any reason he wouldn’t accept it. Nonetheless, you have it sent directly to his home to avoid any appearance of impropriety. You would be extremely disappointed if he didn’t accept your gift.
• What will you say when the sales rep calls to thank you for your gift?
• If the sales rep decides not to accept the gift, will you insist that he keep it?
• If the sales rep doesn’t accept your gift, will it have an impact on your relationship?
• Will you expect special pricing and other deals in return for your gift?
ACTIVITIES
1. Identify at least one professor who might be willing to write you a letter of recommendation. Approach him or her and make the request—be prepared to talk about your career aspirations. Be sure to choose a professor in whose class you received a good grade and who likely remembers you.
2. What influences your values? Make a list of your values and try to determine their origin. Do they come from your parents, your church, or your own experiences?
3. Use the Internet to find a company whose mission statement and values statement reflects your mission and values. Write a cover letter to that company explaining why you would be a good hire.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Ethical behavior is morality applied to specific situations; it is behavior that addresses your obligations.
2. An ethical dilemma is a situation in which options are presented that may be right or wrong.
3. Personal values include (but are not limited to) honesty, integrity, accountability, drive, determination, and sincerity.
4. Corporate values may be the same as personal values, which may also include teamwork, open and honest communication, and diversity.
5. The process and reason for creating a mission statement, whether it is for a person or a company, is the same: to develop a roadmap, a guide by which all future decisions will be made.
6. When you work in sales, you are selling yourself; you will have greater success with customers if you are someone they want to “buy.” When a customer buys from you, they are investing in your reputation.
7. The employee handbook will outline the company’s policies concerning gift giving, nondisclosure of company information, and other areas of behavior.
8. A conflict of interest is “a situation in which a person, such as a public official, an employee, or a professional, has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties.”
9. Whistle-blowing is the act of publicly exposing the misconduct of a company or organization. | textbooks/biz/Marketing/The_Power_of_Selling/04%3A_Business_Ethics_-_The_Power_of_Doing_the_Right_Thing/4.05%3A_Review_and_Practice.txt |
• 5.1: Introduction to Effective Communication
• 5.2: Ready, Set, Communicate
Have you ever had one of these communications be misinterpreted? You meant one thing, but your friend thought you meant something else? A text message. A voice mail. A passing comment. A Facebook post. An unreturned phone call. Sometimes, the miscommunication can result in the confusion of a meeting time or a place to get together. Or worse, it can be entirely misunderstood and may have a negative impact on your relationship.
• 5.3: Your Best Behavior
You probably learned about table manners, thank-you notes, and other forms of etiquette when you were younger. The way you conduct yourself says a lot about who you are in life and, by extension, in business. Although many companies have a casual dress code, don’t be quick to assume that protocol and established practices aren’t important. It would be easy to misinterpret lack of formality as lack of professionalism. Manners matter in selling, now more than ever.
• 5.4: Selling U - The Power of Informational Interviews
• 5.5: Review and Practice
05: The Power of Effective Communication
The Power of Effective Communication
Video Ride-Along with Andrew Sykes, Pharmaceutical Sales Specialist at AstraZeneca
Meet Andrew Sykes. He is a pharmaceutical sales specialist in the medical care division at AstraZeneca, one of the largest pharmaceutical companies in the world. He has been in sales for five years. Andrew calls on doctors and educates them about the products he represents. His success is measured by the number of prescriptions written by doctors for the drugs for which he is responsible.
Ride along with Andrew and get his perspective on how communication works (and doesn’t work) in sales. Learn about Andrew’s tips for effective communication. You might be surprised by what you hear.
5.02: Ready Set Communicate
Learning Objectives
• Understand the elements of effective business communication.
• Recognize the implications of different types of verbal and nonverbal communication.
• Learn how your dress communicates in an interview and the workplace.
• Discuss how technology tools can help a salesperson manage customer relationships.
Have you ever had one of these communications be misinterpreted? You meant one thing, but your friend thought you meant something else?
• A text message.
• A voice mail.
• A passing comment.
• A Facebook post.
• An unreturned phone call.
Sometimes, the miscommunication can result in the confusion of a meeting time or a place to get together. Or worse, it can be entirely misunderstood and may have a negative impact on your relationship.
Communication, the exchange of information or ideas between sender and receiver, is a challenging aspect in your personal life, at school, and especially in selling. Today, it’s even more complex with business being conducted around the world and with varying communication methods. In this constant, high-speed business environment, communication blunders can cost you more than you might think. Did you ever hear the saying, “You only have one chance to make a good first impression”? It couldn’t be truer when it comes to communication: The first two seconds of communication are so important that it takes another four minutes to add 50 percent more information to an impression—positive or negative—within that communication.Dave Rothfield, “Communicating Simply, Directly Will Improve You, Your Business,” Orlando Business Journal, May 15, 2009, http://orlando.bizjournals.com/orlando/stories/2009/05/18/smallb2.html?t=printable (accessed July 12, 2009). Communication has often been referred to as a soft skill, which includes other competencies such as social graces, personality traits, language abilities, and ability to work with other people. Soft skills also encompass emotional intelligence, which Adele B. Lynn, in her book The EQ Interview: Finding Employees with High Emotional Intelligence, defines as “a person’s ability to manage herself as well as her relationship with others so she can live her intentions.”“Interviewing for Emotional Intelligence,” Selling Power Hiring & Recruiting eNewsletter, October 15, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=878 (accessed March 16, 2010). But in today’s business world, communication has become part of the new “hard skills” category, a technical job requirement, because of the critical role that it plays in business. Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009): 19. According to Peter Post, great-grandson of the late Emily Post, “Your skills can get you in the door; your people skills are what can seal the deal.” The Emily Post Institute, www.emilypost.com/business/index.htm (accessed July 13, 2009).
Misunderstood = Miscommunicated
In Chapter 3 you learned about the importance of relationships. In fact, it is almost impossible to be in sales without developing relationships inside your organization and with your customers. Your relationship skills build trust, allow you to be a true partner, and help solve your customer’s problems; both internal trust and external communication are essential keys to your ability to deliver on your promises. How are these qualities intrinsically related? The way in which you communicate can determine the level of trust that your colleagues or customers have in you. Gail Fann Thomas, Roxanne Zoliln, and Jackie L. Harman, “The Central Role of Communication in Developing Trust and Its Effect on Employee Involvement,” Journal of Business Communication 46, no. 3 (July 2009): 287.
Just like relationships are the cornerstone of trust, communication is the foundation of relationships. But it’s difficult to establish and develop relationships; it takes work and a lot of clear communication. You might think that sounds simple, but consider this: Nearly 75 percent of communications that are received are interpreted incorrectly. At the same time, interestingly, many people consider themselves good communicators. The telling disconnect occurs because people tend to assume that they know what other people mean or people assume that others know what they mean. This is compounded by the fact that people tend to hear what they want to hear—that is, a person may interpret elements of a conversation in such a way that the taken meanings contribute to his already established beliefs. When you put these assumptions together, communication can easily become “miscommunication.” Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009): 19.
The Communication Model
The standard model of communication has evolved based on two parties—the sender and the receiver—exchanging information or ideas. The model includes major processes and functions categorized as encoding, decoding, response, and feedback. In addition, the model accounts for noise, which symbolizes anything that might disrupt the sending or receiving of a message. George E. Belch and Michael A. Belch, Advertising and Promotion: An Integrated Marketing Communications Perspective, 8th ed. (New York: McGraw-Hill Irwin, 2009), 146. The communication model is shown in Figure \(1\).
The model helps describe exactly how communication takes place. For example, if you send a text message to your friend to ask him if he wants to go a movie, you are the source, or sender, of the message. You translated or encoded your message into text characters. A personal digital assistant (PDA) such as a BlackBerry, iPhone, or cell phone is the channel, or the method by which you communicated your message. Chances are, if your friend does not have his PDA or cell phone with him, your message will not reach him, and you might miss the movie. So in this example, the PDA or cell phone is the channel. When your friend, the receiver, reads the message, he decodes it or determines what you meant to communicate, and then he responds. If he was talking to another friend while he was reading your text message and didn’t see the time the movie started, that conversation would be considered noise because it would be interfering with the communication of your message. Noise interferes with communication or causes distraction, whether it is heard or seen. When your friend responds to you by saying that he wants to go see the movie, he is providing feedback (or a response to your message). Figure \(2\) shows this example applied to the communication model.
The same thing can happen in a selling situation. For example, if you call a prospect to set up a meeting, you are the sender. The message is the meeting information (e.g., date, time, and place) that you encode into words. The channel is the telephone, and the receiver is the prospect. It sounds easy enough. Assume, however, that the prospect responds to you and agrees to the meeting. But because he was checking his e-mails while he was talking to you (which is noise), he puts the wrong time on his calendar. When you come for the appointment, he’s out of the office, and your sales call doesn’t take place. Now you have to start the communication process all over again. This is only an example of simply setting up a meeting. Now imagine the challenges if you started explaining the features and benefits of a complex product or negotiating a contract. You can see why understanding the communication process is so important in selling.
Did You Know…?
• Positive e-mail messages are likely to be interpreted as neutral.
• Neutral e-mail messages are likely to be perceived as negative.
• People who send e-mails overrate their ability to communicate feelings.
• There is a gap between how a sender feels when he writes the e-mail and the way the emotional content is communicated that can cause an error in decoding on the part of the receiver.
• One simple e-mail can lead to a communication debacle if the e-mail is not clearly written and well thought out from the recipient’s point of view.Jeremy Dean, “Avoid Email Miscommunication,” PsyBlog, http://www.spring.org.uk/2007/10/avoid-email-miscommunication.php (accessed July 15, 2009).
Effective Communication
How do you avoid the pitfalls of poor communication and build productive business relationships? It’s best to always communicate in a timely manner and in the method that your customer prefers. That may be easier said than done. Here are six tips that can help you increase your chances of making your communications effective.
Tip 1: Empathy Is Essential
One of the key elements of being a good communicator is having empathy. That means thinking about your communication from the receiver’s point of view. It’s focusing on what she wants to learn as a result of your communication, not what you want to tell her. Empathy is about demonstrating that you care about the other person’s situation. Think about when you received your acceptance letter from your college; the letter probably mentioned what an exciting time it is in your life. The author of the letter demonstrated empathy because she focused on the situation from your perspective. A purely factual letter, without empathy, might have said that you were accepted and that now the school can make their budget since they met their enrollment goal. That would be quite a different letter and would make you feel very different (and probably not very welcome). Although it’s always best to be candid, you should deliver information from the receiver’s point of view and address her concerns.Steve Adubato, “Empathy Is Essential to Effective Communication,” NJBiz, www.stand-deliver.com/njbiz/2008/020408.pdf (accessed July 14, 2009).
Empathy is an integral part of emotional connection, one of the elements of a brand that you learned about in Chapter 1. (Keep in mind that when you are in sales, you are the brand to the customer.) It is especially important to have an emotional connection and empathy when apologizing to customers. Chances are the customer is already angry, or at least disappointed, when you are not able to deliver as expected. You can express empathy in your communications by saying or writing, “You have every right to be upset. I understand how you must feel. I apologize for the late delivery. Let’s work on a new process that will help prevent it from happening again.”Mary Ellen Guffey, Business Communication, 6th ed. (Mason, OH: South-Western Publishing, 2008), 280. Some of the best brands have disappointed their customers but showed empathy when they apologized. For example, the letter from then JetBlue CEO David Neeleman shown in Figure \(3\) is an example of a letter of apology that demonstrates empathy and emotional connection and also offers corrective action.
Tip 2: Think Before You Communicate
Quick responses, whether verbal or via electronic methods, can be less effective than those that are considered and can even cause misunderstanding. Although a timely response is critical, it’s worth a few minutes to think about exactly what you want to say before you say it (or type it).
Tip 3: Be Clear
It seems obvious, but not everyone is clear in his communications. Sometimes, people are trying to avoid “bad news” or trying to avoid taking a stand on a topic. It’s always best to avoid confusion and clearly say what you mean by framing your message in a way that is easily understood by all receivers. It’s also a good idea to avoid buzz words (or jargon)—those words, phrases, or acronyms that are used only in your company. If they can’t be avoided, explain them in the same communication terms. You should also avoid jargon on your résumé and cover letter—help your reader see your brand story at a glance without needing a decoder ring.
Tip 4: Be Brief
Business communication should be short and to the point. Your customers are busy and need information—whether it’s a proposal, report, or follow-up to a question—in a clear, concise way. It’s best to avoid being verbose, especially in any business plans, proposals, or other significant documents.Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009): 19.
Tip 5: Be Specific
If you go to dinner at Cheesecake Factory and there is a wait to get a table, the hostess will hand you a portable pager and tell you that the wait will be twenty to twenty-five minutes. Perfect. You have just enough time to run a quick errand at a nearby store at the mall and be back in time to get your table. If, on the other hand, she told you that you will be seated shortly, you might have an expectation of being seated in five to ten minutes. Meanwhile, “shortly” might mean twenty to twenty-five minutes for her. You would probably forgo running your errand because you think you are going to be seated soon but end up waiting for twenty-five minutes and being frustrated. Being specific in your communication not only gives clarity to your message but also helps set your customer’s expectations. In other words, your customer won’t expect something you can’t deliver if you are clear about what exactly you can deliver and when. The same is true for prices. For example, if you order from the menu at the Cheesecake Factory, you know precisely what you will get to eat and how much it will cost. However, if there is a menu special that you heard about tableside, but weren’t told how much the dish was, you might be surprised (and disappointed) when you receive the check. Specificity avoids surprises and sets expectations. See some examples in Table \(1\) of general statements that can be communicated more effectively when made into specific statements.
Table \(1\): General versus Specific Statements
General Statement Specific Statement
I’ll get back to you shortly. I’ll get back to you by Tuesday.
It will only take a few minutes. It will take less than 5 minutes.
It will cost about \$5,000 plus installation. The cost is \$4,800 plus \$200 for installation.
Everything is included. It includes your choice of entrée, vegetable, dessert, and coffee.
Tip 6: Be Timely
Timing is everything in life and most certainly in selling. It’s best to be proactive with communication, and if you owe someone a response, do it sooner rather than later. If you are slow to respond to questions and communication, it will be difficult to develop trust, as prolonged responses may seem to imply that you are taking action without informing the customer what it is you are doing. Timing is especially important when you are communicating a negative response or bad news. Don’t put it off; do it as soon as possible and give your customer the benefit of complete information.
Rules of Engagement
At the beginning of each relationship, ask your customer how he prefers to communicate. Getting the answers to these simple questions will save time and confusion throughout your relationship and help ensure good communication.
• How do you prefer to receive regular communication (e-mail, text, phone, in person, hard copy)?
• What can I expect as a standard turnaround time for response to questions and issues?
• How do you prefer to receive urgent communication (e-mail, text, phone)?
• Who else (if anyone) in the organization would you like to also receive communication from me?
• When is the best time to touch base with you (early morning, midday, or later in the afternoon)?
• How frequently would you like a status update and in what format (e-mail, phone, in person)?
Listen Up
While you may think you are ready to communicate, it’s a good idea to stop and listen first. Creating your message is only half of communication; listening is the other half. But it’s difficult to listen because we listen faster than we speak—that is, based on what the other person is saying, we are already constructing responses in our minds before they have even finished. As a result, many people are guilty of “listening too fast.”Jeffrey J. Denning, “How to Improve Your Listening Skills, Avoid Mix-ups,” Ophthalmology Times 26, no. 10 (May 15, 2001): 28. Cicero once said that it is good thing that humans were given one mouth and two ears, in light of the way we use them.Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009): 19.
Listening, in fact, is so important that companies like Starbucks believe that it may directly improve profits. According to Alan Gulick, a Starbucks Corporation spokesperson, if every Starbucks employee misheard one \$10 order each day, it would cost the company one billion dollars in a year.[citation redacted per publisher request]. That’s why Starbucks has a process to teach their employees how to listen. Although listening may seem passive, it is actively linked to success: One study conducted in the insurance industry found that better listeners held higher positions and got promoted more than those who did not have developed listening skills.Beverly Davenport Sypher, Robert N. Bostrom, and Joy Hart Seibert, “Listening, Communication Abilities and Success at Work,” Journal of Business Communication 26, no. 4 (Fall 1989): 293. So it’s worth it to hone your listening skills now so that when you get into the business world you can be successful. Here are a few tips:
• Use active listening. Confirm that you heard the sender correctly by saying something like, “Just to be sure I understand, we are going to move forward with twelve cases for your initial order, then revisit your inventory in five days.” Review the communication model above and take notice of the importance of decoding. If you decode a message from your customer incorrectly, the communication is ineffective and could even be costly. In the example above, the customer might have said in response, “I meant that the initial order should be five cases, and we’ll revisit the inventory in twelve days.” That’s a big difference.
• Ask questions. Questions are a way to gather more information and learn about your customer and their business. They are also an excellent way to demonstrate that you are communicating by listening. You learned in Chapter 2 that asking the right questions is critical to being a successful salesperson. Focus on listening and asking the right questions, and you’ll be rewarded with great information.
• Focus. Although multitasking has seemingly become a modern virtue, focus actually helps create more effective communication. Stop and focus on your customer when he is speaking. This is a sign of respect, and this concentration allows you to absorb more information. Take notes to remember exactly what you discussed. There’s nothing more important than what your customer has to say.Jeffrey J. Denning, “How to Improve Your Listening Skills, Avoid Mix-ups,” Ophthalmology Times 26, no. 10 (May 15, 2001): 28.
• Take notes. While it may seem like you will remember everything that is said at a meeting or during a conversation, taking notes signals that you are listening, and it provides you with an accurate record of what was said. “The palest ink is better than the best memory.”“A Lesson on Listening,”Selling Power Pharmaceuticals eNewsletter, April 9, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=814 (accessed March 16, 2010).
Listen More, Talk Less
This video highlights some challenges and tips for listening in sales.
Source: Josaine Feigon, http://www.tele-smart.com
Link
Are You a Good Listener?
Take this quiz to find out if you are a good listener.
www.chuckbauer.com/resources/assessments/are-you-listening-an-assessment
There’s More to Communication than Meets the Eye…or Ear
It’s important to remember that you will be communicating with many different people about many different topics in selling. Sometimes, you will be communicating one-on-one and sometimes you will be communicating with a group. Just as people have varying social styles (as you’ve learned in Chapter 3), it’s important to know that people also absorb information differently. Research conducted in the 1970s indicates that people comprehend information in four distinct ways:
• Why. They want to know the reasons for doing something.
• What. They want to know the facts about it.
• How. They want to know only the information they need to get it done.
• What if. They want to know the consequences of doing it.
This can be a helpful road map of the elements you will want to include in your communications, especially if you are communicating with a group, since you may not know everyone’s best method of absorbing information. It’s been proven that if people don’t receive the type of communication they prefer, they tend to tune out or reject the information.
You’ve probably noticed that both people and brands communicate the same message multiple times and usually in multiple ways. Creative repetition is key to successful communication. Think about the advertising Pepsi ran when it launched its new logo in early 2009; you most likely saw the television commercial during the Super Bowl, noticed a billboard in a high-traffic area of a major city, received an e-mail, saw banner ads on the Internet, reviewed the commercial on YouTube, and saw the new logo on the packaging. Pepsi’s ad campaign illustrates the “three-times convincer” concept, which claims that 80 percent of people need to be exposed a message three times to buy into it, 15 percent need to be exposed to it five times, and 5 percent need to be exposed to it up to twenty-five times.Natalie Zmuda, “Pepsi, Coke Try to Outdo Each Other with Rays of Sunshine,” Advertising Age, January 19, 2009, adage.com/abstract.php?article_id=133859 (accessed July 14, 2009). You may have seen the message so many times that it’s hard to remember what the old logo even looked like.
Types of Communication
It is important to use multiple types of communication so that repetition does not become boring like a broken record. There are three types of communication: verbal, which involves speaking to one or many people to convey a message; nonverbal, which includes body language and other observations about people; and written, which includes a message that is read in hard copy, e-mail, text message, instant message, Facebook, Twitter, blog, or other Internet-based written communication.[citation redacted per publisher request]. Varying the usage of these mediums can help ensure your customer’s attention, but you must carefully develop each skill separately to communicate effectively.
Verbal Communication
An introduction, a presentation, a telephone conversation, a videoconference call: these are all examples of verbal communication because information is transmitted orally. Despite the ubiquitous use of technology in the business world, verbal communication is the most common method of exchanging information and ideas. Verbal communication is powerful, fast, and natural and includes voice inflections that help senders and receivers understand the message more clearly. The downside to verbal communication is that once it is spoken, the words are essentially gone; they are preserved only in the memory of those present, and sometimes the memories of the specific words spoken vary dramatically. The he-said-she-said argument is an example of this. No one really knows who said what unless the words are recorded. Recall is rarely exactly the same between two or more people.
Voice inflection, the verbal emphasis you put on certain words, can have a significant impact on the meaning of what you say. In fact, the same words can take on completely different meaning based on the inflection you use. For example, if you say the sentence in Figure \(4\) with an inflection on a different word each time, the sentence communicates something completely different each time.
Source: Based on ideas in Kiely, M. (October, 1993). When “no” means “yes.” Marketing, 7–9.
You may also enjoy hearing recognized selling expert Zig Ziglar discuss the importance of intonation in a sales call.
Video Clip
Zig Ziglar Says It Best
It’s not what you say; it’s how you say it.
http://www.candogo.com/search/insight?i=1581
Verbal communication may take place face-to-face, such as an in-person conversation or group meeting, speech, or presentation. It could also take place by phone in an individual conversation, a conference call, or even a voice mail. Other forms of verbal communication include videoconferences, podcasts, and Webinars, which are increasingly common in business. All these methods allow you to use inflection to communicate effectively. Face-to-face meetings also provide the opportunity to use and interpret other visual cues to increase the effectiveness of your communication. Verbal communication is especially important throughout the steps of the selling process. Your choice of words can make the difference in someone’s decision to first hear your sales presentation, and your presentation can determine whether that person will purchase your product or service. You will learn more specifically about how communication is used throughout the selling process covered in later chapters.
Verbal communication is especially important throughout the steps of the selling process. Your choice of words can make the difference in someone’s decision to first hear your sales presentation, and your presentation can determine whether that person will purchase your product or service. You will learn more specifically about how communication is used throughout the selling process covered in later chapters.
Nonverbal Communication
Imagine that you are in a retail store buying a suit for an interview. When the salesperson approaches you, she smiles, makes eye contact, and shakes your hand. You respond positively. You notice that she is dressed professionally, so she makes you feel as if you will receive good fashion advice from her. When you make your choice, the tailor comes over wearing a tape measure around his neck. You know he is a professional and you can trust him to alter your new suit properly. On the other hand, if the salesperson waits on you only after you interrupt her personal phone call, doesn’t make eye contact or shake your hand, acts as if she is bored being at work, and is dressed in worn jeans and flip-flops, it’s unlikely that you trust her to help you choose your suit.
You have, no doubt, used and noticed nonverbal communication in virtually every personal encounter you have had. Think about it: A gesture, a smile, a nod, eye contact, what you are wearing, the fact that you are frequently checking your cell phone for text messages, and how close you stand to someone are all examples of nonverbal communication.
Say versus Do
This video describes the difference between verbal and nonverbal communication.
Source: eHow.com
Nonverbal communication is extremely powerful. In fact, some studies indicate that the influence from nonverbal communication such as tone and visuals can have a greater impact than the spoken words. Dr. Albert Mehrabian, a famed psychologist and professor emeritus of psychology at University of California, Los Angeles, is considered a pioneer in the area of body language and nonverbal communication. His research includes an equation, called the Mehrabian formula,Albert Mehrabian, “Silent Messages,” http://www.kaaj.com/psych/smorder.html (accessed July 15, 2009). that is frequently used to define the relative impact of verbal and nonverbal messages based on experiments of communication of feelings and attitudes. Dr. Mehrabian developed the formula shown in Figure \(5\) to define how communication takes place.
The Mehrabian formula is used to explain situations in which verbal communication and nonverbal communication do not match. In other words, when facial expressions contradict words, people tend to believe the facial expressions.“Mehrabian’s Communication Research,” Businessballs.com, www.businessballs.com/mehrabiancommunications.htm (accessed July 15, 2009).
Types of Nonverbal Communication
• Handshake
• Body language
• Gestures
• Nodding or shaking your head
• Eye contact (or lack of eye contact)
• Eye roll
• Facial expressions
• Touch
• Space or proximity
• Dress
• Multitasking (e.g., texting while listening to someone, earphones in ears while working)
Your Handshake Says It All
In some countries, you might bow when you meet someone; in others you might kiss; but when you meet someone for a business meeting in the United States, it’s best to shake hands.Terri Morrison, “Kiss, Bow, or Shake Hands,” www.getcustoms.com/2004GTC/Articles/new011.html (accessed July 23, 2009). Although fist bumps and high fives may be trendy as friendly greetings, neither is appropriate in a business setting.
Be Memorable
Here’s a networking tip: When you shake hands with people at a meeting, they are two times more likely to remember you than if you don’t shake hands, according to a recent study conducted by the Incomm Center for Trade Show Research.Rachel Zupek, “The Worst Way to Shake Hands,” CNN.com, http://www.cnn.com/2007/LIVING/worklife/11/05/cb.hand.shake/index.html (accessed July 13, 2009).
The exact history of the handshake is unknown; however, at one time it was used as method to prove that you had no weapons in your hands.Rachel Zupek, “The Worst Way to Shake Hands,” CNN.com, http://www.cnn.com/2007/LIVING/worklife/11/05/cb.hand.shake/index.html (accessed July 13, 2009). A good handshake is essential in business; it is the first nonverbal cue that you give to the person with whom you are meeting. It’s so important to have a good handshake that a recent study conducted at the University of Iowa showed that during mock interviews, those students who scored as having a better handshake were also considered more hirable by interviewers. According to Greg Stewart, a business professor who conducted the study said, “We found that the first impression begins with a handshake and sets the tone for the rest of the interview.”“Good Handshake Key to Interview Success,” BC Jobs, www.bcjobs.ca/re/career-advice/career-advice-articles/interview-advice/good-handshake-key-to-interview-success (accessed July 12, 2009).
Do you think you have a good handshake? Believe it or not, it’s worth practicing your handshake. Here are five tips for a good handshake:
1. Extend your right hand when you are approximately three feet away from the person with whom you want to shake hands.Rachel Zupek, “The Worst Way to Shake Hands,” CNN.com, http://www.cnn.com/2007/LIVING/worklife/11/05/cb.hand.shake/index.html (accessed July 13, 2009).
2. Keep your wrist straight and lock hands connecting your hand with the same part of the other person’s hand.John Gates, “A Handshake Lesson from Goldilocks,” Free-Resume-Help.com, www.free-resume-help.com/handshake-interview.html (accessed July 12, 2009). Apply appropriate pressure; don’t crush the person’s hand.
3. Shake up and down three or four times.“Good Handshake Key to Interview Success,” BC Jobs, www.bcjobs.ca/re/career-advice/career-advice-articles/interview-advice/good-handshake-key-to-interview-success (accessed July 12, 2009).
4. Avoid the “wet fish” handshake.“Good Handshake Key to Interview Success,” BC Jobs, www.bcjobs.ca/re/career-advice/career-advice-articles/interview-advice/good-handshake-key-to-interview-success (accessed July 12, 2009). This is where practice is really important. The more you shake hands, the less nervous you will be.
5. Smile and make eye contact.“Good Handshake Key to Interview Success,” BC Jobs, www.bcjobs.ca/re/career-advice/career-advice-articles/interview-advice/good-handshake-key-to-interview-success (accessed July 12, 2009). This is your opportunity to use multiple types of nonverbal communication to get your meeting or interview off to a good start.
Link
Shake on It
What does your handshake say about you?
www.howcast.com/videos/105154-How-To-Shake-Hands
Body Language
Do you use your hands when you talk? If so, you are using body language to help make your point. But body language includes more than talking with your hands. Body language is what we say without words; nonverbal communication using your body includes elements such as gestures, facial expressions, eye contact, a head tilt, a nod, and even where and how you sit. Body language can indicate an unspoken emotion or sentiment that a person might be feeling either consciously or subconsciously. Body language can indicate if you are listening to someone and are engaged in what he is saying, disagreeing with him, or getting bored. (You might want to think twice about the body language you are using in class.) It’s important that you are aware of what you communicate with your body language and to understand and respond to the cues you are getting from someone else’s body language.
Do You Speak Body?
Here are some common examples of body language and what they mean.Kathryn Tolbert, “What We Say without Words,” Washington Post, www.washingtonpost.com/wp-dyn/content/gallery/2008/06/23/GA2008062301669.html (accessed July 15, 2009).,Neal Hendes, “How to Read Body Language: Ten Tips,” EzineArticles, ezinearticles.com/?How-to-Read-Body-Language—Top-10-Tips&id=991635 (accessed July 15, 2009).
• Crossed arms: discomfort
• Spreading fingers: territorial display
• Mirroring (i.e., mimicking your body position to another’s): comfort
• Drumming or tapping fingers: frustration
• Hands on hips: there is an issue
• Hands behind the back: “leave me alone”
• Hands clasped, thumbs up: positive
• Thumbs down: don’t like
• Hands clasped with fingers forming a steeple: confidence
• Touch neck: insecurity
• Crossed legs: comfort
• Glancing at watch: concerned about time or bored
Body language is not just an interesting topic to consider; it’s a proven science that can help you improve your communication. If you would like to see how body language is used in everyday life, watch this video featuring Tonya Reiman, national television commentator and author of The Power of Body Language.
Tonya Reiman, Body Language Expert
Learn what your body language is communicating.
Source: CBS Interactive
Here are some tips to remember about your body language to be sure you are sending the right nonverbal message to your customer or interviewer.
• Make eye contact with the person to whom you are speaking. Eye contact avoidance can be distracting and can prevent you from establishing a relationship as shown in this video.
Eyes Have It
Eye avoidance can be damaging to your career.
Source: eHow.com
• Smile when you meet someone and throughout the conversation. A smile is a positive response to another person and has a significant impact on how people perceive you. A smile can break the ice and help you start a conversation.
• Dress for success at all times, which means always dressing appropriately for the situation. The Selling U section in this chapter covers how to dress for an interview. But it’s best to keep in mind that even after you get the job you want, it’s a good idea to dress a little better than the position. Even in very casual work environments, what you wear is a nonverbal communication about who you are. If you don’t dress for the next promotion, chances are you won’t be considered for it. Be aware of the company policy and dress code, and if in doubt, dress more conservatively. This podcast featuring Peter Post discusses how to handle casual dress in the workplace.
Written Communication
Although verbal and nonverbal communications usually take place in real time, written communication has a longer consideration period. The sender must encode the message in words to be communicated on paper or a screen.[citation redacted per publisher request]. Business reports, proposals, memos, e-mails, text messages, Web sites, blogs, wikis, and more are all examples of written communication. Each of them is created over a period of time and can include collaboration from multiple people. Collaboration is especially important for communicating, planning, and creating documents so many people use tools such as wikis to share documents. To see how a wiki works, watch this video.
Video Clip
Collaborate Online
A wiki can help any team share and collaborate…anywhere, anytime.
www.bnet.com/2422-13731_23-187449.html
Written communication is preferred to verbal communication when careful consideration is important or the information needs to be permanent, such as a company policy, sales presentation, or proposal. Written communication can also take place when verbal communication isn’t an option, like when you need to respond to an e-mail or text message at 1:00 a.m.
Although verbal communication is faster and more natural than written communication, each has its pros and cons. Generally, written communication is better at conveying facts, while verbal communication is better at conveying feelings. Verbal communication has another significant drawback: consider the fact that humans listen much faster than they speak. For example, the average public speaker speaks at about 125 words per minute. Although this sounds natural, the average person can listen at 400 to 500 words per minute. That means that listeners’ minds have time and space to wander, which can impact the effectiveness of verbal communication.[citation redacted per publisher request]. (You may have noticed your mind wandering during a class lecture—even if you found the topic interesting.)
Written communication requires a good command of the English language, including the rules of grammar and spelling. If you think that business exists solely on quick instant messages and text messages, you might be surprised to learn that they are only a portion of the communication within a company and between the company’s vendors and other partners. Because the nature of written communication is such that it allows time for consideration and composition, the standards for writing are much higher than for a casual conversation. Customers and colleagues alike expect clear, concise written communications with proper grammar and spelling. And because written communication is long lasting—whether on paper or on the Internet—errors or misstatements exist for an irritatingly long time. So whether you are writing a proposal, a presentation, a report, a meeting recap, or a follow-up e-mail, it’s best to take the time to think about your communication and craft it so that it is effective. Consider using the following tips:
• Be short and sweet. Shorter is always better when it comes to business correspondence. It’s best to include all pertinent facts with concise information. If you write your communication with the receiver in mind, it will be easier to make it shorter and more effective.
• Grammar, please. Sentences should be structured correctly and use proper grammar, including a subject and a verb in each sentence. Business correspondence should always include uppercase and lowercase letters and correct punctuation.Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009): 19. If writing is not your strong suit, visit your campus student services office or learning center to provide information about upcoming writing clinics and access to other tools that can help improve your writing skills.
• Check spelling. Use the spell-check tool on your computer. There is no excuse for a misspelled word. Text abbreviations are not acceptable in business correspondence.
• Read before you send. Reread your document or electronic communication before it goes out. Is everything complete? Is it clear? Is it something you will be proud of days or weeks later? Take the extra time to review before you send. It’s difficult to revise a communication as revisions cause confusion.
• Just the facts. Stick to the facts to maximize the impact of your written communications; leave the emotional topics for verbal dialogue. For example, send an e-mail to confirm meeting time, date, and location; use a verbal communication for the content of the meeting to be discussed, such as a negotiation.
You Are What You Write
You might not think twice about sending a text to your friend. But in the business world, everything you write in an e-mail, text message, letter, or memo is a direct reflection of your personal brand. This video highlights the power of written communication and how it can help you build your personal brand.
Source: SellingPower.com
Which Is Best?
Although verbal, nonverbal, and written communication all play a role in your communication with your customers, you might be wondering which one is best. It depends on your customer and on the situation. Some customers want to work day to day using all the latest technology tools, including text messaging, social networking, Web conferences, wikis, and more. Other customers prefer more traditional face-to-face meetings, phone calls, and some e-mail correspondence. Adapt to the method of communication that your customer prefers and not the other way around. In some situations, a face-to-face meeting is best—for instance, if you wish to discuss a complex issue, negotiate, or meet some additional members of the team. Sometimes, a face-to-face meeting isn’t feasible, so other verbal communication methods such as a videoconference, phone call, or conference call can be efficient and effective if used properly.
Chances are you will use a combination of communication types with each customer tailored to his particular preferences and situation. Be guided by the fact that you want to keep your communication personal in meaning and professional in content. Think about it from the receiver’s point of view, and deliver bad news verbally whenever possible.
Which Is Better: E-mail or Face-to-Face?
It might seem intuitive, but it’s not always true that a face-to-face meeting is better than an e-mail. It depends on the type of relationship you have with the person. If you are competitive with her, it’s best to use e-mail to communicate. According to a study conducted by Robert B. Cialdini and Rosanna Guadagno in 2002, if you have a more cooperative relationship, a face-to-face meeting is probably a better choice if it’s physically possible.“Communicating Persuasively: Email or Face-to-Face,” PsyBlog, http://www.spring.org.uk/2007/03/communicating-persuasively-email-or.php (accessed July 15, 2009).
Key Takeaways
• Communication is vital in selling and is the foundation of relationships.
• The communication model describes exactly how communication is sent and received and provides clues as to how to improve the effectiveness of communication.
• Empathy is thinking about your communication from the receiver’s point of view. Empathy helps build an emotional connection.
• Effective communication is clear, concise, brief, specific, and timely.
• Creating your message is only one half of communication; listening is the other half. Being a good listener improves your ability to be a good communicator.
• There are three types of communication: verbal, which involves speaking to one or many people to convey a message; nonverbal, which includes body language and other observations about people; and written, which includes a message that is read in hard copy, e-mail, text message, instant message, Facebook, Twitter, blog, or other Internet-based written communication.
• Verbal communication provides the opportunity to change communication with inflection, or the emphasis put on certain words in a conversation or presentation.
• Nonverbal communication provides additional insights into the sending and receiving of a message through gestures, eye contact, proximity, and other elements of body language.
• Your handshake can be one of the most powerful elements of nonverbal communication and sets the tone for the meeting or interview ahead.
• Written communication includes printed words designed to communicate a message on paper or a screen and is more permanent than verbal or nonverbal communication.
• Written communication is best used for factual information, whereas verbal communication is best used for emotional topics or those that require discussion.
• The best method of communication depends on your customer’s preferences and on the situation.
Exercise \(1\)
1. Choose an advertisement online or in a magazine. Apply the communication model by answering the following questions: Who is the source? What is the message? How is the message encoded? What is the channel with which it is communicated? How is the message decoded? Who is the receiver? What might be an example of potential noise that would interfere with the communication of the message? How can the sender receive feedback from the receiver?
2. Are you a good listener? Complete this online listening activity to see how well you listen. www.bbc.co.uk/skillswise/words/listening/listeningforspecificinformation/activity.shtml
3. Can you listen to directions accurately? Take this online listening exercise to see how well you listen. www.bbc.co.uk/skillswise/words/listening/typesoflistening/game.shtml
4. Test your listening skills. Do this exercise with a partner, one is the speaker and one is the listener. The speaker has three minutes to describe what he is looking for in a vacation destination. The listener has to use active listening skills. Then, the listener has three minutes to “sell” a destination to the speaker, based on what the speaker said he wanted. The speaker has one minute to review how close the listener was to his destination. Reverse roles and repeat.
5. Name the three types of communication and give an example for each one. How might the communication be misinterpreted in each example? How might the communication be made more effective in each example?
6. Visit a local retailer that uses personal selling and ask a salesperson questions about purchasing a product or service. Identify three types of communication the salesperson uses. Were they effective? Why or why not?
7. Identify four examples of nonverbal communication you observe in class. What does each example communicate?
8. Visit your campus student services or learning center and learn about the resources that are available to help you develop your writing skills. What information, classes, or workshops are available? Which ones sound like they might be helpful? Why?
9. Consider this situation: You are a salesperson who has to tell your customers that the original shipping date will not be met and the new date is one week later. What are the four things that your customers would want to know?
10. Visit http://www.pbworks.com to set up a wiki for the class. Discuss a situation in which you could use a wiki for class projects, campus activities, or other personal projects. Discuss a situation in which a salesperson might use a wiki with a customer. | textbooks/biz/Marketing/The_Power_of_Selling/05%3A_The_Power_of_Effective_Communication/5.01%3A_Introduction_to_Effective_Communication.txt |
Learning Objectives
• Understand the appropriate etiquette for business communication.
You probably learned about table manners, thank-you notes, and other forms of etiquette when you were younger. The way you conduct yourself says a lot about who you are in life and, by extension, in business. Although many companies have a casual dress code, don’t be quick to assume that protocol and established practices aren’t important. It would be easy to misinterpret lack of formality as lack of professionalism. Manners matter in selling, now more than ever.
Never Underestimate the Power of Good Etiquette
How do you make a positive impression when you meet someone? What’s the best way to ask for her business card? When is it appropriate or expected to send a thank-you note? Who picks up the bill at a business lunch? It’s hard to know the “rules of the road,” especially in today’s casual, fast-paced selling environment. Etiquette can make the difference in how your customer perceives you and your personal brand.
Etiquette Tips for Letters and Memos
Despite the use of electronic devices in business, formal written communication such as letters, memos, proposals, reports, and presentations are still major methods of communication in selling. These more official methods of communication reflect factual statements that you are making on behalf of the company. Here are some tips for writing business communications:
• Use company letterhead where appropriate. For example, letters are always written on letterhead, whether in hard copy or in an electronic format that can be sent via e-mail.
• Use the formal elements of a business letter shown in Figure 5.7 .
• For a company memo, use the company format. Most companies have a set format for hard copy and electronic memos. See an example of a company memo in Figure 5.8 .
• Spell-check and proofread your document carefully before you send it. Be sure it is complete and factually correct and does not include any grammar or spelling errors.
• Use CC to indicate the names of other people who should also receive a copy of the letter or memo. The term “CC” is short for “carbon copy,” which dates back to the days of typewriters when carbon paper was used to make multiple copies of a document. It can also mean “courtesy copy”: an additional copy provided to someone as a courtesy.Mary Ellen Guffey, Business Communication, 6th ed. (Mason, OH: South-Western Publishing, 2008), 175.
• Use BCC (blind carbon copy) to send copies to other people without having the primary recipient see it.Mary Ellen Guffey, Business Communication, 6th ed. (Mason, OH: South-Western Publishing, 2008), 175.
Tips for Writing a Business Letter
Etiquette makes all the difference in the quality of your communication.
Source: eHow.com
Etiquette Tips for Conversations, Meetings, and Presentations
Although common sense should prevail in all business communications, here are some tips that will help make your conversations, meetings, and presentations more effective forms of communication:
• Be prepared; don’t waste anyone’s time or focus.
• Prepare a written agenda and hand it out at the start of the meeting to keep the group focused on the desired topics.
• Speak clearly and at a volume that is easy to hear, but not too loud so as to be distracting.
• Be professional and respectful; don’t interrupt when others are speaking.
• Use eye contact.
• At the end, recap your key points and identify next steps.
In sales, time is money so conducting effective and efficient meetings is critical to your success.
Link
Seven Tips to Make Your Meetings More EffectiveRenee Houston Zemanski, “Seven Ways to Make Your Meetings More Memorable,” Selling Power Meetings eNewsletter, July 7, 2009, http://www.sellingpower.com/content/newsletter/issue.php?pc=972 (accessed March 16, 2010).
http://www.sellingpower.com/content/newsletter/issue.php?pc=972
Doodle to Save Time
If you are setting up a meeting that involves several people and it’s difficult to agree on a meeting date and time, you can use Doodle.com to identify the best date and time to meet. You choose the options and e-mail a link to the participants; when people respond, you see the Doodle.com summary that indicates the best date and time for the meeting. Set up an account at http://doodle.com.
Etiquette for Requesting and Giving Business Cards
Business cards are a branding tool for your company and a way to stay in touch with your customers and other people in your network.Miss E, “The Art of Giving Business Cards,” 123etiquette.com, http://www.123etiquette.com/business-etiquette/business-card-etiquette (accessed July 17, 2009). In fact, giving out and requesting a business card is considered good etiquette.Ben Preston, “Good Business Etiquette Includes Giving Out Business Cards,” Businesstoolchest.com, www.businesstoolchest.com/articles/data/20060201225647.shtml (accessed July 17, 2009). Here are some tips to exchange business cards in a professional manner:
The Etiquette of Exchanging Business Cards
This is the right way to exchange cards.
Source: BNET
Etiquette for Business Meals
The purpose of a business breakfast, lunch, or dinner is to get to know someone and build a relationship. As you learned in Chapter 3, to engage in business entertainment is considered part of the sales job description. Table manners are a form of nonverbal communication, and impolite etiquette can reverse all the effort you have put into a relationship. Business meals are so important that many companies use business lunches or dinners as part of the interview process. Whatever the situation, you want to be prepared with proper etiquette for the occasion.
• A meal is considered a business meeting, no matter where it is held.Louise Lee, “Meet and Eat,” BusinessWeek, June 5, 2009, http://www.businessweek.com/magazine/content/09_66/s0906025664520.htm (accessed July 13, 2009).
• To help you remember which dishes and utensils to use, think BMW: Bread plate on your left, Meal in the center, Water goblet on the right.Joe Morris, “Not Knowing Basics Is Simply Impolite,” Nashville Business Journal, November 21, 2008, http://www.bizjournals.com/nashville/stories/2008/11/24/focus2.html?t=printable (accessed July 12, 2009). Use silverware starting at the outside and work your way in as the meal progresses.
• As a general rule of thumb, the person who invites pays. If you are invited to lunch for an interview, your host pays. If you take a customer out to lunch, you pay.Joanne McFadden, “Rules of Etiquette Are Important for the Business Lunch,” Milwaukee Business Journal, October 24, 2008, http://www.bizjournals.com/milwaukee/stories/2008/10/27/focus4.html?t=printable (accessed July 12, 2009).
• If you don’t know what to order, ask your host what’s good. Order a midpriced entrée rather than ordering the least expensive or most expensive item on the menu. If you are the host, make some suggestions so your customer feels comfortable with her choice.Joanne McFadden, “Rules of Etiquette Are Important for the Business Lunch,” Milwaukee Business Journal, October 24, 2008, http://www.bizjournals.com/milwaukee/stories/2008/10/27/focus4.html?t=printable (accessed July 12, 2009).
• Don’t order anything messy; stick to food that is easy to eat.Louise Lee, “Meet and Eat,” BusinessWeek, June 5, 2009, http://www.businessweek.com/magazine/content/09_66/s0906025664520.htm (accessed July 13, 2009).
• Be courteous to the wait staff. Many people observe how you treat other people, even when you think no one is watching.
Etiquette for Thank-You Notes
There’s nothing more personal than a thank-you note. For the most part, you and your customers are very busy, which is why a thank-you note is even more appreciated. Whether it’s a handwritten note or an e-mail thank you, it will go a long way in building your relationship. It’s a personal touch that sets you apart. It’s never inappropriate to say thank you, but it may be inappropriate not to say thank you.
Video Clip
When to Say Thank You
Sending a thank-you note is always appropriate in business.
http://www.videojug.com/interview/gift-giving-etiquette-in-american-business-2#what-is-the-etiquette-of-thank-you-notes-in-a-business-setting
There are many reasons to send a business thank-you note; this video includes some ideas:
Video Clip
Why to Say Thank You
Here are ideas to keep you top of mind with a thank-you note.
http://www.videojug.com/interview/gift-giving-etiquette-in-american-business-2#when-is-it-appropriate-to-send-a-thank-you-note
Here are some tips for writing thank-you notes:
• Start with a clear introduction and let the reader know right away that the purpose of the note or e-mail is to thank him.
• Be specific about the situation, date, or other information surrounding the reason for the thank-you note.
• Make it personal and make it special by including your own sentiments. A generic message such as “thanks for a great job” really doesn’t fill the bill. Think about exactly what moved you to write the note and be sure your reader knows what she did that was special.Terence P. Ward, “Expressing Gratitude in Writing Builds Business Networks,” May 18, 2008, Suite101.com, business-writing.suite101.com/article.cfm/business_thankyou_notes (accessed July 17, 2009).
Video Clip
How to Say Thank You
This video includes some guidelines about what to include in a business thank-you note:
http://www.videojug.com/interview/gift-giving-etiquette-in-american-business-2#what-is-appropriate-to-write-in-a-business-related-thank-you-note
Power Selling: Lessons in Selling from Successful Brands
SimplySoles
Imagine getting a personalized handwritten thank-you note when you order a pair of shoes online. That’s what SimplySoles.com does for each customer. Founder Kassie Rempel feels so strongly about thanking customers for their business that every customer who purchases a pair of shoes receives one; each note even mentions the name of the shoe that was purchased.Justin Martin, “6 Companies Where Customers Come First,” CNNMoney.com, http://money.cnn.com/galleries/2007/fsb/0709/gallery.where_customers_come_first.fsb/5.html (accessed July 23, 2009).
High Tech, High Touch
The year was 1982, and the world was just beginning to realize the amazing potential of computer technology. John Naisbitt wrote a book called Megatrends: Ten New Directions Transforming Our Lives, where he coined the term “high tech, high touch,” which he defined as the contradictory state in which people are driven by technology yet long for human interaction.John Naisbitt, Megatrends: Ten New Directions Transforming Our Lives (New York: Grand Central Publishing, 1998). He wrote about how the United States has been transformed from being comfortable with technology to being intoxicated with technology, a state he calls the “Technologically Intoxicated Zone” in his 1999 book, High Tech/High Touch. You probably can’t imagine living without your cell phone or personal digital assistant (PDA), iPod, computer, or other electronic devices. In fact, it’s likely you can’t even remember what communication was like before the Internet.
Technology, with all of its efficiency and benefits, cannot, however, become a substitute for old-fashioned human efforts. “Technology makes tasks easier, but it does not make our lives easier,” according to July Shapiro in a recent article in Advertising Age.July Shapiro, “A Digital Myth: Technology Doesn’t Make Life Easier,” Advertising Age, May 11, 2009, adage.com/digitalnext/post?article_id=136533 (accessed May 12, 2009). Shapiro’s observation is true, especially as it relates to business; sometimes, the crush of technology takes precedence over business etiquette. However, people have begun to rethink the lack of personal interaction and its corresponding etiquette in the workplace. Yes, “there’s even an app for that”; a firm named Etiquette Avenue has recently launched an iPod app for business etiquette. The fact is, technology isn’t personal and can’t behave in the right way at the right time with your customer or on an interview; that’s completely up to you.CommercialsKid, “iPhone 3g Commercial ‘There’s an App for That,’” video, http://www.youtube.com/watch?v=szrsfeyLzyg (accessed July 16, 2009).,“Good Advice in Bad Times: New Etiquette Avenue iPhone App Puts Professional Protocol at Fingertips,” Business Wire, June 29, 2009.
Now, we’re seeing a bit of a reverse movement: Technology is so pervasive in selling that salespeople are actually pushing back on their managers and asking them for more face time and less gadget time. One of the best opportunities for sales managers and their salespeople to discuss business problems and build relationships with one another has traditionally been during “windshield time,” which is the time in the car driving between sales calls. “Sales reps report that the intrusion of technology has stolen this valuable time from reps and their principals [bosses],” according to a recent article in Agency Sales, because as soon as they get into the car to drive to the next call, the sales manager pulls out his BlackBerry. “If there’s one thing I could tell my principals [bosses] when they come see me in the field is to ditch the electronic communications and pay attention to me and our customers,” said one salesperson quoted in the article.“Reestablishing the Inside Connection: Open Communication with Inside Sales Strengthens the Rep Bond,” Agency Sales 39, no. 5: 38. It’s no surprise that there’s a need for business etiquette, especially as it relates to technology.
Being Connected versus Being Addicted
In a recent pitch to a potential client, a marketing executive in Manhattan thought it was strange that his potential customer was so engaged with his iPhone that he hardly looked up from it during the meeting. After ninety minutes, someone peeked over the customer’s shoulder and saw that he was playing a racing game on his iPhone. This was disappointing, but not shocking according to the marketing firm that was doing the presentation; they continued with their pitch because they wanted the business. Some are not as tolerant. Billionaire Tom Golisano, a power broker in New York politics, recently announced that he wants to have State Senate majority leader Malcolm A. Smith removed from office because Smith was focused on his BlackBerry during a budget meeting with him. Recently, in Dallas, Texas, a student lost his opportunity for an internship at a hedge fund when he checked his BlackBerry to check a fact during an interview and took an extra minute to check his text messages at the same time.Alex Williams, “At Meetings, It’s Mind Your Blackberry or Mind Your Manners,” New York Times, June 22, 2009, A1. It’s no surprise that BlackBerrys are also called “CrackBerrys.” According to Maggie Jackson, author of Distracted: The Erosion of Attention and the Coming Dark Age, we are living in “an institutionalized culture of interruption, where our time and attention is being fragmented by a never-ending stream of phone calls, e-mails, instant messages, text messages, and tweets.”Patrick Welsh, “Txting Away Ur Education,” USA Today, June 23, 2009, A11.
The need to be connected should not overwhelm respect for colleagues and customers. Although texting has become a national pastime, especially among teenagers, it’s important to know the appropriate etiquette for the use of handheld electronic devices when conducting a sales call.
First, it’s best to turn off your electronic devices before you enter every meeting. If you think you can’t live without checking your text messages, think about how you would feel if you went on a job interview and the person with whom you were meeting was checking his electronic device during your interview. Just because some people demonstrate bad behavior and check their electronic devices for messages during a meeting doesn’t make it appropriate. In fact, it will help you stand out as a good listener, and you will make your customer feel even more important when you focus exclusively on her, as shown in this video.
To Text or Not to Text
Learn about appropriate business etiquette.
Source: eHow.com
Etiquette Tips for Telephone, Cell Phone, Voice Mail, and Conference Calls
Sometimes, however, the use of technology is entirely necessary to conduct business when personal interaction is impossible. It’s important that verbal communication that is not face-to-face is effective and professional. Because you don’t have the benefit of using or seeing the receiver’s nonverbal communication, the challenges for effective and appropriate communication are even greater.
Here are some dos and don’ts of telephone etiquette:
• Do be aware of the volume of your voice when you are speaking on the phone in the office or on a cell phone.Joanna L. Krotz, “Cell Phone Etiquette: 10 Dos and Don’ts,” Microsoft, www.microsoft.com/smAllBusiness/resources/ArticleReader/website/default.aspx?Print=1&ArticleId=Cellphoneetiquettedosanddonts (accessed July 12, 2009).
• Do, when using a speakerphone, conduct the call in an enclosed or isolated area such as a conference room or office to avoid disturbing others in the area.
• Do, when leaving a voice mail message, speak slowly, enunciate, spell your name, and leave your number (this makes it much easier for the recipient to hear your message the first time).John R. Quain, “Quain’s Top Ten Voice Mail Tips,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/18/topten.html (accessed July 17, 2009).
• Do, when you leave a voice mail message, be specific about what you want: make it easier for the caller to get back to you and include what time you will be available for a callback to avoid playing telephone tag.John R. Quain, “Quain’s Top Ten Voice Mail Tips,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/18/topten.html (accessed July 17, 2009).
• Do customize your voice mail message: create a different message for each of your customers or prospective customers so the message is personal and relevant.Keith Rosen, “Eight Tips on Crafting Effective Voice Mail Messages,” AllBusiness, www.AllBusiness.com/sales/selling-techniques-telesales/2975818-1.html (accessed July 17, 2009).
• Do speak with enthusiasm: it’s best to convey a smile in your voice, especially if it is the first time you are calling or leaving a message for someone.Keith Rosen, “Eight Tips on Crafting Effective Voice Mail Messages,” AllBusiness, www.AllBusiness.com/sales/selling-techniques-telesales/2975818-1.html (accessed July 17, 2009).
• Don’t take another phone call during a meeting.Joanna L. Krotz, “Cell Phone Etiquette: 10 Dos and Don’ts,” Microsoft, www.microsoft.com/smAllBusiness/resources/ArticleReader/website/default.aspx?Print=1&ArticleId=Cellphoneetiquettedosanddonts (accessed July 12, 2009).
• Don’t discuss confidential or personal issues during business calls.
• Don’t discuss confidential issues in public areas—you never know who might overhear a conversation in the hallway, on a train, or in other public areas.Barbara Bergstrom, “Good Etiquette Is Recession-Proof,” Baltimore Business Journal, April 17, 2009, http://www.bizjournals.com/baltimore/stories/2009/04/20/smallb3.html?t=printable (accessed July 12, 2009).
• Don’t leave a long, rambling voice mail message: be prepared with a message that is no longer than sixty seconds.John R. Quain, “Quain’s Top Ten Voice Mail Tips,” Fast Company, December 18, 2007, www.fastcompany.com/magazine/18/topten.html (accessed July 17, 2009).
• Don’t multitask during a long phone call or conference call—give the other person or people the courtesy of your full attention.
Etiquette Tips for E-mails, Text Messages, Instant Messages, and Social Networks
Written communication has evolved to include multiple methods, all of which have appropriate places in selling. Notice the operative word here is appropriate. E-mail has become an accepted method of communication in most businesses, whereas text messages, instant messages, and social networks are commonplace for only some companies. That’s why etiquette is especially important when using any of these methods of communication, and you should take time to choose your method carefully. Letters, memos, proposals, and other written communication are considered formal, whether they are sent on paper or transmitted via e-mail. However, text messages, instant messages, and social networking are considered informal methods of communication and should be used only to communicate less formal information, such as a meeting time when schedules have been adjusted during a factory tour. Text and instant messages should never be used to communicate company policies, proposals, pricing, or other information that is important to conduct business with customers. It’s also worth noting that in all these methods your communication is permanent, so it’s a good idea to know the dos and don’ts of electronic communication.
• Do use an e-mail subject line that clearly tells the recipient about the content of the e-mail.
• Do create a short, concise message that uses proper grammar and spelling—use spell-check to be sure all words are spelled correctly.“Shouting and Other E-mail Faux Pas,” BusinessLine, April 20, 2009.
• Do, in all electronic communications, use uppercase and lowercase letters as grammar dictates.“Shouting and Other E-mail Faux Pas,” BusinessLine, April 20, 2009.
• Do use e-mail, text messages, and instant messages when appropriate, according to your company’s practices, and with your customers to communicate factual information such as to confirm meeting date, time, and location.Patricia M. Buhler, “Managing in the New Millennium: Six Tips to More Effective Communication,” Supervision 70, no. 7 (July 2009), 19.
• Do use social networking sites to join the conversation and add value—you can build your personal brand by creating a blog or joining a professional conversation on social networking sites such as Twitter or Facebook.Norman Birnbach, “10 Twitter Etiquette Rules,” Fast Company, July 2, 2008, www.fastcompany.com/blog/norman-birnbach/pr-back-talk/10-twitter-etiquette-rules (accessed July 17, 2009).
• Don’t use all capital letters in an e-mail; it appears that you are shouting or angry.“Shouting and Other E-mail Faux Pas,” BusinessLine, April 20, 2009.
• Don’t use “Reply to All” unless it’s absolutely necessary that all the recipients see your response—be selective to avoid mailbox overload.
• Don’t send an e-mail, text message, or instant message when you are angry: take the time to think about what you send because you can’t take it back after it’s sent.Paul Glover, “Why We Need E-mail Etiquette,” Fast Company, December 30, 2008, www.fastcompany.com/blog/paul-glover/surviving-workquakec/why-we-need-e-mail-etiquette (accessed July 17, 2007).
• Don’t use abbreviations like “ur,” “2b,” and others—this is not appropriate business communication.Norman Birnbach, “10 Twitter Etiquette Rules,” Fast Company, July 2, 2008, www.fastcompany.com/blog/norman-birnbach/pr-back-talk/10-twitter-etiquette-rules (accessed July 17, 2009).
• Don’t use company e-mail, text message, or instant message accounts to send personal correspondence, and don’t check your personal accounts or pages during company time, as all communication that takes place on company hardware and servers is property of the company.
• Don’t use electronic communication to transmit bad news: talk to the person first, and if follow-up is necessary, reiterate the information in written form.
• Don’t use text messages, instant messages, or social networks to communicate information such as pricing, proposals, reports, service agreements, and other company information that should be sent using a more formal method.
Telephone and E-mail Etiquette at Work
Understand what makes a good impression on your customers.
Source: eHow.com
Power Point: Lessons in Selling from the Customer’s Point of View
When the Customer Tweets
Social media give customers a voice like never before. When companies listen to customers, they can turn a bad situation into a good one; but if they don’t respond, customers speak out. For example, a dissatisfied Virgin America passenger posted a tweet on Twitter during a flight to Boston, thanks to the Wi-Fi service onboard. Virgin America monitors Twitter so closely that by the time the plane landed, a ground team met the customer at the gate to be sure his needs were met, and he left the airline with the memory of extraordinary service.Gerhard Gschwandtner, “Wow Your Customers with Twitter in Real Time,” Selling Power, sellingpower.typepad.com/gg/2009/07/wow-your-customers-with-twitter-in-real-time-.html (accessed July 23, 2009).
Music to Your Ears
When is an iPod or other MP3 player or a handheld gaming device appropriate at work? Only when it is used for business purposes. “You’re isolating yourself,” says Dale Chapman Webb, founder of The Protocol Centre in Coral Gables, Florida. “You are sending a message that my music is more important than the work at hand.” If you feel the need to listen to your iPod or use handheld gaming devices at work, sales may not be the right profession for you.
Key Takeaways
• Proper etiquette is a necessity in selling. There are etiquette guidelines for virtually every form of communication, including conversations, meetings, business cards, business meals, thank-you notes, e-mails, text messages, and even social networking.
• Written communication should always include proper grammar and spelling. This applies to formal business communications such as letters and memos, as well as informal business communications such as e-mails and text messages.
• Written communication such as letters, reports, and memos are considered formal methods of business communication; many formal communications are transmitted via e-mail. Text messages, instant messages, blogs, and social networks are considered informal communications and should only be used for informal communications such as confirming a meeting place when noise is an issue, such as on a factory floor.
• It’s best to remember that most written communication is permanent, so take the time to craft it carefully.
• Professionalism should prevail in all business meetings and communications, including meals. When you are at a restaurant, it’s is good idea to remember BMW: Bread to the left, Meal in the middle, Water goblet to the right. Use silverware starting with the utensils on the outside and work your way in throughout the meal.
• You can add a personal touch to a business relationship by sending a thank-you note. Although it is acceptable to send a thank-you note via e-mail, it is recommended to send a personal handwritten note to reflect a sincere sentiment that really stands out.
• It is never appropriate to use an electronic device such as a cell phone, BlackBerry, or iPhone while you are talking with someone else. Turn off your devices before you enter a meeting.
• When talking on the phone, be courteous and use an appropriate volume in your voice. Never discuss confidential or personal topics on the phone when others might overhear.
Exercise \(1\)
1. Assume you work for a textile manufacturer. Draft a letter to invite your customer to tour your company’s factory next month. Choose a specific date, time, and location for your tour to be included in your letter. Who, if anyone, should be included as a CC? Why? Who, if anyone, should be included as a BCC? Why?
2. Create a voice mail message that you would leave on a customer’s voice mail if you were calling to set up a meeting to follow up from your first sales call. What information is essential to be included in the voice mail? What information should not be covered in the voice mail?
3. You are scheduled to meet your customer for an off-site training meeting. You just realized you are at the wrong meeting location, and you need to contact your customer and let her know that you are on your way to the right location. What is the best method to communicate with your customer? What would your message be?
4. You just learned about a delayed shipment date for your customer’s order. What is the best method to communicate this to your customer?
5. You are in a meeting with a customer, but you have a potential problem that is developing with a different customer. You are expecting a phone call about the second situation during your meeting with the other customer. How would you communicate this to the customer with whom you are meeting?
6. You are at a business dinner with your boss and her husband in a very nice restaurant. Watch the following video and answer the following questions.
(click to see video)
Source: BNET
• From which side of the chair do you sit down?
• How do you determine which bread plate is yours?
• When do you put your napkin on your lap?
• When someone asks you to pass the salt, what do you do?
• When you want to excuse yourself, what is the appropriate way to do it? | textbooks/biz/Marketing/The_Power_of_Selling/05%3A_The_Power_of_Effective_Communication/5.03%3A_Your_Best_Behavior.txt |
Learning Objectives
• Learn about informational interviews and how they can help your career search.
“Find someone who does what you want to do, then go talk to them.” That’s the advice that Ike Richman, vice president of public relations at Comcast-Spectacor consistently tells students when he is a guest speaker. That is the essence of what an informational interview is: one-on-one communication that helps you learn about different industries and potential careers. You learned about the power of networking in the Selling U section of Chapter 3. And informational interviews are one of the best ways to network. They are the ultimate in business communication because you are “trying on jobs for size to see if they fit you,” according to Richard Nelson Bolles, author of What Color Is Your Parachute? and the person who coined the term “informational interview.”“Informational Interviewing Tutorial: Background Information about Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_background.html (accessed July 12, 2009).
What Is an Informational Interview?
An informational interview is exactly what it sounds like; it’s an opportunity to learn about a particular profession, industry, or job.“Informational Interviewing Tutorial: Background Information about Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_background.html (accessed July 12, 2009). That means that if you are interested in sales, you might meet with an account manager for a software company and talk to her about what it’s like to be in sales. Or, if you think you want to pursue a job in advertising, you could meet with someone who works at an advertising agency. This gives you the chance to learn the inside story about what it takes to start a career and work in your target industry.
You’ve probably learned about several different professions in your classes; you most likely heard from guest speakers. And through your networking activities, chances are you’ve met people who do what you think you want to do. But it’s impossible to know exactly what career you want to pursue without getting some one-on-one information. What does the job entail? Will you be working with people out in the field or sitting at a desk? What kinds of opportunities are available for personal development? What kind of skills and experience do you need? Is this really a career you will enjoy? What’s the best part of the job? What’s the worst part of the job? All these are excellent questions to ask during an informational interview. Learn more about informational interviews by watching this video.
Informational Interviews. Learn how to maximize them. Source: Susan Ireland
Ask for Information, Not a Job
Informational interviews are an excellent source of information and insight. In fact, you can gain knowledge through informational interviews that you might not be able to gain in any other way. It’s important to note that informational interviews are not the place to look for an internship or job.“Informational Interviewing Tutorial: Never Ask for a Job,” Quintessential Careers, www.quintcareers.com/information_job.html (accessed July 12, 2009). A job or an internship could result from an informational interview because it is a time to make an impression on someone, demonstrate your skills, and network. However, it’s best to keep in mind that when you ask for an informational interview, you are asking for someone to take the time to share insights and information with you. If you ask the interviewer for a job, you misled the interviewer about the purpose of the meeting.“Informational Interviewing Tutorial: Never Ask for a Job,” Quintessential Careers, www.quintcareers.com/information_job.html (accessed July 12, 2009).
Informational Interviews Made Easy
Informational interviews are an excellent way to gather real-world information about your career direction. Here’s a guide to everything you need to know to get the most out of informational interviews using the tenets of journalism. As a guide, remember the five Ws and an H: who, what, when, where, why, and how.
Why Go on Informational Interviews
You might think that if you shouldn’t ask for a job, why bother going on an informational interview? There are plenty of reasons to pursue informational interviews.
• You can learn about what it is like to work in a particular industry, company, or job.“Informational Interviewing Tutorial: Potential Results of Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_results.html (accessed July 12, 1009).
• You have the opportunity to get to know key people in the industry.“Informational Interviewing Tutorial: Potential Results of Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_results.html (accessed July 12, 1009).
• You can learn about jobs that you didn’t realize exist—jobs that are open now or that might be open in the future.“Informational Interviewing Tutorial: Potential Results of Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_results.html (accessed July 12, 1009).
• You can learn about where you might fit in a specific organization.“Informational Interviewing Tutorial: Potential Results of Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_results.html (accessed July 12, 1009).
• You can ask for referrals for the names of other people in the industry or company with whom you can meet.“Informational Interview Questions,” Career Choice Guide, http://www.careerchoiceguide.com/informational-interview-questions.html (accessed July 20, 2009).
• You can hone your interviewing skills in a low-pressure environment.
• You can get “insider” information that other job seekers might not get, because informational interviews are an underused approach.Kate Lorenz, “How Does an Informational Interview Work?” CareerBuilder, www.careerbuilder.com/Article/CB-481-Getting-Ahead-How-Does-an-Informational-Interview-Work (accessed July 20, 2009).
Who to Ask for an Informational Interview
Here’s where your networking skills come into play. Identify people who do what you want to do or do something that you think is interesting. Make a list of people using the following resources:
• Think of people in professional organizations you may have heard speak or may have met at an event.
• Think of guest speakers you may have heard speak in class or at a campus event.
• Talk to friends and family to get ideas for people they may know in the profession you want to learn more about.
• Talk to your professors about people in the industry they may know.
• Visit the campus career center and alumni office to identify people with whom you can meet.
• Use online professional networking to find people whom you would like to talk with and learn from.
• Read local business journals and professional organization publications to identify people who have jobs that you want to learn more about. You can usually find these publications online or in person at your school library or public library.“Informational Interview Tutorial: Identify People to Interview for Informational Interviews,” Quintessential Careers, www.quintcareers.com/information_people.html (accessed July 12, 2009).
How to Ask for an Informational Interview
Informational interviews are usually twenty to thirty minutes long and can take place in person or by phone. Once you identify the people with whom you would like to have an informational interview, it’s time to contact each person and ask for a meeting. It’s always best to request an informational interview in person because you have the opportunity to communicate verbally as well as nonverbally. Although it’s appropriate to send a letter or e-mail to request an informational interview, it’s best to call each person to request the interview or talk to him or her in person. If you use your communication skills, a personal conversation will be much more persuasive than a passive e-mail or letter, which could easily go unanswered.
A telephone conversation should include an introduction along with the reason you are calling. Be clear that you are seeking information; don’t frame your request as a veiled strategy for a job offer. If you are honest about learning about the industry, most people will take the time to help you. You might consider a telephone conversation like this:
You: My name is Jorge Ebana, and I am a student at State University majoring in business administration. I was in Dr. Wolf’s Creative Selling class on Thursday when you were a guest speaker. I really enjoyed your presentation. I especially enjoyed hearing about how you landed the XPress account.
Interviewer: Jorge, thank you so much for calling. I’m really glad to hear that you found my presentation interesting. I enjoyed speaking to your class very much. Yes, the XPress account took a lot of work to land, but it’s been a great relationship for all parties involved.
You: As you were speaking, I realized that as you described the research, preparation, presentation, and follow-up, what you do daily is something that I would really enjoy, too. You made me realize that sales could be the career I might want to pursue.
Interviewer: Jorge, that’s so good to hear. I always like to share my experiences with young people so that they understand the rewards and the challenges involved in selling. Personally, I enjoy selling so much that I can’t imagine doing anything else.
You: I would really like to learn more about how you got into sales. It sounds like you had some very interesting positions at Intuit and CreditSys. I’d like to hear about what’s it’s like to sell for a major corporation compared to a start-up company, and their differing advantages. Would it be possible to get together for twenty minutes or so? I’d really like to learn more about your background in the field.
Interviewer: Why don’t you drop by on Thursday morning at 8 o’clock. We can touch base, and I can give you a quick tour of the office.
You: That would be perfect. I really appreciate your taking the time to help me.
Interviewer: It’s my pleasure. I’ll see you on Thursday morning.
If you use this type of approach when you are speaking with someone with whom you would like to meet, you increase your chances of getting a positive response. If you don’t know the person or have a connection to him, it’s still appropriate to call him directly to request an informational interview.
What to Wear, Bring, and Ask on an Informational Interview
Just like any sales call, business meeting, or job interview, you should always be prepared for an informational interview. Treat it as if it were a job interview and dress in a conservative, professional suit.Katharine Hansen, “Informational Interviewing Do’s and Don’ts,” Quintessential Careers, www.quintcareers.com/informational_interviewing-dos-donts.html (accessed July 20, 2009). Men should wear a white or light shirt, conservative tie, and dark-colored suit. Women should wear a skirt or pants with a blazer in a dark color. Some things the interview “fashion police” would tell you to avoid: too much aftershave or cologne, low-cut blouse or short skirt, wrinkled anything, and athletic-looking shoes or sandals.
Link
What Employers Want
Learn about what employers expect when someone comes in for an informational interview or job interview.
www.blinkx.com/watch-video/testimonial-from-an-employer-dressing-for-a-job-interview-myjobpath-video-series/oy8-P3FAHjEbV1IhQKudcw
Source: Bay Area Video Coalition
Come prepared as if it were a job interview, even if you already know the person with whom you are interviewing. That means doing research on the industry, company, and person before you arrive. Visit the company’s Web site as well as those of competitors, research the industry on databases such as Hoovers.com, and do a search on Google to learn more about the person with whom you are interviewing. Also, look her up on LinkedIn, Plaxo.com, Ryze.com, or other professional social networking Web sites to learn more about her professional background before your meeting.
Bring extra copies of your résumé printed on twenty-four-pound paper (this is also called résumé paper; you can buy it at your campus bookstore or at any office supply store or Web site). It’s best not to use regular copy paper as it is lightweight and doesn’t provide strong nonverbal communication about your brand. You never know when the person with whom you are meeting will ask for an extra copy of your résumé. And, even if she already has a copy, she may not have it handy.Kate Lorenz, “How Does An Informational Interview Work?” CareerBuilder, www.careerbuilder.com/Article/CB-481-Getting-Ahead-How-Does-an-Informational-Interview-Work (accessed July 20, 2009).
This is a perfect opportunity to bring samples of your work. See the Selling U section in Chapter 6 for some tips about how to put together a portfolio that helps you show and sell yourself. If you have had an internship, bring clean samples of any projects you worked on; the same is true for any student organizations, volunteer work, or community service that you have done. You should also include a few key class projects to demonstrate your versatility.
Now prepare for the questions. Unlike a regular job interview, you have requested this meeting so you should be prepared to ask the questions. Keep the questions focused on learning about how your interviewer broke into the business and what he can share as a result of his experience. Here are some questions you might consider:
• How did you decide to go into this field?
• What was your first job?
• How did you get to your current position?
• What was your favorite job?
• What is the best thing about your current job?
• What is your least favorite part of your job?
• What is the single most important attribute someone needs to have to be successful in this industry?
• What is the typical salary range for an entry-level job in this industry?
• What advice would you give to someone starting out in the industry?
• What is the outlook for the industry?“Informational Interview Questions,” Career Choice Guide, http://www.careerchoiceguide.com/informational-interview-questions.html (accessed July 20, 2009).
In addition to having your questions ready, also be ready to talk about your brand positioning points (review this concept in the Selling U section in Chapter 1). Use your communication skills to make your experience and interest come alive in the interview. It’s a good idea to offer to show the samples of your work while you are talking about why you are interested in pursuing a career path in the industry.
Take the time to print out your questions so you are organized during the interview. Put your questions and spare copies of your résumé in a professional portfolio or folder. Don’t be afraid to refer to your questions and take notes during the interview; it’s an excellent nonverbal cue that you think what the interviewer has to say is important.
Wrap up your informational interview by asking for your interviewee’s business card. Also, ask for the names of some other people that you might be able to learn from; for example, “I really enjoyed our conversation today, and I learned so much about the industry. You have helped me realize that I would like to pursue a career in sales. Can you give me the names of some other people I might be able to learn from?”
You’ve Got the Power: Tips for Your Job Search
Keep in Touch
What about after the informational interview? Keep in touch. People who take the time to help students also want to know what is going on with the young job-seeking population. Send an e-mail or touch base by phone at least every four to six weeks. It’s a great way to develop a relationship and network, even after you land your internship or job. Part of networking is providing exchange, and keeping in touch is your part of the bargain. When you keep in touch, your interviewer might be able to help you in the future; or better yet, you might be able to help her and return the favor.
When to Ask for an Informational Interview
It’s always a good time to meet and learn from experienced people in the industry in which you are interested. However, you should actively pursue informational interviews when you are prepared with your résumé and have compiled some samples of your work. Keep in mind that every contact you make is a selling opportunity for your personal brand so it’s best to be ready as early as possible in your academic career. It’s never too soon to prepare your résumé even as you are building your experience with internships and other jobs. Whenever you meet someone interesting, follow up and ask him for an informational interview so you can learn more about how he got into the business.
Where to Have an Informational Interview
Your interviewee will most likely suggest a location for your meeting; it might be in her office, or you might meet for breakfast or lunch. Some informational interviews might take place by phone. The objective is to connect, learn, and network.
Whatever the location, always prepare and dress for each informational interview as if it were a job interview. Also, always send a thank-you note to thank your interviewer for his time. You should send a thank-you e-mail and a handwritten thank-you note on the same day, so your interviewer will receive your e-mail followed by your handwritten note. That way, you leave a lasting impression and demonstrate your good etiquette.
Key Takeaways
• An informational interview is an underused career search method that includes a meeting with a professional to learn more about pursuing a career in a specific industry, profession, or job.
• You go on informational interviews to learn what it’s like to work in a particular industry, company or job, connect and network with people in the industry, and hone your interviewing skills.
• One thing you should never do on an informational interview is ask for a job or internship. If the opportunity presents itself and your interviewer asks if you might be interested, it’s appropriate to say yes. However, you should not be the one to initiate dialogue about the possibility of a position with the company.
• You should ask anyone who is in the industry or profession that you would like to pursue. It’s a good idea to use your networking skills to identify people with whom you can have an informational interview. Professionals such as guest speakers in class, prominent executives, and those in local professional organizations are ideal people to ask for an informational interview.
• It’s best to request an informational interview in person or by phone because you increase your chances for a positive response. You can also request an informational interview by letter or e-mail.
• Prepare for an informational interview as if it were a job interview, even if you already know the person. Research the company, bring extra copies of your résumé and samples of your work, and prepare questions that you would like to discuss.
Exercise \(1\)
1. Identify three people with whom you would like to have an informational interview. Write down each person’s name, company, title, and phone number. Write a phone script that you would use when you call to ask for the interivew. Discuss your approach.
2. Write down a list of six to eight questions that you would like to ask on each informational interview. Which questions would you ask on all informational interviews? Which questions would be specific to a particular interview? Why?
3. How would you answer the following question on an informational interview: “Why do you want to pursue a career in (name of industry)?”
4. Identify at least four samples of your work that you would include in a binder when you go on informational interviews. Why would each one be included? What would you tell an interviewee about each sample? How would each sample demonstrate one of your brand positioning points?
5. Write a thank-you e-mail and a handwritten thank-you note that you would send after an informational interview. Would you send both? Why or why not? | textbooks/biz/Marketing/The_Power_of_Selling/05%3A_The_Power_of_Effective_Communication/5.04%3A_Selling_U_-_The_Power_of_Informational_Interviews.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand how to communicate effectively and with proper etiquette in business.
• You can discuss the communication model and how it works.
• You can compare and contrast the different types of communication: verbal, nonverbal, and written.
• You can recognize the strengths and weaknesses of each type of communication and when each is appropriate to use.
• You can understand the role of listening in effective communication.
• You can recognize the impact of nonverbal communication.
• You can practice how to shake hands properly.
• You can discuss the appropriate etiquette for business situations, including the use of electronic devices.
• You can understand the role that informational interviews may play in your career search.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. Describe the difference between soft skills and hard skills.
2. Discuss two ways to demonstrate active listening.
3. Name the three types of communication. Identify at least one pro and one con for each one.
4. Which type and method of communication would you use to tell your boss that your car broke down and you can’t make it to the customer presentation?
5. If you invite a customer to lunch, who should pay? If your customer invites you to lunch, who should pay?
6. When is it appropriate to write a thank-you note in sales?
7. Identify three situations in which it would be appropriate to have your electronic device such as a cell phone turned on in a meeting.
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. The following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
Safe and Secure
Role: Sales rep for Sun Security Systems for retail stores
You are meeting with a potential customer who is responsible for purchasing security systems for over two hundred retail stores. He is convinced that your company’s security system is the one he wants to use, but he has to convince his boss. The key selling point in his mind, he mentions to you, is the fact that the system carries a money-back guarantee so that if anything happens, the company will be protected. You realize that he has misinterpreted the terms of the guarantee. It is a money-back guarantee only on the security system itself, not for any other loss. It appears that there was some miscommunication between all the meetings and follow-up e-mails.
• How would you tell this customer about the correct terms of the guarantee, even though it might be the sale at risk?
• Since you are meeting in person, what type of follow-up would you consider to ensure that the information is clearly understood? Why?
• What do you think caused this miscommunication?
• Using the communication model, describe what happened with the communication.
Role: Security manager at Argon Retail, Inc.
You have been looking at security systems for several months and reviewing the offering from different suppliers. Sun Security Systems appears to offer the best performance at the best value. The key selling feature is the money-back guarantee. It’s a strong statement about how the company stands behind its products. This kind of low-risk investment is important to you and your company.
• Do you assume that what you heard or saw about the money-back guarantee is true? After all, it’s up to the salesperson to be sure you’re informed, right?
• If you probe the details with the salesperson, what questions will you ask to be sure you understand the terms of the guarantee?
• What type of communication will be best to learn about this information?
ACTIVITIES
1. Discuss at least three reasons why informational interviews are good to do. Then watch this video to see if you named the reasons mentioned. www.blinkx.com/video/what-is-an-informational-interview-myjobpath-video-series/6dugA0wq_-PRAk4EeUVjdA
Source: Bay Area Video Coalition
2. Invite someone on your informational interview list to come to class to speak about why he or she gives informational interviews.
3. Invite three people on your informational interview list and ask them to participate in a panel discussion in class about how to use informational interviews as an effective career search tool.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Soft skills include communication, relationship building, emotional intelligence, and the ability to interact with people. Hard skills are the technical skills required to perform your job, such as analytical skills in the finance area.
2. The sender is Axe (Clix); Nick Lachey acts as the spokesperson in this commercial. The message is that Clix is such a great scent that it attracts lots of women. The message is encoded in video: a commercial. The receiver is the viewer of the commercial, and the target audience is young men. The decoding occurs when a young man sees that Clix is so good that it can attract more women than Nick Lachey. The sender (Clix) gets feedback in several ways: when people view the video, when people post comments about the video or the product, and when people buy the product.
3. Repeat the information that you heard by saying, “Let me be sure I understand what you’re saying…,” nodding your head, and taking notes.
4. Verbal communication is best for communicating emotions because you can use or hear intonation. It is also natural and fast and provides instant feedback. However, verbal communication is gone in an instant (unless it’s recorded), and people remember what was said differently. Also, we speak at about 125 words per minute, but listen at about 400 to 500 words per minute, so people’s minds wander during a good amount of verbal communication. Nonverbal communication includes body language and any other type of communication that can be observed. Nonverbal communication can underscore a message, such as hand gestures, or can send a different signal than the spoken words, such as crossed arms or physical proximity. But sometimes people don’t realize the messages they are sending when they use nonverbal communication because it can be more difficult to interpret. Written communication is the most permanent of all communication types. It is usually considered and is used for formal business communication such as policies, pricing, and other information. Written communication lacks intonation and is best used for communicating factual information. Grammar and spelling are critical for written communication to be effective.
5. It would be best to call him to let her know. This would allow you the opportunity to demonstrate a high sense of urgency, explain the situation, and discuss possible options. It’s always best to communicate bad news (especially to your boss) verbally, whether in person or by phone.
6. You should pay when you invite. Although it is appropriate to let your customer pay for a meal once in a while, it’s usually expected that the salesperson’s company will pick up the tab.
7. Whenever someone does something that is worth noting—referring you to a new prospect, hosting a productive meeting, being a great business partner, providing some information that was difficult to get, or any other situation that is worth a thank you—then note it. People rarely send thank-you notes, so it’s an excellent way to set yourself apart. A thank-you e-mail is always appropriate, but a handwritten thank-you note is more personal.
8. The only time it is appropriate is if you are waiting for an urgent phone call. If that is the case, you should mention it before the meeting starts, put your cell phone on vibrate, and step out of the meeting to take the call. If you are waiting for a text, only check your device occasionally as to not send the message that the other matter is more important than the meeting you are in. | textbooks/biz/Marketing/The_Power_of_Selling/05%3A_The_Power_of_Effective_Communication/5.05%3A_Review_and_Practice.txt |
Why and How People Buy: The Power of Understanding the Customer
Video Ride-Along with Rachel Gordon, Account Manager at WMGK Radio
Meet Rachel Gordon. Rachel has been in sales for three years and has learned that selling is about understanding the customer’s needs and wants. Rachel sells advertising and marketing programs to businesses such as casinos, restaurants, car dealerships, and local businesses. Rachel graduated from Cornell University with a degree in fashion merchandising. After two years in retail, she learned that selling is her passion.
Ride along with Rachel and learn how she identifies the decision maker versus the influencer in a sales call and why each is important to making the sale.
6.02: Buying 101
Learning Objectives
• Describe the different types of customers and why this information is important in determining customers’ needs.
• Discuss the implications of Maslow’s hierarchy of needs for selling.
• Learn the types of buyers and buying situations in the business-to-business (B2B) environment.
You walk into an Abercrombie & Fitch store at the mall, and without thinking about it, you turn to the right and make your way through the denim, past the belts, and to the sweaters. You are so engaged in the experience that you didn’t even realize that the huge mural at the entrance to the store serves a purpose other than to make you look twice at the hot model in the larger-than-life photo. Before you know it, one of the oh-so-gorgeous salespeople dressed in Abercrombie from head to toe approaches you with a smile. “These hoodies are awesome,” she says as you pick up the pale blue one.
Shopping. It’s the national pastime for some but a detested necessity for others. Whether you love shopping (“Oh, that is sooooooo cute!”) or do everything to avoid it (“I’m not going to the mall, no matter what”), it is a major source of spending in the United States. In fact, the retail industry generated \$4.475 trillion in sales in 2008, including everything from products and services in retail stores and e-commerce to food service and automotive.Barbara Farfan, “Retail Industry Information: Overview of Facts, Research, Data, and Trivia,” About.com, http://retailindustry.about.com/od/statisticsresearch/p/retailindustry.htm (accessed August 3, 2009). That’s a lot of selling—and a lot of buying. But what makes you stop and pick up one sweater but not another? What makes you buy a pair of jeans you weren’t even looking for? What makes you walk out of the store spending more than you had planned?
Inside Consumer Behavior
The science of consumer behavior describes and even defines how you shop and, more importantly, why you buy. Smart retailers study consumer behavior patterns and lay out their stores and merchandise accordingly. For example, did you know that 86 percent of women look at price tags when they shop, while only 72 percent of men do?Paco Underhill, Why We Buy: The Science of Shopping (New York: Touchstone, 1999), 99. And did you know that the average shopper doesn’t actually notice anything that’s in the entrance of a store? According to Paco Underhill, famous marketer, CEO and founder of EnviroSell, and author of the book Why We Buy: The Science of Shopping, consumers don’t actually begin shopping until a certain point after they enter the store. That’s why smart retailers include a “transition zone” at the entry to their store; it allows customers to get their bearings and choose their shopping paths. In other words, products, signs, and displays that are in the very front of the store might not be seen if there is not a transition for the customers when they enter. In the case of Abercrombie & Fitch, the transition is the space just inside the entrance that includes the humongous photo of the Abercrombie model du jour. When you go into Hollister, it’s the outside porch that serves the same purpose; it’s a transition that allows you to get your focus and plot your course in the store, even if you don’t consciously realize it.
Think about the last time you went into a grocery store or drug store; you might not have noticed anything until you were well inside the store, which means that the merchandise and signs that were displayed in the area before you got your bearings were virtually invisible to you.Paco Underhill, Why We Buy: The Science of Shopping (New York: Touchstone, 1999), 46. Based on consumer research, there’s a high likelihood that you turned right when you entered the store. Take note the next time you go shopping; chances are, you’ll turn right after you walk in.Paco Underhill, Why We Buy: The Science of Shopping (New York: Touchstone, 1999), 46.
Understanding how and why customers buy can make a significant difference in how you sell. Is the product a considered purchase, like a computer or car, or an impulse buy, like a sweater or music download? Is the product bought frequently, like an energy drink, or only once every few years or even once in a lifetime, like a car or a college education? For each of these products, the customer goes through a buying process. Understanding the customer and the buying process can make your selling efforts successful. This video featuring Martin Lindstrom, the author of Buyology: Truths and Lies about Why We Buy, highlights the science of consumer behavior in selling and marketing
Video Book Review. Buyology: Truths and Lies about Why We Buy. Source: BNET
Do You Need It or Want It?
Think of something you need, like an annual medical checkup, a new apartment because your lease is up, or even food to survive. There are some products and services you purchase solely because you can’t exist without them. Now think about something you want: a new pair of jeans, an iPhone, tickets to a concert. There is a significant difference in what motivates you to buy products and services you need, compared to those you want.
Needs versus Wants
Needs are essentials, those products and services you literally cannot live without. Food, shelter, clothing, transportation, and health care are all examples of needs. Wants, on the other hand, are products, services, and activities that can improve your quality of life; you don’t need them to exist, but rather you desire to have them because you think they will make you happy.Kristin Biekkola, “Needs versus Wants,” slide show, Wisc-Online.com, http://www.wisc-online.com/objects/index_tj.asp?objID=ABM3302 (accessed August 2, 2009). Cell phones, vacations, sporting events, restaurants, amusement parks, cable television, and fashion are all examples of wants. People are motivated differently depending on if they are making a purchase for a need or a want.
Needs and wants have different motivations. Think about buying a car; you could focus on the functional attributes of the car such as miles per gallon, maintenance costs, and safety ratings. Those are considered utilitarian needs, or the objective, tangible aspects of a product or service.Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2009), 133. So, if those were your only needs, you might choose a Smart Fortwo, Ford Focus, or Toyota Prius. But you might want to have something a bit sportier, maybe even hipper, to get around campus, and you might choose a Mini Cooper, a Scion, or even a Jeep. These cars would do more than simply provide transportation; they would meet your hedonic needs, which are subjective aspects of a product or service.Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2009), 133. You might choose to buy a Mini Cooper because you can customize the design online. That would certainly meet a need other than providing basic transportation. Some people buy a BMW because they want the status that goes with owning that make of car, or perhaps they think that having a Mercedes-Benz means they have arrived.
When you understand the difference between needs and wants and between utility needs and hedonic needs, you are better able to tailor your selling communications. Listen to consumer behavior expert Dr. Michael R. Solomon discuss the difference between needs and wants and the impact it has on selling.
Interview with Dr. Michael Solomon. Needs versus wants.
Maslow’s Hierarchy of Needs
When Hurricane Katrina hit the United States on August 28, 2005, the Gulf Coast was devastated. Thousands of people were stranded for days, some without food, water, or shelter due to overwhelming flooding. Almost two thousand people lost their lives in the natural disaster.United States Department of Health and Human Services, www.hhs.gov/disasters/emergency/naturaldisasters/hurricanes/katrina/index.html (accessed August 2, 2009). During those horrible days and in the aftermath, those who were affected by the catastrophe did not care what kind of car they drove, what anyone did for a living, or if they forgot to sign up for French or scuba lessons. They were focused on the basics: food, shelter, and clothing.
This tragedy is a demonstration of exactly how Maslow’s hierarchy of needs works. Abraham Maslow is among the most renowned psychologists of the twentieth century. His theory explains human behavior in simple terms: A hierarchy of needs that begins with the most basic of physiological needs (e.g., food, water, shelter, and clothing) motivates people, and when the lowest-level needs are satisfied, they are no longer motivators.[citation redacted per publisher request].
During the days after Hurricane Katrina hit, people were rescued and provided with water, food, and shelter. Many were relocated to temporary housing or even to housing outside the affected areas. It was not until after the physiological needs were met that people became concerned about the next level of needs on Maslow’s hierarchy: safety needs. Looting of shops in some of the cities began to occur, and there was even concern that the police force in some cities was not taking an active role in arresting those who were breaking the law.Associated Press, “Looters Take Advantage of New Orleans Mess,” msnbc.com, August 30, 2005, www.msnbc.msn.com/id/9131493 (accessed August 2, 2009). The people of the Gulf Coast were no longer motivated by simply getting water, food, or shelter; they had moved up Maslow’s hierarchy and were concerned about their personal security and well-being.
As the days and weeks passed after Hurricane Katrina hit, its victims wanted to get back to their normal lives. They searched for options to put their children back in school, ways to get jobs, and options to rebuild their lives. By Christmas 2005, people stopped to celebrate the holiday together. According to a story reported by CBS Evening News on December 25, 2005, about the Christmas gatherings in New Orleans, “The will to be home for the holidays outweighed everything else.”Joel Roberts, “Christmas After Katrina,” CBS Evening News, December 25, 2005, www.cbsnews.com/stories/2005/12/25/eveningnews/main1165360.shtml (accessed August 2, 2009). By this time, they were motivated by social needs, or the need to belong and have an attachment or bond to others.[citation redacted per publisher request].
Slowly but surely, people began to rebuild their lives and their cities. People took on leadership roles and began to take recovery to the next level. Even people who were hundreds of miles away from the hurricane-ravaged area wanted to help. Volunteers from all over the country began to make the pilgrimage to the Gulf Coast to help in any way they could. In fact, volunteer vacations to help rebuild cities such as New Orleans became commonplace and are still going on today.Sheryl Kane, “Volunteer Vacations: Rebuilding New Orleans,” June 26, 2009, SingleMindedWomen, singlemindedwomen.com/2009/06/rebuilding-new-orleans (accessed August 2, 2009). This is an example of esteem needs, or the need to feel respected and appreciated by one’s peers. Although volunteers were motivated by social needs and the need to help their fellow human beings, they found that they were also greatly appreciated for their efforts.
Although recovery will be going on for years to come, many of the people affected by the destruction of Hurricane Katrina are striving for self-actualization, which focuses on learning new skills, taking on new challenges, and “being all you can be.”[citation redacted per publisher request]. John and Starr Chapman are perfect examples of this; their restaurant, Chappy’s Seafood Restaurant, was lost in the hurricane. The couple relocated to Nashville, Tennessee, and in 2006, opened Chappy’s on Church Street. Although it was challenging and overwhelming at times, the husband-and-wife team is not only surviving but also thriving after this life-changing experience.Joy Messer, “Survivors of Hurricane Katrina Overcome Adversity and Open ‘Chappy’s on Church Street,’” July 23, 2008, Associated Content, www.associatedcontent.com/article/887343/survivors_of_hurricane_katrina_overcome.html?cat=22 (accessed August 2, 2009).
Power Point: Lessons in Selling from the Customer’s Point of View
Self-Actualization Means Help for Others
Nikki Olyai, president and CEO of Innovision Technologies, recently made a significant investment for her company and purchased new software and hardware. Her buying philosophy? Nikki looks for a strong value system, trust, commitment, a proactive approach to helping her solve her business problems, and cost-effectiveness. But she expects more from a vendor and business partner; she gives extra consideration to vendors who have demonstrated a commitment to community service and development. Nikki believes that businesses and their vendors need to give back to the communities they serve.Mary Cantando, “How Savvy Women Entrepreneurs Make Buying Decisions,” Women Entrepreneurs, Inc., January 1, 2005, www.perfectbusiness.com/articles/newsarticle.cfm?newsID=948&news=1 (accessed August 1, 2009).
This all comes together at the point of sale, whether you are selling in business-to-consumer (B2C) or business-to-business (B2B) environments. When you understand the motivation of your customer, you can customize your solution and your message to meet their needs, emotions, and motivations. Consider the Hurricane Katrina example; would you attempt to sell fine jewelry, pitch the benefits of a landscaping service, or suggest a home theater system to someone in New Orleans on August 29, 2005? Probably not. People were focused on their most basic needs at that time, and none of these products or services would have been appropriate to sell. Although this may seem like an extreme example, it’s a good way to remember to look at the world through your customer’s eyes, as you’ll see a completely different view. Now that you can see what motivates people to buy, it’s time to learn who is buying. Although the buying process is similar for B2C and B2B, there are some distinct differences that can make a difference in the way you sell.
Business-to-Consumer (B2C) Buying
Think back to your visit to the Abercrombie & Fitch store. It’s pretty obvious that you are the customer, or in marketing parlance, you are the consumer, the end user of the product or service. You might be shopping for yourself or buying a gift for a family member or a friend. Either way, you (or the person to whom you are giving the product) are the ultimate consumer, which is what defines B2C buying. So, whether you are buying a cell phone and service at a Verizon store, a music download from iTunes, or a burger and fries at Burger King, you are buying in the B2C arena. Even though you may behave differently than your brother or roommate in terms of your purchasing decisions, you are all described as B2C customers because you are the ultimate consumer of the products or services you buy.
Why People Buy: Virtual Purchases
Clothes for your avatar, “bling” for your online profile, or a virtual birthday cupcake are all reasons to make digital purchases virtually: paying real money for something that exists only online. Facebook, SecondLife.com, and Stardolls.com are just a few Web sites that give users the option to buy virtual goods. Why do people buy things that aren’t even real? For some of the same reasons people buy the real thing: to be able to do more (i.e., increase functionality), build relationships, and establish identity.Jeremy Liew, “Why Do People Buy Virtual Goods?” Wall Street Journal, February 9, 2009, http://online.wsj.com/article/SB123395867963658435.html (accessed August 1, 2009).
Business-to-Business (B2B) Buying
With B2B customers, sometimes referred to as organizational (or institutional) markets, there are several different types of situations that define needs and purchasing behavior. Some companies buy products to sell directly to consumers, whereas others purchase products as ingredients or components to produce their product. Still other companies lease products or services, while others serve the public, such as government or nonprofit organizations. Each of these different types of companies and organizations has different needs and requirements that impact the buying process.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 179.
Producers
Companies that buy products to make or build a product or service to sell for a profit are called producers. For example, in the case of Reebok, the company purchases components for its athletic shoes from a variety of vendors around the world. Reebok uses the components to manufacture the shoes and sell them to retailers such as Foot Locker, which in turn, sell the shoes to consumers like you. In this example, Reebok is engaged in B2B buying as a producer because the company purchases parts or materials to make shoes and then sells them to other companies.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 86. Reebok is a B2B purchaser but not a B2C seller; the company markets its brand directly to B2C consumers to gain recognition and drive consumers to participate in B2C buying at retailers that carry its brand.
Resellers
Resellers purchase finished goods to sell, lease, or rent to B2B or B2C purchasers. In the example above, Foot Locker is a reseller because the company buys finished products from manufacturers such as Reebok, Nike, New Balance, Ryka, and others. In other words, Foot Locker doesn’t manufacture products but rather buys them from other companies to sell them. It’s important to note that although Foot Locker buys in the B2B arena as a reseller, the company sells in the B2C arena because it sells its products to the ultimate consumer.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 180. Besides retailers, other types of resellers are wholesalers, brokers, and agents.
Organizations
organizations include government bodies (federal, local, and municipal, as well as the District of Columbia) and nonprofit groups (churches, hospitals, colleges, and cause-related groups like the American Red Cross). The government is a huge consumer, using over \$1 trillion in goods and services annually.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 88. In fact, according to the U.S. government budget in 2010, the government outlays are projected to be 24.4 percent of the U.S. gross national product.Office of Management and Budget, “Updated Summary Tables, May 2009: Budget of the U.S. Government, Fiscal Year 2010,” http://www.usgovernmentspending.com/us_20th_century_chart.html (accessed August 2, 2009). This makes the U.S. government the single largest customer in the world. In fact, government purchases are so large that when the Obama administration decided to replace its fleet of government vehicles in 2009, it purchased 17,205 cars for a total of \$287 million—that’s just one government purchase!Jeremy Korzeniewski, “U.S. Government Buys 17,205 Cars for \$287 Million, Ford Represents,” Autoblog Green, http://www.autobloggreen.com/2009/06/11/u-s-government-buys-17-205-new-cars-for-287-million-ford-repr (accessed August 2, 2009). As a result of the government being such a huge customer, there are processes for prospective vendors to apply to provide products or services to the government. The Web site https://www.fbo.gov provides information about federal business opportunities.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 181.
Nonprofit organizations such as the Salvation Army, the Susan G. Komen Foundation, the American Cancer Society, churches, schools, shelters, and others are also B2B purchasers of goods and services. Some may be producers, such as a soup kitchen that buys ingredients for soup and other meals, and some may be resellers, such as the yellow bands for LIVESTRONG, the Lance Armstrong Foundation.Lance Armstrong Foundation, www.livestrong.com (accessed August 2, 2009).
Big Differences
B2C and B2B purchasers are different for several reasons. The most important differentiator is that consumers purchase for their own consumption (or the consumption of their household or friends), whereas B2B customers purchase to produce or resell the product to a company or the ultimate consumer. There are also several other key differences between B2C and B2B buyers. Generally, B2C buying is based—for the most part—on impulse, low-risk decisions for products and services that are readily accessible. Whether you shop online, in a store, or at a direct selling party, your buying decisions impact only yourself and your family and do not put you at risk. Although you may make some significant buying decisions such as a house or a car, your options are easily accessible (go online, go to the mall or store), and your decisions don’t put you in danger of losing anything—except, of course, if you spend money you don’t have.
Table \(1\): Comparison of B2C and B2B Buying Decisions
B2C Buying Decision B2B Buying Decision
Impulsive Methodical
Simple Complex
May or may not be budgeted Budgeted
Low risk High risk
Individual decision Coordinated decision with buy-in and approval from many people
May or may not include some research Analytical including cost-benefit analysis
Source: Data from Randy Shattuck, “Understand the B2B Buying Cycle,” http://www.internetviz-newsletters.com/PSJ/e_article001037852.cfm (accessed August 1, 2009).
However, in a B2B buying decision, the buying decision is complex, and there is significant risk because a single decision can affect the quality of a product or service offered by a company to its customers, safety of consumers, or even profitability of the company. If a B2B buying decision is the wrong decision, the person or people who made the decision might suffer the consequences, including the loss of his job.Randy Shattuck, “Understand the B2B Buying Cycle,” http://www.internetviz-newsletters.com/PSJ/e_article001037852.cfm (accessed August 1, 2009).
Size of Purchases
Because B2C buyers are purchasing only for their consumption or for the consumption of a limited number of people, the size of the purchases is relatively small. By contrast, B2B purchases are significant because the companies are purchasing to sell to other companies or to many consumers. Consider this difference: you might buy ten pairs of jeans in a year, but Nordstrom buys hundreds of thousands of pairs of jeans to stock in their inventory.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 177. The size of B2B purchases is always significantly larger than B2C purchases simply because a company is buying for more than one consumer.
Multiple Buyers
If you think it’s difficult to keep everyone in your apartment happy with the food purchases you make at the supermarket, that’s easy compared to the number of people involved in a B2B purchasing decision. In most B2B transactions, there are multiple decision makers involved in each purchase. Think about your trip to the supermarket from the B2B buyer’s perspective. The decision about which products to stock on the shelves was ultimately made by someone who holds the title of “buyer” in the company. However, she could not decide unilaterally what to carry in the bottled water section. She has to understand which bottled water her customers want, consult with the general merchandise manager, who is responsible for the shelf space, and the vice president of merchandising, who oversees all product choices. She may even need to make a presentation to a buying committee before she makes the decision to carry another flavor of Vitaminwater. She will need to get approval for the money to invest in the inventory and shelf space. Depending on the organization and the size and impact of the decision, several people from several different departments may be involved in a B2B buying decision.
Number of Customers
There are over three hundred million people who live in the United States and approximately a hundred million households. However, there are less that half a million businesses and other organizations.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 177. Because B2B buyers are making decisions that may ultimately impact the sale of a product or service to millions of consumers, there are naturally fewer businesses. Consider the fact that according to the United States Census Bureau, there are only 7,569 hospitals in the country, yet there are over 110 million visits to emergency rooms annually.United States Census Bureau, www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/004491.html (accessed August 2, 2009).
Geographic Concentration
Since there are many fewer businesses and organizations compared to the number of ultimate consumers, it makes sense that there is a geographic concentration of B2B customers. For example, the fashion industry is primarily located in New York, filmmaking in Los Angeles, and technology in Silicon Valley. B2B buyers can determine where they want to be located based on resource or on access and can even choose where to build warehouses or call centers based on costs, transportation, and availability of labor.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 178.
Business-to-Business Means Person-to-Person
Although B2C buying behavior is very complicated, B2B buying behavior is even more complex. The fact is, although it’s called business-to-business buying, the term actually describes people doing business with people. A business never makes a buying decision; the decision is made by people who work for the company. So B2B buying decisions are subject to the same behaviors as B2C buying decisions, but on a more challenging level because B2B buying decisions usually include multiple decision makers, an extensive evaluation process, extended analysis, and they represent a high risk on the part of the decision makers.Kae Groshong Wagner, “The B2B Buying Process,” http://www.internetviz-newsletters.com/PSJ/e_article001037852.cfm (accessed August 2, 2009).
While many B2B buying decisions are made by an individual decision maker, many are made by a group of people working together, usually from different departments. When this is the case, the group is called a buying center, all the people in a group who are involved in the buying decision.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 184. For example, hospitals use buying centers to make decisions on new equipment, a retail company might use a buying center to determine which point-of-sale register system to purchase. The buying center usually includes people from the organization who have expertise in different areas, and each may play a different role in the buying decision. Following are some roles that may be included in the buying center.
Users
The people in the B2B buying process may include some or all of the following roles. Users are the people who are actually using the product or service. In the case of a company purchasing a telecommunications system, the users are all employees of the company because each uses the telephone, Internet, and other communications technologies. But in the case of a company purchasing a security system, only the employees in the security department would be users of the product; other employees would simply enjoy the benefits of the product without actually using it. Because the users’ satisfaction is so important, many companies involve users at various points throughout the buying process, including gathering input, participating in product demonstrations, or even using the product as a test.
Initiators and Influencers
Initiators are those people in the company who start the purchasing process for a particular product or service.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 97. For example, the e-commerce manager in the marketing department may begin the process of seeking a new technology provider for e-mail and social networking services on the company’s Web site. However, he may not be the final decision maker. There may be several departments involved in the purchasing decision including marketing, IT, and customer service, just to name a few. The e-commerce manager will most likely be a user and will take part in the buying process. In fact, he may even be an influencer in the final buying decision because he can lend his expertise to the team of people who will be making the final decision. He may compare the offerings from competitive companies, do a competitive cost analysis, and even conduct a cost-benefit analysis to determine which product will provide the most benefit for the least amount of cost. He might have a preference of which vendor to choose as a result of this information and his knowledge of the different companies in the industry. His influence may be quite significant as to what choice the company makes for the purchase. There may be other people in the organization who are also influencers, such as the IT manager, customer service manager, and others.
Decision Makers
At the end of the day, it is the decision maker or decision makers who will make the final purchasing decision. Decision makers could be anyone who holds the responsibility or accountability for making buying decisions for the company. In the case of the e-mail and social networking technology purchase, depending on the company, the decision maker might be the CEO, the head of the marketing department, or even a committee of people from marketing, IT, and customer service. A smart decision maker involves the users and influencers in her decision-making process to make the best choice. An investment in technology will not only be expensive, but will last for years; once a company makes a commitment to integrate their systems with a technology company, it is not practical to make frequent changes. The decision making process in B2B can take days, weeks, months, or even years to make, depending on the company and the product or service being purchased.
Finding the “Power Level”
When you are selling in a B2B environment, you may not always have access to the ultimate decision maker. But building a relationship with the initiator, influencers, and users can be just as important and effective as meeting with the decision maker. However, you should always be aware of the “power level,” or exactly the level in the organization that is making the buying decision. Sometimes, salespeople don’t get to the power level, but instead stop at one or two levels below that critical level where the purchasing decision is being made. If the vice president of human resources is making the decision as to which vendor to choose for the company’s training programs, it’s important to build a relationship with her. Having a relationship with the director of training is critical, but a successful salesperson wouldn’t stop there; he would work to secure a relationship at the power level, which is the vice president. This video discusses the power level and its importance to success in selling.
Video Clip
Finding the Power Level
Learn how to find the power level within an organization.
http://www.sellingpower.com/content/video/?date=1/8/2009
Types of B2B Buying Situations
There’s still more you can learn about the B2B buying environment. Although companies are so different from each other (some are large multinational corporations while others are one-person operations) and the types of products and services being purchased are so different (everything from business cards to office buildings), it might seem difficult to know how to apply the concepts covered to every buying situation. One way is to understand the different types of buying situations that face a B2B buyer.
New-Task Buy
If a company is moving its headquarters to a new building that does not come equipped with office furniture, the company will need to acquire furniture for all of its employees. This is a new purchase for the company, which would classify it as a new-task buy.Gerald L. Manning, Barry L. Reece, and Michael Ahearne, Selling Today: Creating Customer Value, 11th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 163. When a customer is contemplating a new-task buy, it is an excellent opportunity to use your consultative selling skills to bring information to your customer to help her make the best possible decision.
Straight Rebuy
What if your customer is already purchasing the product or service regularly? Although he may currently be purchasing the product from you, he already knows about the product or service, how to use it, and how much he is currently paying for it. This is called a straight rebuy,Gerald L. Manning, Barry L. Reece, and Michael Ahearne, Selling Today: Creating Customer Value, 11th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 163. a routine repurchase of a product or service. Usually, straight rebuys are consumable products or supplies such as office supplies, maintenance supplies, or parts. This is an opportunity for you to shine, whether the customer is currently purchasing from you or not. When purchases are on “auto pilot,” sometimes the salesperson gets lazy, takes the business for granted, and doesn’t go the extra mile to suggest something new or better. If a prospective customer is already buying from someone else, you have the opportunity to win her over by suggesting a better or more efficient product, a different pack size or method of replenishment, or other ideas that will help the customer save time or money or increase quality. For straight rebuys, it is often price that gets the customer’s attention, but it is service (or lack of it) that makes the customer switch providers.
Modified Rebuy
Sometimes, your customer may already be purchasing the product but wants to change the specifications; this is called a modified rebuy.Gerald L. Manning, Barry L. Reece, and Michael Ahearne, Selling Today: Creating Customer Value, 11th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2010), 163. For example, when the magazine Vanity Fair did a split run of their magazine cover for their September 2009 issue, they printed half of the copies with Michael Jackson on the cover and half with Farrah Fawcett.Lorena Bias, “Fawcett, Jackson Get ‘Fair’ Magazine Play,” USA Today, August 3, 2009, life 1. Although they print the magazine monthly, they modified the printing specifications for that issue. Therefore, the sales rep from the printer sold the September 2009 print run as a modified rebuy. Selling to a customer who is purchasing a modified rebuy is an excellent opportunity to demonstrate your flexibility and creativity. Many times, customers have an idea in mind for a modification, but if you can bring them ideas and insights that will help them increase their business profitably, you will have the upper hand in securing the buy.
Strategic Alliance
Although most B2B selling depends on relationships, some selling situations go above and beyond the traditional relationship between a salesperson and the customer. Some relationships go to the next level and actually create a partnership that puts both parties at risk and provides opportunities for all parties to gain; this is called a strategic alliance. The relationship between Yahoo! and Microsoft is an example of a strategic alliance. The two companies finally decided to join forces in July 2009 in an effort to leverage resources as a stronger competitor to industry leader Google. As part of the relationship, Microsoft will power Yahoo!’s search with its new engine called Bing; Yahoo! will receive 88 percent of the search-generated advertising revenues from Bing.“Yahoo-Microsoft Deal,” New York Times, July 30, 2009, http://topics.nytimes.com/top/news/business/companies/yahoo_inc/yahoo-microsoft-deal/index.html (accessed August 3, 2009). Both Microsoft and Yahoo! have “skin in the game,” which means that each party has something at risk and much to gain. The strategic alliance represents a way for both companies to prosper in the Internet search business. Separately, each represents less than one-fifth of the searches done in the United States. Together, their market share is 28 percent, still a far cry from industry-leading Google at 65 percent.Patricia Resende, “Microsoft Keeps Watchful Eye on Yahoo’s Earnings,” Yahoo! Tech, July 20, 2009, tech.yahoo.com/news/nf/20090720/tc_nf/67859 (accessed August 3, 2009). Despite spending billions, neither company has been successful overtaking Google alone; the strategic alliance gives these companies a chance to compete.“Yahoo-Microsoft Deal,” New York Times, July 30, 2009, http://topics.nytimes.com/top/news/business/companies/yahoo_inc/yahoo-microsoft-deal/index.html (accessed August 3, 2009).
Who Makes the Buying Decision?
In many companies, there is a function called buyer, purchasing manager, materials manager, or procurement manager. These are the people who are responsible for making buying products, services, and supplies for the company or for the company’s customers. In most cases, they are the decision makers for purchasing decisions.
Because most purchasing decisions in a company have a significant impact on the users and on the profitability of the company, some companies create cross-functional teams called a buying center. These people work together to make important buying decisions for the company or organization. For example, many colleges and universities have a buying center that makes decisions that impact all users in the school such as a new e-mail system, classroom, or dormitory supplies.Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 8th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2009), 184.
Key Takeaways
• Customer behavior is a science, not an art, driven by specific needs that drive motivation.
• A consumer who purchases in a B2C environment is the end user of the product or service.
• A B2B purchaser, also called an organizational or institutional purchaser, buys a product or service to sell to another company or to the ultimate consumer.
• B2B purchasers may be producers, resellers, or organizations.
• B2B buys are characterized by being methodical, complex, budgeted, high risk, analytical, and coordinated across different parts of the company.
• B2B purchases are larger than B2C purchases, include multiple buyers, involve a smaller number of customers, and are geographically concentrated.
• Maslow’s hierarchy of needs describes how people are motivated based on the level of needs that are being satisfied. Understanding a customer’s motivation based on the hierarchy can provide valuable insights for selling.
• There can be several types of people involved in a B2B purchasing decision, including users, initiators, influencers, and decision makers.
• An individual such as a buyer, purchasing manager, or materials manager might make buying decisions. Some companies use a buying center, a cross-functional team that makes buying decisions on behalf of the company.
Exercise \(1\)
1. Visit at least two different retailers. Determine whether each has a transition zone at the front of the store. Discuss the differences between the shopping experiences. Which one is more conducive to buying?
2. Identify one B2C seller and one B2B seller. Describe at least three differences between their buyers.
3. Identify one B2B company or organization that fits each of the following descriptions and describe why each belongs in the category:
• Producer
• Reseller
• Government
• Nonprofit organization
4. Consider each of the following products and services. Evaluate each one based on utilitarian need and hedonic need:
• Trip to Las Vegas
• Subscription to Rolling Stone magazine
• Internet service
• College education
• iPod Touch
5. Jessica wants to celebrate her twenty-first birthday in style. She bought a new outfit, had her nails done, and went to the tanning salon. She is not only having a party for one hundred of her closest friends, but she is going to broadcast it live on Facebook and Twitter while the party is going on. Which need on Maslow’s hierarchy is Jessica striving to satisfy?
6. Assume you are a salesperson for Chevrolet and you are among the first to sell the new electric-powered car called Volt. Which need on Maslow’s hierarchy is the car designed to meet?
7. Imagine you work in the communications department of your school. Homecoming is just a few weeks away, and you are in charge of getting the banner for the parking lot, which will direct alumni where to park. This year, the directions to the parking are different than they were on the banner last year. Identify the type of purchase a new banner for the parking lot is and explain.
8. Assume you are selling printers and copiers to a group of clinics. The buying center includes people from purchasing, information technology, administrative assistants, doctors, and nurses. Discuss the role that each might take on as part of the buying center and the impact they may have on the final buying decision. How might you interact with each one? | textbooks/biz/Marketing/The_Power_of_Selling/06%3A_Why_and_How_People_Buy-_The_Power_of_Understanding_the_Customer/6.01%3A_Introduction.txt |
Learning Objectives
• List the steps in the buying process and describe how and why the process is evolving.
• Understand the role of emotions in the buying decision.
• Learn how to use FAB for effective selling.
For years, the buying process was considered to be linear; scholars and researchers who closely monitored buying behavior identified several steps that the B2B customer goes through before she makes a purchase. It’s helpful to understand these steps to appreciate the changes that are taking place, even as you read this.
The Traditional View of the Seven Steps of the B2B Buying Process
You are probably familiar with buying as a consumer. But did you ever think about how Aéropostale decides what products will be in their stores for the spring season, how a restaurant determines which beverages it will offer, or how Hewlett-Packard (HP) identifies which parts it will use to manufacture its printers? The buying process outlines the steps that the B2B customer goes through when he is making a purchasing decision on behalf of the company. This process applies whether the buying decision is being made by an individual or by a buying center.
1. Recognizing the need. The buyer realizes there is a need for the product or service.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009). In the B2B environment, this might occur because of an internal need (e.g., the company needs more office space) or because of a customer need (e.g., green tea is becoming more popular, and so we want to offer it on our menu). This is the ideal opportunity for you to learn about your customers’ needs, although it may be difficult to know exactly when a customer or prospective customer is beginning this step. That’s why it’s important to engage your customer in dialogue to understand their current and future needs. Sometimes, you can help your customer see an opportunity that he didn’t realize.
2. Defining the need. This step usually involves users as well as initiators to put more definition around the type of product or service that will help meet the need.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009). For example, in the case of office space, the head of facilities would ask the head of human resources about the types of new positions that will be needed and the type of workspace each requires. He might also ask for insight from each hiring manager or department head in the company, such as the head of operations, marketing, finance, and other areas. This will help him more fully understand the general type of product or service that is needed. Salespeople can play a role in this step of the buying process by sharing information and insights from other customers, without divulging any confidential information.
3. Developing the specifications. This is the step at which the exact needs are outlined.Barton A. Weitz, Stephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships, 7th ed. (New York: McGraw-Hill Irwin, 2009), 93. For example, if Target identified the need to create its own brand of DVD player, the appropriate people in the company would determine the exact specifications of the product: what functions it will have, how large it will be, what materials it will be made of, how many colors will be offered, and all other attributes of the product. When a salesperson has a good relationship with a customer, the buyer might ask the salesperson for insights and advice on different features, functionality, and production costs to finalize the product or service specifications.
4. Searching for appropriate suppliers. This step is focused on researching potential suppliers. This research can be conducted online by doing a Google search for suppliers of the desired product or service.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009). Trade associations are also an excellent source as many provide unbiased evaluations of suppliers; for example, Forrester Research publishes a report on Web site analytic tools.
Link
Forrester Research Reports on Web Site Analytics Tools
www.forrester.com/rb/Research/web_analytics_buyers_guide/q/id/53043/t/2
And industry trade shows can be an excellent source of information about prospective suppliers. One of the best ways to identify suppliers is by referrals; use your business network, including LinkedIn, to get feedback about reliable suppliers that might be able to meet your needs.
5. Requesting proposals. This is when the buyer or buying center develops a formal request for proposal, often called an RFP, and she identifies several potential vendors that could produce the product or service.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009). For example, if Home Depot decided that it wanted to upgrade its bags, the buyer would have determined the specification, quantity, shipping points, usage, and other requirements (e.g., being environmentally friendly), and put the information into a formal document that is sent to several bag manufacturers along with questions about the history of the company, key customers, locations, manufacturing capacity, turnaround time, and other relevant information. Each manufacturer would have the opportunity to respond to the RFP with a formal proposal, which means that each company would provide information about their company, capabilities, delivery, and pricing to manufacture the bags. This is an opportunity for a salesperson to respond with a complete proposal that addresses the customer’s needs and concerns. See the sample RFP template for a nonprofit organization below.
Link
RFP Template for a Nonprofit Organization
http://www.npguides.org/guide/grant1.htm
6. Evaluating proposals. After the proposals are submitted, the buyer or buying center reviews each one and determines whether the company would be a good fit for the project. At this point, the number of potential vendor choices is narrowed to a select few. Usually, salespeople from each of the chosen companies are invited to meet with the buyer or buying center to discuss the proposal, capabilities, and pricing. Negotiation for pricing, quality, timing, service, and other attributes may also take place during this step.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009). This is the step where a salesperson may need to overcome objections, or the reasons why the customer may not want to choose her as the company of choice.Ron Brauner, “B2B Buying Process: 8 Stages of the Business Sales Funnel,” www.ronbrauner.com/?p=68 (accessed August 1, 2009).
7. Making the buying decision. The buyer or buying center chooses one (or the necessary number) of companies to execute the project, finalizes details, negotiates all aspects of the arrangement, and signs a contract. This step requires perseverance and attention to detail on the part of the salesperson. Once the decision is made, the real business of selling begins: delivering the product or service as agreed upon and building the relationship.
8. Postpurchase evaluation. Throughout the buying process, the buyer is provided all the good news: how the new product or service will solve her company’s problems, increase demand, reduce costs, or improve profitability. It is the postpurchase evaluation that tells the tale. Did the product or service perform as promised? Was the delivery and installation done correctly and on time? Are the business results in line with expectations? Is the relationship growing? Do the salesperson and his company really care about the performance of the buyer’s company? Does the salesperson add value to the buyer’s company? This is where the rubber meets the road; it presents an opportunity for the salesperson to communicate, anticipate, and solve any problems that may have arisen.Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart, Marketing: Real People, Real Choices, 5th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 190.
The process makes sense and is a flow of systematic steps that leads a B2B buyer through a logical buying process. But there are two flaws in this thinking that significantly impact the buying process and, as a result, the selling process: (1) the Internet changes everything and (2) emotions dominate B2B buying.Geoffrey James, “Is Your Sales Process Obsolete?” BNET, March 30, 2007, blogs.bnet.com/salesmachine/?p=30 (accessed August 1, 2009).,Bryan Eisenberg, “Buying Is Not a Rational Decision,” ClickZ, November 26, 2001, http://www.clickz.com/927221 (accessed August 1, 2009).
The Internet Changes Everything
It used to be that B2B buyers relied on salespeople to get information, demonstrations, and cost about products and services. Salespeople sold, and buyers bought; the world was a simpler place.
Today, B2B buyers are doing the work of two or even three employees because there are fewer people working at companies due to cutbacks and restructuring. The fact is, buyers don’t have the time to meet with salespeople like they used to. And the Internet has been a game changer. Buyers can not only research product and supplier options online, but they can also see product specifications, view demonstration videos, participate in online forums, get real-time recommendations and feedback from users on social networks, and basically be smarter than any salesperson before he even calls for an appointment.Geoffrey James, “Is Your Sales Process Obsolete?” BNET, March 30, 2007, blogs.bnet.com/salesmachine/?p=30 (accessed August 1, 2009). The power has shifted from sellers to buyers. In fact, the Internet has had such a profound effect on how people make purchasing decisions that the Wall Street Journal has coined a new term: “new info shopper.” These are people who can’t buy anything without getting information online first. What’s even more important to note is the fact that 92 percent of new info shoppers have more confidence in the information they get online than from an ad, salesperson, or other company source.Mark Penn, “New Info Shoppers,” January 8, 2009, Wall Street Journal, http://online.wsj.com/article/SB123144483005365353.html?mod=dist_smartbrief# (accessed August 1, 2009).
So what’s a salesperson to do? Stop, listen, and help your customer make the best decision for her business, even if it means that she doesn’t buy your product. Despite the importance of the Internet in providing information throughout the buying process, B2B buyers still gather insight from a variety of sources that include salespeople. Successful salespeople are those that truly focus on the buyer’s needs, which may mean giving up the sale and bringing valuable feedback to your company to change the product, service, or other options that are reasons why customers might not buy from you. The new world order requires everyone to rethink the conventional wisdom. Selling used to be something you “do to” a customer; now it’s something you “do for” a customer.Geoffrey James, “Is Your Sales Process Obsolete?” BNET, March 30, 2007, blogs.bnet.com/salesmachine/?p=30 (accessed August 1, 2009). The salespeople who win are the ones who listen in person, on the phone, and online, then make the recommendation that is in the customer’s best interest.
Information is no longer the exclusive domain of the salesperson. But great salespeople bring value to their customers with ideas, insights, knowledge, and personal commitment that can’t be duplicated on a Web site, online forum, or even on a social network. And the role of the Internet in B2B buying decisions is changing quickly.
Sales 2.0 has changed the way people seek, receive, and interact online. The Internet used to be only an information source, a place to search Web sites for information. But static Web sites have given way to not only information gathering, but to problem solving. Crowdsourcing occurs when a company takes a job that is traditionally done by an employee and issues an “open call,” usually online, to people all over the world to solve the problem. This is a new way for businesses and individuals to leverage the Internet in an efficient and effective way.BrightSightGroup, “Jeff Howe: Crowdsourcing,” video, July 6, 2008, http://www.youtube.com/watch?v=F0-UtNg3ots (accessed August 3, 2009). Crowdsourcing uses the wisdom of the crowd in a virtual way to make information and solutions readily available to everyone. This video describes how crowdsourcing has changed the photography business forever.
Crowdsourcing. Learn how to make the crowd work for you..Source: Jeff Howe
Salespeople can embrace crowdsourcing and bring the power of the crowd to solve any customer problem. Facebook, iPhone apps, and YouTube are just three examples of crowdsourcing. Consider this example of the power of the crowd: Apple offered more than 65,000 apps for its iPhone in less than two years, and the number is projected to rise to 300,000 in 2010.Will Park, “Apple Bans Hundreds of Spammer’s iPhone Apps,” Into Mobile, August 3, 2009, http://www.intomobile.com/2009/08/03/apple-bans-hundreds-of-spammers-iphone-apps.html (accessed August 3, 2009).,Daniel Ionescu, “Android Market Hits 20,000 Apps Milestone,” PC World, December 16, 2009, www.pcworld.com/article/184808/android_market_hits_20000_apps_milestone.html (accessed December 20, 2009).
Power Selling: Lessons in Selling from Successful Brands
What’s Next? Ask the Crowd
How do content companies know what people will want to read about in six months? How do retailers determine what color will be hot next season? How will car companies know what defines luxury next year?
Trendwatching.com, a global trend service, uses a team of global network of business and marketing-savvy “spotters” (a.k.a. the crowd) in 120 countries to gather data, observe consumers, and talk to the people who are innovators and trendsetters to identify what’s next. Trendwatching.com offers a free version of its basic trend reports on its Web site (http://trendwatching.com), but also sells premium and customized trend information to all types of companies such a retailers, media companies, manufacturers, and others.Trendwatching.com, http://trendwatching.com (accessed August 9, 2009).
The use of technology in B2B selling, especially social networking, will continue to explode as digital natives (people, probably like you, who are under the age of 27) move into the workplace and meet the digital immigrants, Generation X and baby boomers who accept technology, but developed their online habits during a different time. Processes, behaviors, communication, and decisions will occur differently in the future.
Video Clip
The B2B Buying Process
What will it be like in the future?
www.enquiro.com/b2bresearch
Emotions Dominate B2B Buying
Whether you look at the traditional buying process or the role the Internet plays in providing information, it appears that the B2B buying process is logical and rational, but appearances can be deceiving. Despite the implication and belief that companies make purchasing decisions based on facts, it’s a good idea to remember one of the key tenets of B2B buying mentioned earlier: business-to-business means person-to-person. That means that although a B2B buyer is making a decision on behalf of her company, she still behaves like a consumer and is subject to emotions and feelings. “People rationalize buying decisions based on facts, but they make buying decisions based on feeling,” according to Bryan Eisenberg from ClickZ.com.Bryan Eisenberg, “Buying Is Not a Rational Decision,” ClickZ, November 26, 2001, http://www.clickz.com/927221 (accessed August 1, 2009).
Fear and Trust
You learned in Chapter 3 how important trust is in a relationship. People won’t buy from someone they don’t trust, which is why some salespeople are more successful than others; they work to establish and develop trust with the customer. People buy when they feel comfortable with the product and the salesperson and when they believe it is the best decision they can make. They want to do business with someone who understands all their needs, not just the needs of the product or service. And because the B2B purchasing process usually includes multiple people, it means that the salesperson needs to develop a relationship and establish trust with as many people involved in the purchasing process as possible.
Although trust is a positive emotion that can influence a sale, an even stronger emotion in B2B buying is fear. B2B buyers have several fears, not the least of which is being taken for a fool. Many executives have had the experience of being told one thing by a salesperson only to learn the hard way that what he said just wasn’t true. “People are afraid of being sold,” according to Tom Hopkins, author of How to Master the Art of Selling.“Fear of Buying,” Selling Power Sales Management eNewsletter, August 18, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=296 (accessed March 16, 2010). The best way to overcome this fear is to demonstrate that you are trustworthy. That means something as simple as returning a phone call when you say you will, or following up with information as promised. Even the language that you use can signal trust. For example, “initial investment” is a better term than “down payment,” “fee” is more customer-friendly than “commission,” “agreement” says something different than “contract,” and “can’t” sounds more negative than “would you consider.” Understand your customer’s fear of buying and replace it with comfort, trust, and confidence—in you.“Fear of Buying,” Selling Power, August 18, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=296 (accessed June 21, 2010).
Power Player: Lessons in Selling from Successful Salespeople
Fear as an Opportunity
Norm Brodsky is the owner of an archive-retrieval business called CitiStorage. He is a master salesperson because he is an astute listener and understands how to “listen between the lines” to pick up on customers’ fears. One day he was showing a prospective customer through his facility when she saw all the boxes and said, “Gee, aren’t you afraid of having a fire in this place?” Norm was not concerned at all because he already had backup coverage. But he realized that she was afraid of a fire so instead of simply saying that he was not concerned, he took the opportunity to address and respect her fear, not gloss over it. He responded by saying, “Yes, certainly, I’ve thought about the danger of a fire, and let me show you what we’ve done about it.”Norm Brodsky, “Listen and Earn,” Inc., March 1, 1997, www.inc.com/magazine/19980301/878.html (accessed August 9, 2009). He used the opportunity to put her fear to rest, even before his sales presentation.
Some consumer products such as virus protection, security systems, or insurance, appeal to the emotion of fear; consumers balance the assurance of owning it with the pain of acquiring it. (Let’s face it: It’s more fun to buy a new PC than to buy virus protection.) However, in the B2B buying process, the buyer is not the person who experiences the benefits of the product or service she purchased.“Beyond the B2B Buying Funnel: Exciting New Research About How Companies Make Complex Purchases,” Marketo, April 22, 2009, blog.marketo.com/blog/2009/04/beyond-the-b2b-buying-funnel-exciting-new-research- about-how-companies-make-complex-purchases.html (accessed August 1, 2009). The fact is if the product or service doesn’t perform as expected or doesn’t generate the desired results, the decision maker could put their job in jeopardy.“Fear of Buying,” Selling Power, August 18, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=296 (accessed June 21, 2010). “B2B buying is all about minimizing fear by minimizing risk,” according to a recent study by Marketo, a B2B marketing company.“Beyond the B2B Buying Funnel: Exciting New Research About How Companies Make Complex Purchases,” Marketo, April 22, 2009, blog.marketo.com/blog/2009/04/beyond-the-b2b-buying-funnel-exciting-new-research- about-how-companies-make-complex-purchases.html (accessed August 1, 2009). There are actually two kinds of risk: organizational risk and personal risk. Most salespeople address the organizational risk by discussing the rational aspects of the product or service with information such as, “This server accommodates more than five times as much traffic as your current server.” However, it is the personal risk, which is usually not articulated, that has a significant impact on the buying decision. This is especially true today given the focus on personal accountability, budgets, and performance. Imagine being the buyer at a fashion boutique that bought too many plaid skirts and has to request a budget for markdowns, or the decision maker who bought the computer system to power the United States’ government car rebate program, Cash for Clunkers, which was delayed for over three weeks because the system crashed.“Cash for Clunkers Launch Postponed Due to Computer Crash,” U.S. News and World Report, July 24, 2009, usnews.rankingsandreviews.com/cars-trucks/daily-news/090724-Breaking-News-Cash-for-Clunkers-Launch-Postponed-by-Computer-Crash (accessed August 4, 2009). Some purchasing decisions at certain companies have been so bad that people have been fired as a result. Every B2B purchaser thinks about nightmares like this, so she is naturally risk-averse. The best approach in these instances is for the salesperson to reassure her that you realize how important it is for her to look good to her boss and throughout her organization as a result of the decision and show her exactly how you will help her do that.“Fear of Buying,” Selling Power, August 18, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=296 (accessed June 21, 2010).
Fear is a strong motivator in a B2B buying decision, and it can’t simply be addressed in one meeting or conversation. Successful salespeople are aware of it in each contact and use every opportunity to demonstrate trustworthiness. “It’s how you handle the little things that show customers how you’ll handle the big ones,” says Tom Hopkins.“Fear of Buying,” Selling Power, August 18, 2003, http://www.sellingpower.com/content/newsletter/issue.php?pc=296 (accessed June 21, 2010). It’s best to look at the situation from your customer’s vantage point; you’ll see more clearly how you can deliver value.Bryan Eisenberg, “Buying Is Not a Rational Decision,” ClickZ, November 26, 2001, http://www.clickz.com/927221 (accessed August 1, 2009).
The Evolving Buying and Selling Processes
The framework for the buying and selling processes has been in place for many years. The buying process changes literally every day and has dramatic impact on the selling process. As a result, the “new” processes are not yet clearly defined. One thing is for certain; the processes are no longer organized, controllable functions. “Linear is so twentieth century,” according to Michael R. Solomon, author of Consumerspace: Conquering Marketing Strategies for a Branded World.Michael R. Solomon, Conquering Consumerspace: Marketing Strategies for a Branded World (New York: AMACOM, 2003), 11. Cultural, social, and technological changes will continue to drive companies for even better performance, faster, and with ideas as currency, which will continue to drive change in the buying process.
To understand the impact of the rapid changes occurring in the buying process, it’s important to know the basic steps in the selling process. The next seven chapters review the selling process in detail and include insights into how the process is changing. A study by William Moncrief and Greg W. Marshall provides a roadmap for the evolution of the selling process in Table \(2\).
Table \(2\) The Evolution of the Seven Steps of Selling
Traditional Seven Steps of Selling Transformative Factors Evolved Selling Process
1. Prospecting
• Telemarketing
• Internet selling
• Organizational prospecting
Customer retention and deletion
2. Preapproach
• Laptop account data
• Support staff
Database and knowledge management
3. Approach
• Build a foundation
Nurturing the relationship (relationship selling)
4. Presentation
• PowerPoint/multimedia
• Listening
• Team selling
• Multiple calls
• Value-added
• Buying centers
Marketing the product
5. Overcoming Objections
• Predetermining needs
Problem solving
6. Close
• Identifying mutual goals
Adding value/satisfying needs
7. Follow-Up
• Increased effectiveness of communication through technology
Customer relationship maintenance
Source: Reprinted from Industrial Marketing Management, 34/1, William C. Montcrief and Greg W. Marshall, “The Evolution of the Seven Steps of Selling,” 13–22, Copyright (2005), with permission from Elsevier.
Buying Process Meets FAB
No matter how the buying process evolves, customers continue to make purchase decisions driven by emotions. You learned how motivating trust and fear are for people who are making B2B buying decisions. Comfort, vanity, convenience, pleasure, desire to succeed, security, prevention of loss, and need to belong are all emotions that motivate purchases. A company may want to build a new building that carries its brand name downtown to signal its importance to the city and business community; that would be an example of vanity as a motivator. Or perhaps the company wants to move its headquarters to a better part of town to provide better security for its employees. Maybe a prominent figure in the community donates a large sum of money to your college motivated by the desire to give back. The same types of motivations apply to B2C purchases: a woman purchases makeup in the hopes of looking as beautiful as the model in the ads, a man buys a sports car in the hopes of turning heads, a student buys a microwave for the convenience of having food when she wants it.
Emotions are the driving force in so many B2C and B2B purchases that you might not even realize it. Consider this: would you buy the product in Figure \(10\) ?
So how do you create the same type of emotional appeal with your customers? The answer is simple: FAB.
While you might not consider buying it based on only this factual information, you probably have bought this product based on the emotional appeal of the packaging, advertising, and other marketing messages that tell you that the product is the best late-night snack.
Consider this information that was on the home page of Amazon recently:
3G wireless means books in 60 seconds. No monthly fees, service plans or hunting for Wi-Fi hotspots. Over 300,000 of the most popular books, newspapers, magazines, and blogs available.Amazon.com, www.amazon.com (accessed August 4, 2009).
Amazon truly understands how to use FAB, a selling technique that focuses on Features, Advantages, and Benefits, to sell its Kindle electronic reader. FAB is more than a way of selling; it’s a way of thinking like your customers. Using the Kindle as an example, here are the details about how to use the FAB approach for effective selling.
• A feature is a “physical characteristic” of the product.Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 114. In the Kindle example above, the feature is the 3G wireless capability. Features are characteristics of the product; a feature comparison chart between the Kindle and the Kindle DX is shown below.
• A product advantage is the “performance characteristic” of the product, or what the feature does.Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 114. In the information about Kindle included at the start of this section, the advantages of the 3G service are that the user doesn’t need to hunt for Wi-Fi hotspots and that over 300,000 of the most popular books, newspapers, magazines, and blogs are available in sixty seconds.
• The benefit is the “result” the buyer will realize from the product because of the product advantage, or in other words, what the feature does or the result it delivers.Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 114. The benefit of the Kindle is the fact that you can “rediscover reading anywhere, any time.”Amazon.com, www.amazon.com (accessed August 4, 2009).
Video Clip
Kindle FAB Story
Amazon created an entire video to tell the FAB story of Kindle.
www.amazon.com/Kindle-Amazons-Wireless-Reading-Generation/dp/B00154JDAI/ref=amb_link_ 84932831_1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-1&pf_rd_ r=1SBQSS8P947CD5QK29MC&pf_rd_t=101&pf_rd_p=485413371&pf_rd_i=507846.
Notice how Amazon skillfully reinforces the benefit of portability by showing someone reading on a beach or a bus.
Why does FAB work? Because customers want to know what a product or service will do for them—not just what it’s made of. B2C and B2B customers seek information before making a buying decision but are also driven by emotions. FAB helps you appeal to a customer’s rational and emotional buying behavior by providing the most compelling features and factual information and then showing how the features provide an advantage that delivers a benefit. This is how salespeople help customers establish an emotional connection with a product. You remember from Chapter 1 the power of an emotional connection between a customer and a brand.
You probably use FAB sometimes without even realizing it. “My new Lucky Brand jeans have a dirty wash, fit great, and make me look thin. The best part is they were on sale for only \$89.00.” The features are the dirty wash and the fact that they were on sale for \$89.00; the advantage is that they fit well (no easy feat when it comes to jeans); the benefit is that they make you feel like you look thin and, as a result, make you feel good when you wear them. Your statement is much more powerful when you frame it with FAB than if you simply say, “I got some new jeans today for \$89.00.”
Or maybe you stopped into McDonald’s and tried one of their new Angus Third Pounders. The product feature is that the burger is one-third of a pound and is available in three flavor options; the advantage is that it is thick and juicy; the benefit is that you will enjoy the taste and your hunger is satisfied. The FAB message is more compelling than simply saying that you had a hamburger that was one-third of a pound; that would be stopping at the feature and not offering an advantage or benefit.
If you want to be able to use FAB in conversation, simply think in terms of the following:
Table \(3\) gives features, advantages, and benefits for some common products.
Table \(3\): FAB in Action
Product Feature Advantage Benefit
HP Pavilion Computer 250-GB hard drive Enough space to store music, pictures, documents, and more. Do more from playing video games to downloading all of your favorite music and still have space for your homework projects.
Caribbean Vacation 4 all-inclusive nights with airfare for only \$599 per person Don’t worry about how to budget for the cost of the vacation because everything is included in one low price. Enjoy a spring break you will never forget on a beach in the Caribbean.
2010 Honda Insight 40 mpg highway/43 mpg city Lower your gas prices with a fuel-efficient Insight. Be kind to the environment and travel in comfort for less with an Insight.
For example, if you were describing Netflix in terms of FAB, you might say something like the following:
For only \$8.99 a month you can watch as many movies as you want and never be charged a late fee. You can order online and have a DVD delivered in about a day and exchange it as many times as you want without a late fee, or you can watch streaming video of your favorite movies online anytime. Now that’s total personalized entertainment.Netflix, www.netflix.com (accessed July 12, 2009).
Now look at this FAB statement with the features, advantages, and benefits in bold:
For only \$8.99 a month [feature] you can watch as many movies as you want and never be charged a late fee [advantage]. You can order online and have a DVD delivered in about a day [advantage] and exchange it as many times as you want without a late fee [advantage], or you can watch streaming video of your favorite movies online anytime [advantage]. It definitely saves you time and money [benefit] and gives you total personalized entertainment [benefit].
It’s easy to remember by using the FAB framework as your guide.
[Name feature] means you [name advantage] with the real benefit to you being [name benefit].Charles M. Futrell, Fundamentals of Selling: Customers for Life through Service, 10th ed. (New York: McGraw-Hill Irwin, 2008), 116.
Here’s another example, based on research about the 2009 Nissan Cube:Ben Stewart, “2009 Nissan Cube vs. Kia Soul vs. 2009 Scion xB: 300-Mile Fuel-Economy Test-Drive,” Popular Mechanics, February 24, 2009, www.popularmechanics.com/blogs/automotive_news/4306145.html (accessed August 4, 2009).
The Nissan Cube has funky, Japanese-like design and is friendly to the environment with a fuel-efficient 1.8-liter, 4-cylinder engine that gets over 30 miles per gallon. It’s hip, cool, and fun to drive. At \$15,585, it’s a great value for the money.
How to Use FAB
Now that you know what FAB is, you probably want to know how to use it most effectively in selling. Here are three easy steps to put FAB to work for you:
1. Know your customer. Benefits speak emotionally to customers in a way that rational facts can’t. But you need to know what is important to each customer. The health club that’s open twenty-four hours might be attractive to a young professional because he can work out late in the evening after a long day, whereas the club’s day care center might be appealing to a young mother. Similarly, in a B2B selling situation in which a buyer is evaluating warehouse space, one customer might be interested in the warehouse because of its state-of-the-art systems, while another might be focused on location. Know what motivates your customer, and then you can craft an effective FAB statement.Laura Clampitt Douglas, “Marketing Features vs. Benefits,” Entrepreneur, http://www.entrepreneur.com/magazine/homeofficemagcom/2000/december/34942.html (accessed August 4, 2009).
2. Think outside your box. If you want your FAB to work for your customer, you will need to deliver value in the form of benefits that she can’t get from anyone else. Think about your product or service in a different way; talk to people, watch the trends, see what else you can bring when you look at your product or service in a different way. Baking soda had traditionally been used as a leavening agent for baking. Arm & Hammer reinvented baking soda as a way to remove odors from refrigerators. Can you be as creative with the application for your product or service?Laura Clampitt Douglas, “Marketing Features vs. Benefits,” Entrepreneur, http://www.entrepreneur.com/magazine/homeofficemagcom/2000/december/34942.html (accessed August 4, 2009).
3. Get in touch with your customer’s motivation. Listen, learn, and craft an FAB message that will “have your customer at hello.”IMDB, Jerry McGuire, written and directed by Cameron Crowe, released December 13, 1996, www.imdb.com/title/tt0116695 (accessed August 4, 2009). Although that might be an overly romantic notion of how selling works, your goal is to have your customer fall in love with your product or service so much that it’s something he can’t live without. Imagine living without iTunes, your cell phone, or your favorite pair of jeans. That’s how your customer should feel about the product or service you are selling. If you understand his motivation, you can deliver features, advantages, and benefits that not only tell him why he should buy, but why he can’t afford not to.
Key Takeaways
• The traditional B2B buying process has seven steps: need recognition, defining the need, developing the specifications, searching for appropriate suppliers, evaluating proposals, making the buying decision, and postpurchase evaluation.
• The Internet is a game-changer as it relates to the buying process because information is no longer the exclusive domain of the salesperson; the power has shifted from the seller to the buyer.
• Crowdsourcing occurs when a company takes a job that is traditionally done by an employee and issues an “open call,” usually online, to people all over the world to solve the problem. Salespeople can use crowdsourcing to get the best solutions for their customers.
• Emotions such as comfort, security, convenience, pleasure, and vanity are major motivations for buying decisions.
• Trust and fear are especially important in B2B buying because the decision maker has to consider organizational risk and personal risk as part of his buying decision.
• The buying process continues to evolve, which changes the selling process; the traditional selling process provides a foundation and insight into the evolution.
• FAB (a.k.a. features, advantages, benefits) is the way to appeal to your customer’s emotions with factual and emotional appeals.
• A feature is what a product has.
• An advantage is what the feature does.
• A benefit is what the features mean to the customer.
Exercise \(1\)
1. dentify a recent major purchase that you made recently. How did you recognize the need for the product or service? Where did you go to gather information about the options that were available to you? Did you use one method or a combination of methods?
2. Contact a buyer at the headquarters of a retailer such as Dick’s Sporting Goods, GameStop, Costco, Urban Outfitters, or another company. Ask him about the process he uses to determine which products to put in the retail stores. Is his process similar to the process outlined in this chapter? How does it differ? How does his postpurchase evaluation impact his decision to buy the product again?
3. Based on the comment that “customers don’t want to be sold,” what should a salesperson do to sell to a customer? Identify an example of a good buying experience and a bad buying experience that you have had recently. Did the salesperson “sell” to you?
4. Describe a situation in which a salesperson might use crowdsourcing.
5. Assume you are a salesperson for a major telecommunications company and you are calling on a major construction company that is considering buying smart phones for the key people in the company. Describe at least one organizational risk and one personal risk that might be involved in the customer’s decision.
6. Identify a feature, advantage, and benefit for each of the following products and services:
• MTV
• Kia Sportage
• Palm Pre
• Virgin Mobile phone | textbooks/biz/Marketing/The_Power_of_Selling/06%3A_Why_and_How_People_Buy-_The_Power_of_Understanding_the_Customer/6.03%3A_How_the_Buying_Process_Works.txt |
Learning Objectives
• Understand how to develop your personal FAB message.
• Learn how to make your FAB message memorable in an interview.
You can see that FAB is a powerful way to build an emotional connection with a customer. It is also an excellent way to stand out to a prospective employer in an interview. You’ll learn more about the interviewing process in the Selling U section of Chapter 10, but now it’s a good idea to do some advance preparation.
You’ve already done a lot of work that will serve you well as you network and interview—you’ve identified your brand positioning points in the Selling U section of Chapter 1, put them to work in your résumé and cover letter in Chapter 2, and developed your elevator pitch in Chapter 5. All these activities help you bring your personal FAB (feature, advantage, benefit) message into focus. Your FAB message will help you tell the details about your brand and will help you tell your “stories” about your experience and accomplishments during your interviews.
Stories Paint Pictures
If getting the job or internship you want were only about the facts, you would only need to present your résumé on a job interview. But prospective employers are looking for that “certain something,” an emotional connection that helps them know that you are the one.Bryan Eisenberg, “Buying Is Not a Rational Decision,” ClickZ, November 26, 2001, http://www.clickz.com/927221 (accessed August 1, 2009). Every candidate comes into an interview trying to impress the interviewee and saying how much he wants the job. Why not stand out, show, and sell?
Think about your three brand positioning points you developed in Chapter 1. Now, think about the stories that demonstrate each one in terms of FAB. Table \(4\) shows you some examples.
Table \(4\): Personal FAB Example
Brand Positioning Point Feature Advantage Benefit
Marketing Experience Had an internship at an advertising agency I worked on the Limited, Too account developing Twitter conversations with target customers. I can help SpitFire engage its customers directly and learn about shopping preferences using social networking.
Customer Service Experience Worked as a server at Olive Garden I interacted with customers and provided excellent customer service under pressure. I understand how to handle multiple tasks under pressure without losing my cool.
Leadership Experience President of Young Entrepreneurs Club I developed a forum for local investors to regularly hear pitches from student entrepreneurs, which led to the launch of three new products. I understand the process it takes to turn ideas into profitable businesses, and I’m able to be the driving force behind bringing people, ideas, and money together.
Every Picture Tells a Story
Take your FAB one step up and create a portfolio that you can show during job interviews. When you tell someone about your experience and accomplishments, that’s good, but showing them really helps you stand out in the crowd. If you are lucky enough to get an interview, capitalize on the opportunity to sell yourself. Keep in mind that most companies interview at least two or three people, and sometimes more, before they make their hiring decision.
A portfolio isn’t just for creative or advertising people; everyone should have a portfolio. It is simply a collection of samples of your work from class projects, internships, volunteer projects, and any other work that demonstrates your skills.“Job Search: Back Up Your Resume with a Portfolio,” WorkForce2.org, www.workforce2.org/resume-portfolio.htm (accessed August 5, 2009). Creating a portfolio is as simple as putting samples of your work in a three-ring binder. You might find it helpful to view this video about how to create a portfolio.
How to Create Your Portfolio
Source: MonkeySee.com
You probably have more samples of your work than you think. And each sample is an excellent way to show and tell your FAB. Here are some ideas about what to put in your portfolio:
• Class projects. Choose those projects that demonstrate your skills, especially in your major. For example, if you did a sales presentation, include a video clip along with your selling aids. Or if you created a PR plan, include the plan along with the exhibits. Group projects are acceptable as long as the group names are included on the title page. A team project allows you to talk about how you provided leadership to the team or helped the team get focused.
• Internship projects. If you had an internship or multiple internships, include samples of the projects on which you worked. For example, include copies of Web pages, brochures, flyers, graphs, presentations, or other samples of your work.
• Volunteer projects. If you have been involved in a student group, community service, or other service organization, include samples of the projects on which you worked. For example, if your group did a fundraiser for breast cancer, include the flyer for the event along with photos and a summary of the contributions.
You’ve Got the Power: Tips for Your Job Search
Keep a Copy
Whenever you work on a class project, internship, volunteer project, or any other type of project that demonstrates your skills, keep a copy for your portfolio. The same is true when you begin working; keep copies of all your projects to continue to build your portfolio throughout your career. You never know when you will need to show samples of your work. It’s best to avoid including any confidential or proprietary information from companies or organizations.
• Other work samples. If you enjoy photography, writing, design, selling on eBay, or other activity that has application to the position for which you are seeking, include that work. In other words, print the Web page for your eBay store along with the feedback you have received, include photographs or other projects on which you have worked to show your work. If you don’t have samples of your work for your portfolio, consider starting a blog and print copies of your entries.
• Letters of recommendation. Ask for a letter of recommendation from former supervisors, colleagues, team leaders, professors, and other people who will be happy to write a letter about your skills.Maureen Crawford Hentz, “How to Obtain and Use References and Recommendation Letters,” Quintessential Careers, www.quintcareers.com/references_recommendation_letters.html (accessed August 5, 2009) If you have had a summer job or internship, ask your former boss and other people with whom you worked to write a letter of recommendation. Keep the copies of the letters in your portfolio and show them to prospective employers during your interview. Although these letters are different from references, they serve the purpose of showing your prospective employer how highly people regard you and your work. You will be asked for references after the interview process if you are one of the final candidates. See the Selling U section in Chapter 4 for more information about how to contact and submit references, including how letter of recommendation from references can help set you apart.
Tips to Make Your Portfolio Even More Powerful
After you gather all of your work samples, here are a few tips that will help you organize them for an effective visual story.
• Choose a few work samples. Select samples (no more than five or six) that reflect your brand positioning points. If leadership is important, be sure to include projects, results, pictures, and other visual elements that will demonstrate your leadership story.
• Create a summary page for each work sample. Include bullet points for the project name, objective, approach or strategy, and results. A sample is provided in Figure \(13\). This will help you quickly summarize the key points when you are showing your portfolio.
• Use clean copies, in color where appropriate. Avoid using papers that include comments or grades. Use fresh, clean copies of all samples. If you need to make a copy of an original document that was in color, splurge and pay for color copies; it’s worth it.
• Include extra copies of your résumé. Your portfolio is a great place to keep at least three or four extra copies of your most current résumé printed on twenty-four-pound paper. Although your interviewer may have already received your résumé before the interview, he may not have it handy when you come in. Or you may be asked to meet with some people that were not on the original interview schedule. If this is the case, you can be the consummate professional and offer your interviewer a reference copy of your résumé. It’s also the perfect time to mention your portfolio.
• Use a professional binder or portfolio. Visit a local or online art supply or office supply store and get a professional three-ring binder or portfolio. You can include your work samples in plastic sleeves, but it is not required. Many portfolios include plastic sleeves for your samples. Ask if the store offers a student discount.
Make It Memorable
As you develop your FAB and portfolio, think about the stories you want to tell about each one. Stories are much more powerful than facts. For example, “I can really appreciate what it takes to go the extra mile for a customer. When I worked at J&J Catering, they needed someone to mix the giant vats of cookie dough. Needless to say, I spent hours working with the dough, but I wanted to make it interesting, so I learned how ingredients work together, and I created a new recipe for lemon cookies that became the signature dessert of the company.”
www.You.com
A portfolio is a must to bring on a job interview. You might be wondering if it’s a good idea to also create an online portfolio. The answer is “yes.” Creating your own professional Web site as a way to showcase your résumé, samples of your work, awards, and letter of recommendation is a perfect way to build your brand and demonstrate to your prospective employer that you have additional technology skills.
Your online portfolio, or Web site, should include all the elements that are included in your offline portfolio. Since space is not an issue, you may want to include even more samples of your work, especially if you have writing or design samples. This is also an ideal place to include a link to your blog.
A word of caution: Your professional Web site should be exactly that—professional. That means no personal photos, comments, or casual blog posts from friends. In other words, your Facebook page is not an appropriate place for your professional Web site. Use a business-like domain name (www.yourname.com); if you don’t already have one, you can get one at Google or GoDaddy.com, for a minimal annual fee. The following article provides six steps to set up a domain name and your own Web site.
Video Clip
Six Steps to Set Up a Domain Name and Personal Web Site
www.ehow.com/how_4390_set-personal-domain.html
Use your online portfolio as a way to sell yourself on your résumé: add your Web site address to your contact information and mention it in your cover letter.Resumemic09, “What Is a Portfolio and How Can I Use One to Get a Job?” video, July 24, 2009, http://www.youtube.com/watch?v=PrHI0m0B1l4 (accessed August 5, 2009). See résumé and cover letter samples in the Selling U section in Chapter 2.
How to Use Your Portfolio in an Interview
It’s always best to bring your portfolio to every interview, even if it’s an informational interview. In most cases, the interviewer will not ask you about your portfolio so you will have to bring it up in the conversation. The following video provides some tips about how to introduce your portfolio during an interview.
Using a Portfolio in an Interview
Learn how to use your portfolio to make the sale and get the job you want.
Source: Prima Civitas Foundation
Be proud of showing your work samples. The Financial Times, in reference to Peggy Klaus’ book Brag: The Art of Tooting Your Own Horn Without Blowing It, wrote, “Start bragging…if you don’t speak up for yourself, who will?”Peggy Klaus, Brag: The Art of Tooting Your Own Horn Without Blowing It (New York: Hachette Book Group, 2003), front cover. To ensure that you are getting all of your FAB points across, it’s best to rehearse how you will review your portfolio in an interview. Keep in mind that time is short so it’s best to be concise and underscore the FAB points you want your interviewer to remember. A portfolio is an excellent visual tool that makes your FAB message come alive for your prospective employer. The bottom line is, “If you walk into an interview empty-handed, you’re missing an opportunity.”“How to Create an Awesome Work Portfolio,” ManifestYourPotential.com, www.manifestyourpotential.com/en/work/tensteps/4preparework/howto/jobsearch/portfolio.htm (accessed August 5, 2009).
Key takeaways
• Develop your FAB message using your brand positioning points as a foundation. Develop one or more FAB messages for each point.
• Create a portfolio to bring on job interviews to visually tell your FAB messages. Include extra copies of your résumé, samples of your work from class projects, internships, volunteer work, and relevant hobbies in a professional three-ring binder. Be sure all samples are clean and are in color where appropriate.
• You can also create an online portfolio on a professional Web site that includes the same information as your physical portfolio. Also include your Web site address in the contact information on your résumé and mention it in your cover letter.
• Be ready to introduce and review your portfolio in an interview; you’ll need to take the initiative as your prospective employer won’t know you have work samples to show.
• Be proud of showing your work samples. Rehearse exactly what you will say about each sample and keep it concise.
Exercise \(1\)
1. Write down your FAB using the chart below. What examples or stories can you tell about each one?
Brand Positioning Point Feature Advantage Benefit
2. Identify at least four samples of your work that you can include in your portfolio. Discuss which FAB message each sample demonstrates. Create a summary sheet for each sample.
3. Shop online or in a local art supply or office supply store and identify a professional binder or portfolio for your samples.
4. Review your portfolio with a professor, supervisor, or other professional. Ask for feedback on your portfolio and presentation. | textbooks/biz/Marketing/The_Power_of_Selling/06%3A_Why_and_How_People_Buy-_The_Power_of_Understanding_the_Customer/6.04%3A_Selling_U_-_Developing_and_Communicating_Your_Personal_FAB.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand why and how people buy in B2C and B2B situations.
• You can describe the types of customers and why this information is important in determining customers’ needs.
• You can discuss the implications of Maslow’s hierarchy of needs for selling.
• You can learn the types of buyers and buying situations in a B2B environment.
• You can list the steps in the buying process and describe how and why the process is evolving.
• You can understand the role of emotions in the buying decision.
• You can learn how to use FAB for effective selling.
• You can understand how to develop your personal FAB message.
• You can learn how to make your FAB message memorable in an interview.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. Describe the three types of B2B customers and what makes them different.
2. Name at least three differences between a B2C and a B2B purchase.
3. Describe two products or services a B2B purchaser would buy to meet esteem needs.
4. True or false: B2B buying decisions are rational.
5. True or false: The initiator in a B2B buying situation is also the decision maker.
6. Describe the first step in the buying process.
7. What is an RFP, and at which stage in the buying process is it used?
8. Describe FAB and how it is used in the selling process.
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. Following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
The Best Way to Reach Boomers
Role: Director of marketing at Shooz Athletic Shoe Company
Sales have been far less than expected as a result of the economy. Shooz brand athletic shoes are targeted to baby boomers; they are flexible and comfortable, yet look cool. They are priced higher than the competition, and it seems to have been suffering at the hands of the promotional efforts of competitors. But the marketing strategy of Shooz is to continue to focus on its niche and be higher priced, despite the sinking economy.
You have a limited advertising budget that has been devoted primarily to television advertising. You are in the process of reviewing the numbers before your next meeting.
• Should you be open to new options and ways to increase your business?
• What role could a salesperson play in helping you think about different advertising options?
Role: Internet advertising salesperson
You are a salesperson for an advertising company named Online Marketing Concepts. You sell banner ads, e-mail, and social networking advertising for several online networks. Despite the growth of Internet advertising in the past several years, online advertising sales have been down due to the economy, which has had an impact on your paycheck. You would really like to get the Shooz account to buy some Internet advertising. You’ve done your homework, and you think that online advertising could really help the Shooz business. You haven’t found any ads online for Shooz, and you have a great idea for an interactive advertising campaign targeted to baby boomers. Now, you’re confident that if you get in front of the right person, you can see your idea and help Shooz grow its business.
• What step in the buying process is the director of marketing currently in?
• How might you prepare for this sales call based on what you know?
• How will emotions come into play in the purchase of advertising for Shooz?
ACTIVITIES
1. Ask a professor, mentor, or other professional to share her portfolio with you. Ask her how she gathered examples of her work that she shows to prospective customers or employers. Ask for feedback on your portfolio.
2. Create an online portfolio including your résumé, samples of your work, letters of recommendation, awards, and other proof of your skills. Review Web sites such as http://sites.google.com and www.myevent.com. Don’t forget to include your URL on your résumé in the contact information area.
3. Create a blog to demonstrate your skills. Review Web sites such as www.blogger.com/start and http://wordpress.com as possible hosts for your blog. Choose a topic that you are passionate about (sports, music, movies, fashion, or whatever moves you). Follow the directions to personalize your blog and start writing. Remember to make regular and frequent posts; there’s nothing less professional than an out-of-date blog. Keep it professional. Promote your blog on Facebook, Twitter, LinkedIn, and other professional networking Web sites.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Producers are companies or organizations that buy parts or ingredients to make a product or service. Resellers are companies or organizations that buy finished products or services to sell them to other companies or consumers. Organizations are government or nonprofit groups that buy products or services for consumption or to be sold to companies or consumers.
2. Size of purchases, multiple buyers, number of customers, and geographic concentration.
3. A building that bears the company name; doing business with only those companies that have the best reputations, such as McKinsey & Company; hiring only people who have an Ivy League education.
4. False. B2B decisions are dominated by emotions, especially trust and fear.
5. False. Although the initiator may be the decision maker, that is not always the case, especially in complex B2B buying decisions.
6. Need recognition includes the realization that there is a need for the product or service. The need might be identified by a user or anyone else inside the organization or by a customer.
7. The request for proposal is part of step four: searching for appropriate suppliers.
8. Feature, advantage, benefit is used in B2B and B2C selling and is used to appeal to a customer’s emotions as in “what will this product or service do for me?” | textbooks/biz/Marketing/The_Power_of_Selling/06%3A_Why_and_How_People_Buy-_The_Power_of_Understanding_the_Customer/6.05%3A_Review_and_Practice.txt |
Prospecting and Qualifying: The Power to Identify Your Customers
Video Ride-Along with Lisa Peskin, Sales Trainer at Business Development University
You met Lisa Peskin in Chapter 1. She has over twenty years of experience in sales and sales training at companies such as Automatic Data Processing, Inc. (ADP), Commercial Direct, and Interbay Funding. Lisa is now a sales trainer and works with companies to help increase their sales. She understands the importance of always identifying potential new customers. Without new customers, businesses would ultimately die. Great salespeople are constantly looking for new prospective customers everywhere. By the way, listen closely to Lisa’s advice, as the same methods that help generate new customers are the same ones that can help you find your prospective employer.
Ride along with Lisa and hear her tips for identifying new customers.
7.02: Its a Process - Seven Steps to Successful Selling
Learning Objectives
• Explain the role of the seven steps of the selling process.
You may have been surprised if someone told you that movie scripts, regardless of the genre, all follow the same basic formula—the same sequence of events—almost down to the minute: after three minutes, the central question of the movie is introduced; after twenty-seven more minutes, the main character will set off on a new path; fifteen minutes more, and something symbolic will happen; and so on.Viki King, How to Write a Movie in 21 Days (New York: Quill Harper Resource, 2001), 34–37. It’s hard to believe that The Fast and the Furious would follow the same formula as The Notebook, but once you know what to look for, you’ll see that the structure holds up. Clearly, Hollywood has come to learn that this particular structure is the secret to keeping the audience’s attention, earning positive reviews, and selling movies.
In the same way, almost all selling—regardless of the product that’s being sold—follows a particular sequence of steps. It’s a simple but logical framework that has been the accepted model for almost a hundred years.William C. Moncreif and Greg W. Marshall, “The Evolution of the Seven Steps of Selling,” Industrial Market Management 34, no. 1 (2005): 13–22. Salespeople have adapted the specifics of the process as culture and technology have changed, but the fact that they’ve followed the same basic model has for so long testifies to its effectiveness. The selling process is generally divided into seven steps that, once you understand them, will empower you to sell virtually anything you want and satisfy your customers:
1. Prospect and qualify
2. Preapproach
3. Approach
4. Presentation
5. Overcome objections
6. Close the sale
7. Follow-up
Each step of the seven-step process is covered thoroughly in this and the next six chapters so that you can learn the details of each step and how to apply them in various selling situations.
When the Seven-Step Selling Process Is Used
As you learned in Chapter 3, the sales process is adaptive, which means that each situation may be different and salespeople have to adapt and understand what is important to each customer and where each is in the buying process. But in order for a salesperson to use adaptive selling, he or she must thoroughly understand the steps in the selling process and how each works to can use them effectively.
The Evolving Role of Technology in the Selling Process
While the basics of the selling process have remained the same over the years, the methods of communication and the way people interact are quickly evolving with the use of the interactive capabilities on the Internet by customers and salespeople alike. Each step now includes much more collaboration between customers and salespeople (and even between customers) with the use of social networking, consumer reviews, wikis, and other community-based tools. This technology allows salespeople to learn more about their customers at each step, and therefore provide more relevant and powerful solutions to customers at each stage of the buying process (covered in Chapter 6).Selling Power Sales 2.0 Newsletter, Selling Power, September 18, 2008, http://www.sellingpower.com/content/newsletter/issue.php?pc=868 (accessed June 21, 2010).
Business-to-Consumer (B2C) Sales
Let’s say you want to buy a gym membership. Maybe you received a promotional offer in the mail, your friends on Facebook have had good things to say about a particular gym, or you picked this club because it’s close to home. Whatever the reason, you wander in and ask to speak to the membership director who seems to know a lot about the club and what you might be looking for. After some small talk about the fact that you both live in the same apartment complex, he tells you about the gym’s amenities and gives you a tour of the facility. Then, you sit down to discuss pricing options and payment plans. If you have any questions or concerns (i.e., “I noticed there are only three tennis courts. Is there usually a long wait to use one?” or “Why aren’t there any kickboxing classes on your class schedule?”), the membership director will attempt to address those. Maybe he will tell you there is occasionally a wait to use the tennis courts at peak times, but you can reserve a spot up to a week in advance, in which case you can get right in. Or maybe he’ll say that while they don’t have kickboxing classes, they offer Zumba, which is a fun aerobic alternative.
If you’re satisfied with his responses, and the price and product meet your needs, you will probably decide to sign a contract. Once you’ve signed, someone from the club will probably follow up with a call in a few weeks to see if you’re satisfied with your experience at their gym, or you may get an e-mail from them with a membership satisfaction survey or a text message about an upcoming event.
The example above is an actual selling situation. Although you may not have realized it while you were reading it, the situation follows the seven-step selling process.
Whether you’re buying a gym membership or a car, cell phone service or a new computer, the situation may be different, but the steps in the selling process will follow the same pattern.
Business-to-Business (B2B) Sales
The process isn’t only limited to business-to-consumer sales; it’s also the process that IBM will use to sell servers to a corporation, that Accenture will use to sell consulting services to a technology company, or that the Coffee Brewers Company will use to sell espresso machines to coffee shops. Imagine you run a chic new restaurant. You get a call from a salesperson who compliments you on the roasted chicken she had at your restaurant last weekend. After some conversation, she asks if you’re satisfied with your commercial ovens. You have been having some problems with them and have been doing some casual research online. You know that her company is rated as one of the best oven manufacturers, so you tell her: the ovens are over ten years old, they take a long time to heat up, and they sometimes cook things unevenly.
“Many older ovens have this problem,” she says. “Would you be interested in learning about the state-of-the-art commercial ovens our company sells?”
Since you need a solution for your current ovens, you agree to set up an appointment with the salesperson. When the she arrives, you are impressed that she knows so much about your business. She visited your restaurant, reviewed your menu, spoke with some of the wait staff, read reviews on the city magazine Web site, and even had some conversations with some of your patrons on Chef’s Blog. She explains that the ovens she sells heat up quickly and use energy more efficiently. She gives you an estimate of your annual savings on energy costs if you switched over to her product line.
You’re interested, but you’re concerned that the ovens might not cook food evenly. Ovens are a big expense—what happens if you aren’t satisfied with the product? The salesperson says you can lease an oven for a trial period at no obligation, and she shows you reviews from other customers on her company’s Web site and on some restaurant industry blogs. You feel like this might help you solve your problem, so you agree to lease the machine for four months.
After two months, the salesperson calls to ask if you’ve been satisfied with the product so far, and she offers you a discount if you sign a contract to purchase two ovens in the next ten days. Since you have been happy with the leased oven and checked out the company’s service record online from other current customers, you make the purchase.
As in the gym membership example above, this B2B selling situation follows the seven-step framework. Now, take a minute to review this selling situation in the box below to see exactly how the steps are implemented.
The Seven Steps of Selling
Compare the B2B and B2C examples you just read about. Do you notice a pattern? Although the products and customers were quite different, both salespeople adapted to the situation and the customer’s needs, but followed the same seven steps to successfully complete their sales. In fact, you’ve probably used a version of these seven steps yourself before without even realizing it. Take a look at some real-world selling examples below and how of each of the steps is used.
Step 1: Prospecting and Qualifying
Before planning a sale, a salesperson conducts research to identify the people or companies that might be interested in her product. In the B2B example, before the salesperson called the company, she had to find the company’s information somewhere—probably in a local business directory. This step is called prospecting, and it’s the foundational step for the rest of the sales process. A lead is a potential buyer. A prospect is a lead that is qualified or determined to be ready, willing, and able to buy. The prospecting and qualifying step relates to the needs awareness step in the buying process described in Chapter 6. In other words, in a perfect world, you are identifying customers who are in the process of or have already identified a need.
Undoubtedly, when the salesperson called the target customer to discuss his ovens (in the example, you were the customer), she asked some questions to qualify him as a prospect, or determine whether he has the desire and ability to buy the product or service. This is the other component to step one. What happens if the customer is not interested in the salesperson’s product, or he’s interested but his business is struggling financially and doesn’t have the resources for a big purchase? Perhaps he is only an employee, not the manager, and he doesn’t have the authority to make the purchasing decision. In this case, he is no longer a prospect, and the salesperson will move on to another lead. Salespeople qualify their prospects so they can focus their sales efforts on the people who are most likely to buy. After all, spending an hour discussing the capabilities of your company’s ovens with a lead that is about to go out of business would be a waste of time. It’s much more fruitful to invest your time with a qualified prospect, one who has the desire or ability to buy the product or service.
Step 2: Preapproach
The preapproach is the “doing your homework” part of the process. A good salesperson researches his prospect, familiarizing himself with the customer’s needs and learning all the relevant background info he can about the individual or business.Geoffrey James, “6 Things to Know about Every Prospect,” BNET, January 12, 2009, blogs.bnet.com/salesmachine/?p=705 (accessed June 9, 2009). Remember that in the B2B example, the salesperson knew important information about the restaurant beforehand. She came prepared with a specific idea as to how her service could help the prospect and gave a tailored presentation.
Step 3: Approach
First impressions (e.g., the first few minutes of a sales call) are crucial to building the client’s trust.Michael T. Bosworth, Solution Selling: Creating Buyers in Difficult Selling Markets (New York: McGraw-Hill, 1995), 106. If you’ve ever asked someone on a first date (yes, this is a selling situation), chances are you didn’t call the person and start the conversation off with the question, “Hey, do you want to go out on Saturday night?” Such an abrupt method would turn most people away, and you probably would not score the date you were hoping for. Similarly, as a professional salesperson, you would almost never make a pitch right away; instead, you’d work to establish a rapport with the customer first. This usually involves introductions, making some small talk, asking a few warm-up questions, and generally explaining who you are and whom you represent.Paul Cherry, Questions That Sell: The Powerful Process of Discovering What Your Customer Really Wants (New York: AMACOM, 2006), 21.,Neil Rackham, The SPIN Selling Fieldbook (New York: McGraw-Hill, 1996), 40. This is called the approach.
Step 4: Presentation
There’s a good deal of preparation involved before a salesperson ever makes her pitch or presentation, but the presentation is where the research pays off and her idea for the prospect comes alive. By the time she presents her product, she will understand her customer’s needs well enough to be sure she’s offering a solution the customer could use. If you’re a real estate agent selling a house and your customers are an older, retired couple, you won’t take them to see a house with many bedrooms, several flights of stairs to climb, and a huge yard to keep up—nor will you show them around a trendy loft in a busy part of town. The presentation should be tailored to the customer, explaining how the product meets that person or company’s needs. It might involve a tour (as in this real estate example), a product demonstration, videos, PowerPoint presentations, or letting the customer actually look at or interact with the product. At this point, the customer is using the information that is being shared as part of his evaluation of possible solutions.
Step 5: Handling Objections
After you’ve made your sales presentation, it’s natural for your customer to have some hesitations or concerns called objections. Good salespeople look at objections as opportunities to further understand and respond to customers’ needs.William C. Moncreif and Greg W. Marshall, “The Evolution of the Seven Steps,” Industrial Marketing Management 34, no. 1 (2005): 14, 15. For instance, maybe you’re trying to convince a friend to come camping with you.
“I’d like to go” your friend says, “but I’ve got a big project I need to finish at work, and I was planning to spend some time at the office this weekend.”
“That’s no problem,” you tell him. “I’m free next weekend, too. Why don’t we plan to go then, once your project’s out of the way?”
Step 6: Closing the Sale
Eventually, if your customer is convinced your product will meet her needs, you close by agreeing on the terms of the sale and finishing up the transaction.Thomas A. Freese, Secrets of Question Based Selling (Naperville, IL: Sourcebooks, Inc., 2003), 166. This is the point where the potential gym member signs her membership agreement, the restaurant owner decides to purchase the ovens, or your friend says, “Sure, let’s go camping next weekend!” Sometimes a salesperson has to make several trial closes during a sales call, addressing further objections before the customer is ready to buy.Dave Dolak, “Sales and Personal Selling,” www.davedolak.com/psell.htm (accessed June 10, 2009). It may turn out, even at this stage in the process, that the product doesn’t actually meet the customer’s needs. The important—and sometimes challenging—part of closing is that the seller has to actually ask if the potential customer is willing to make the purchase.William C. Moncreif and Greg W. Marshall, “The Evolution of the Seven Steps,” Industrial Marketing Management 34, no. 1 (2005): 14, 15. When the close is successful, this step clearly aligns with the purchase step in the buying process.
Step 7: Following Up
OK, so you’ve completed a landscaping job for your customer or sold him a car or installed the software that meets his needs. While it might seem like you’ve accomplished your goal, the customer relationship has only begun. The follow-up is an important part of assuring customer satisfaction, retaining customers, and prospecting for new customers. This might mean sending a thank-you note, calling the customer to make sure a product was received in satisfactory condition, or checking in to make sure a service is meeting the customer’s expectations. This is the follow-up e-mail you get from Netflix every time you return a movie by mail. It’s Amazon’s invitation to “rate your transaction” after you receive your Amazon order. Follow-up also includes logistical details like signing contracts, setting up delivery or installation dates, and drawing up a timeline. From the buyer’s perspective, the follow-up is the implementation step in the buying process. Good follow-up helps ensure additional sales, customer referrals, and positive reviewsDave Dolak, “Sales and Personal Selling,” www.davedolak.com/psell.htm (accessed June 10, 2009). and actually leads you back to the first step in the selling process because it provides the opportunity to learn about new needs for this customer or new customers through referrals.
Key Takeaways
• The seven-step selling process refers to the sequence of steps salespeople follow each time they make a sale. The process gives you the power to successfully sell almost anything.
• The first step of the selling process, prospecting and qualifying, involves searching for potential customers and deciding whether they have the ability and desire to make a purchase. The people and organizations that meet these criteria are qualified prospects.
• Before making a sales call, it is important to “do your homework” by researching your customer and planning what you are going to say; this is the preapproach.
• The approach is your chance to make a first impression by introducing yourself, explaining the purpose of your call or visit, and establishing a rapport with your prospect.
• Your research and preparation pays off during the presentation, when you propose your sales solution to your prospect.
• Your prospect will naturally have objections, which you should look at as opportunities to better understand and respond to his or her needs.
• Once you overcome objections, you close the sale by agreeing on the terms and finalizing the transaction.
• The sales process doesn’t end with the close; follow-up (i.e., ensuring customer satisfaction and working out the logistics of delivery, installation, and timelines) is essential to retaining existing customers and finding new ones.
Exercise \(1\)
1. Think of a personal interaction in which you sold someone on an idea (e.g., a vacation, a choice of movies, or a date). Explain how the seven steps applied to this particular situation.
2. Consider the last major purchase you made. Did the salesperson use the seven steps? In what ways could he or she have done a better job? What eventually sold you on the product?
3. Imagine you are trying to sell season tickets to your local ballpark. After you present the product to your prospects, a middle-aged married couple, they tell you they are very interested but are concerned they might be out of town on some of the weekends when there are home games, and they don’t want their tickets to go to waste. What solutions could you offer to overcome their objections?
4. Discuss the difference between a prospect and a customer. | textbooks/biz/Marketing/The_Power_of_Selling/07%3A_Prospecting_and_Qualifying_-_The_Power_to_Identify_Your_Customers/7.01%3A_Introduction.txt |
Learning Objectives
• Understand the role prospecting plays in the selling process.
Imagine you decide to build a house from the ground up. After designing your ideal house, of course it would be nice if you could snap your fingers and get to the fun part: watching the finishing touches come together. But before the walls go up you have to make detailed plans and measurements, find your materials and negotiate with contractors, and lay the foundation. All these things require patience, time, and effort, but these steps are absolutely necessary for the project to move forward.
Planning and laying a foundation is a little like prospecting and qualifying. Finding leads (or people who might be prospects) is the most vital part of the selling process—you can’t make a sale without identifying the people to whom you’ll be selling.Charles M. Futrell, The ABC’s of Relationship Selling, 9th ed. (New York: McGraw-Hill Irwin, 2005). In other words, without prospecting, nothing else can happen. Yet, unlike laying a foundation, prospecting doesn’t happen just once; it’s a constant process. Businesses lose some customers every year for a variety of reasons: customers may no longer need the product or service, have the financial means to purchase the product or service, or live or do business in the area, or the business may no longer be open. So if you haven’t been building your prospect list, you won’t have new customers to replace the ones you lose. More than this, finding new prospects is the only way you can increase your sales and expand your business.
The Value of a Lead
Think of the last time you went to the store to make a major purchase and you started by browsing the products. A salesperson probably approached you with the standard “Can I help you?” and you may have responded with the equally standard “No, thanks. I’m just looking.” Chances are good that the salesperson left you alone after that, very likely assuming you weren’t genuinely interested in making a purchase. Most people—salespeople and customers alike—are surprised to learn that over two-thirds of shoppers who give the “just looking” response end up purchasing the product within a week.Channel Intelligence, “2004 Channel Intelligence Consumer Buying Intent Survey Reveals Online Shopping Trends,” channelintelligence.vnewscenter.com/press.do?step=pkview&contentId=1184050872399&companyId=1123580114932 (accessed June 10, 2009). In other words, these customers are valuable leads, and all too often their business goes to a competitor.
Let’s say you are planning to buy a new refrigerator. That’s generally not the kind of purchase you make on the spot; you will probably go to a number of stores to compare products and prices first. If you tell the salesperson at the second store that you’re just looking, you may then go to a third store and decide you’re ready to buy. As a customer, if the vendors seem more or less equal, you will base your purchasing decision on price, product features, convenience, or a combination of these things. But imagine the salesperson at the second store who took the time to determine your specific needs, wrote down your contact information, and followed up with you. It’s very likely she would make a sale. Her products might be quite similar to her competitors’, but if she goes out of her way to provide you with a solution, you have a reason to buy from her over someone else.
Now let’s change hats. What does knowing this information mean for you as a salesperson? Most importantly, it means that you should never write off a lead until you are certain he can’t be qualified as a prospect. If you work in a showroom that sells only high-end cars like Lexus or BMW and a potential customer walks in wearing torn jeans and a T-shirt, you might be tempted to mentally disqualify him, assuming he won’t have the money to buy such expensive cars. But appearances are often misleading, and you won’t know whether or not your lead is actually qualified until you ask some specific, qualifying questions. When you realize that a lead is the only thing you can turn into a sale, you also realize just how valuable every lead is.
This is true for both B2C and B2B sales, wherein 30 percent to 50 percent of companies that see and respond to business-specific ads end up purchasing the product or service about which they’ve inquired within one or two years. This percentage is nothing to sneeze at. Yet, according to businesses, only about 1 percent to 5 percent of the ad-related inquiries they get from businesses translate into sales.John Coe, The Fundamentals of Business-to-Business Sales (New York: McGraw-Hill, 2003), 125. That’s a big gap. In other words, a lot of valuable leads can slip through your fingers if you don’t follow up and qualify them.
The Sales Funnel
If you talked to a guidance counselor when you were applying to colleges, he probably told you to consider several and then apply to a number of schools (more than just two or three) even though you would only end up choosing one school in the end. This is because not all the schools that you apply to end up being a good fit. Sometimes you aren’t accepted, sometimes you are accepted but don’t get an ideal financial package, and sometimes as you learn more about a school you decide it isn’t the right one for you. Whatever the reason, you start out by considering many schools and generally end up deciding between a few.
The same can be said of the selling process. In fact, the process is often compared to a funnel. You start out with many leads, and after gathering more information, you come up with a smaller list of qualified prospects. As you communicate with these potential customers and work toward a solution, some will turn out to be more likely to buy than others. It’s common sense to assume that you will have more leads than you have buyers since not all leads turn into customers. The concept of the sales funnel is a helpful way to visualize the process of finding and qualifying your customers and effectively illustrates the value of identifying a large pool of potential prospects. If you don’t bother to find more than a handful of leads, you limit your chances of ever closing a sale no matter how much effort you put into your sales presentation. It’s a common temptation that most people want the results without having to put in the foundational work of finding and contacting prospects.
But wait a minute, you might think, “Isn’t it hugely inefficient to spend time and effort communicating with so many prospects with the expectation that only a handful of those will turn out to be buyers?” This is also true, which is why qualifying and prioritizing your prospects is such an important part of the sales process. Technological tools like collaborative communities and other online resources can help you identify, qualify, and prioritize prospects. But you might wonder how do you decide which prospects you should invest your time in pursuing. To begin with, you should create a profile of your ideal buyer.Ron Hubsher, interview by Gerhard Gschwandtner, Daily Report, Sales Optimization Group, Selling Power, www.salesog.com/index.html (accessed June 9, 2009).
Create a Profile of Your Ideal Buyer
• What particular qualities and characteristics will define this individual or company?
• What specific problems would this buyer have that your product could solve?
• In what ways should the buyer be compatible with you or your organization?
For instance, if your company sells expensive, high-quality kitchen utensils, the average college student won’t fit your ideal profile. While a young adult living away from home for the first time might have something in common with your ideal customer, the college student likely won’t have the budget or desire to go out and get the top-of-the-line products.
Your ideal customer profile will help you prioritize and target your efforts because it provides a model against which you can measure your leads to determine whether a potential customer is worth pursuing. If you focus your energy on prospecting and qualifying, which is learning more about your target prospects, you will save valuable time and resources, which you can then devote to giving your customers a more satisfying experience. Effective prospecting and qualifying empower you to invest in the opportunities that count.Ron Hubsher, “Turning the Sales Funnel Upside Down,” interview by Michelle Nichols, Savvy Selling, podcast audio program, BusinessWeek, July 13, 2007, http://www.businessweek.com/mediacenter/podcasts/savvy_selling/savvy_selling_07_13_07.htm (accessed June 9, 2009).
Video Clip
Prioritizing Leads
Understand how to use the sales funnel to maximize leads.
http://www.sellingpower.com/content/video/?date=2/9/2007
Now that you understand the concept of prospecting and why it’s important, you’ll find the next sections helpful as they will provide you with tools to help you find prospects and qualify prospects.
Key Takeaways
• Prospecting is the most vital part of the selling process. Without prospects, you won’t be able to make sales, and without constantly searching for new prospects, you won’t be able to replace the customers you lose and grow your business.
• A lead, or prospect, is the only thing you can turn into a sale, so it’s important to follow up with your leads. Don’t write someone off without legitimately qualifying him.
• The concept of the sales funnel illustrates the value of generating a large pool of leads because many of your prospects won’t qualify or will drop out during the selling process.
• You should begin searching for leads by building an ideal customer profile to help you target your search efforts.
Exercise \(1\)
1. Describe the ideal customer for the following products or services:
2. Discuss the sales funnel and why leads are important to the selling process.
3. Discuss the difference between a prospect and a customer.
4. If someone goes into a Best Buy store and looks at the home theater systems, is he a lead or a prospect? Why?
5. Visit a local jeweler and shop for a watch. What questions does the salesperson ask to qualify you as a prospect? | textbooks/biz/Marketing/The_Power_of_Selling/07%3A_Prospecting_and_Qualifying_-_The_Power_to_Identify_Your_Customers/7.03%3A_Prospecting_-_A_Vital_Role_in_the_Selling_Process.txt |
Learning Objectives
• Identify resources to use when prospecting.
In the last section, you read that prospecting can be compared to setting up the plans and laying the foundation for a building project. You could also say that prospecting is a little like going to class or making your bed—you’ve got to do it, and you know that it won’t be long before you’re doing it again (assuming you make your bed regularly!). Because prospecting is one of those jobs that’s never truly finished, it’s helpful to draw on a number of sources and be creative about the places where you find your leads.
Where to Find Prospects
Knowing your ideal customer and where he or she is likely to go for informatiFon will allow you to choose the best prospecting sources for your business. It helps to be your customer. Imagine yourself in your prospect’s shoes and think about where you would go for information. For instance, if you are a photographer who specializes in professional yearbook and graduation pictures, you might want to set up a Facebook account so you can let students in local schools know about your services.Adam Stone, “Dennis Kelly Photography Took a Shot with Facebook,” Philadelphia Business Journal, June 5–11, 2009, 10–11. Meanwhile, if you’re in B2B sales and your ideal prospects are car dealerships in northern California, you might build up your professional network by joining the local branch of the National Auto Dealers Association or by joining some community organizations in your city.
Prospecting takes knowledge and creativity, so start your prospecting and qualifying with the top ten power prospecting list below. No matter what business you’re in, think of this section as your GPS for finding the leads that will fuel your business growth.
Top Ten Power Prospecting List
1. Existing customers
2. Referrals
3. Networking and social networking
4. Business directories in print
5. Online databases and directories
6. Newspapers, trade publications, and business journals
7. Trade shows and events
8. Advertising and direct mail
9. Cold calling
10. Being a subject matter expert
Power Prospecting Source #1: Existing Customers
It costs five times more to attract a new customer than to keep an existing customer.Jeff Bressler, “How Much to Spend to Acquire New Customers?” CEO World Magazine, May 13, 2009, http://ceoworld.biz/ceo/2009/05/13/hto-much-to-spend-to-acquire-new-customers (accessed June 10, 2009). So it stands to reason that your best new customers are your existing customers. Salespeople who make an effort to deliver excellent customer service during and after a sale know the secret that some of their best prospects are the customers they already have. To keep and develop your existing customers, love them, service them, be partners with them, live and breathe in their world, understand them, and anticipate their needs, and you will succeed in sales.
One of the keys to retaining your best customers is to keep in touch with your customers’ needs and update your solutions as their needs change. Say you work for a marketing company that offers a variety of services to businesses. One of your customers, a record company, is using your printing services, but they’re turning to another organization for their public relations needs. If you’re aware of this, your existing customer is now a prospect for additional sales. You might tell the record company, “You know, your current PR people are setting up events and concerts to increase your publicity, and that seems to be working only moderately well. If we were running your PR, we would integrate your events with a variety of other media. For instance, we think a blog would be a hugely effective tool.…” If the company is already a loyal customer and you let them know that you are aware of their needs and can offer a better solution, then you may very well make a new sale.
Power Prospecting Source #2: Referrals
There’s nothing more powerful than getting information about a product or service from a friend or people you trust before you buy. Think about the last time you bought a printer. You probably checked out the customer reviews on Amazon, asked your friends, checked out some blogs, and maybe even got some insights on Twitter (in 140 characters or less). Before you bought the Hewlett-Packard (HP) OfficeJet 6310, you knew exactly what to expect from people who have bought and used the product, and you learned that if you buy it at Office Depot, you get free shipping and two free ink cartridges. Although you never shopped at Office Depot before, you were sold before you even clicked “buy now” on the Office Depot’s Web site. Imagine that you didn’t even come in contact with HP or Office Depot. You made your purchase based solely on the information from others. The power of the referral cannot be underestimated.
Referrals and word-of-mouth advertising have always been one of the most effective—and cost-efficient—ways to get new customers. It used to be that the circle of referrals was limited to people who used your product or service in a given geographic area. The Internet has amplified that network, especially with user-generated content such as communities, blogs, customer ratings and reviews, and social networking sites. So as a salesperson, you have to think creatively about all of resources you have to generate referrals.
Seth Godin, best-selling author and entrepreneur, talks about “flipping the funnel.” He challenges salespeople to think about turning the sales funnel on its side, thinking of it as a megaphone, and then handing the megaphone to those who already love you. He suggests that when many of your customers enter into the conversation on Web sites such as Digg, Flickr, and Delicious, the power of your message gets even stronger, and new referrals find you.Seth Godin, “How to Flip the Sales Funnel,” video, Selling Power, http://www.youtube.com/watch?v=McmEyr0oWew (accessed June 9, 2009). Listen to Seth describe how your customers can be your best salespeople.
Seth Godin Interview. Hear how flipping the funnel is the best way to get new customers. Source: SellingPower.com
Want to see how it works? When Naked Pizza, a small takeout and delivery operation in New Orleans, decided they wanted to compete with the city’s chain pizza places, they turned to their existing customer base for sales prospects by putting their Twitter address on every pizza box that went out the door. As Jeff, Randy, and Brock, the company’s founders put it, “Even your most core customers must be continually and softly nudged.”Jeff Leach, Randy Crochet, and Brock Fillinger, “How One Small Business Uses Twitter to Build Its Brand,” Advertising Age, May 29, 2009, http://adage.com (accessed June 9, 2009). The prospecting effort has been a huge success with their existing customers posting tweets that have introduced the brand to new customers. The Twitter-enabled follow-ups allowed Naked Pizza to continue the conversation and ensure that a greater number of first-time buyers become repeat customers—and that they spread the word to more new customers. Talk about a megaphone!
Whether you sell pizza or insurance, if your existing customers are happy, they’re usually happy to refer you to their friends, online or offline. Consider Flycaster & Company, a Florida-based branding and advertising agency for businesses. For a number of years now, almost 100 percent of the firm’s new customers have been referred to them by friends and colleagues. According to John Spence, one of the company’s managers, referrals are the “best possible” source of prospects for any B2B business.John Spence, “Seven Steps to Successful B2B Marketing,” John Spence Blog, comment posted October 31, 2007, johnspence.com/blog/?p=52 (accessed June 9, 2009).
So let your customers speak for you. Their voices will be heard by people you could never reach.
Power Prospecting Source #3: Networking and Social Networking
Networking works.
The art of networking, developing mutually beneficial relationships, can be a valuable prospecting tool, not only for retaining old prospects, but also for connecting with new ones. The larger and more diverse your network becomes, the bigger your pool of potential prospects. Your networking connections often become sources of referrals for your business, just as you will become a referral source for theirs.
If you’re a member of the American Chemical Society and you work for a chemical supply company, you might use your membership to get acquainted with chemists who work at a variety of labs. You could offer them your card and let them know that you provide supply discounts for fellow Chemical Society members. Now these prospects will be more likely to buy their chemical supplies from you than from a company or individual with whom they have no personal connection. If one of your customers needs a chemist with a particular specialty, you, in turn, will be able to refer him to someone in your network. Joining a professional trade association is one simple way to network with others in your field, or with prospects in your target industry.
If your business is location specific, joining community organizations can also be a valuable tool for connecting with local business leaders and prospects. Consider service organizations (like the Rotary Club), fraternity organizations, and other affinity groups that will allow you to build relationships with members of the community.
What about social networking? You’re probably well acquainted with online social networking sites like Facebook or MySpace, but you may be less familiar with the ways people leverage these tools in a professional capacity. According to professional networking expert Clara Shih, online social networks can be an effective means of prospecting for sales with organizations. After all, the decision makers at any organization are individuals with whom you can build relationships (remember, you learned in Chapter 3 that even though it’s called business-to-business, buying decisions are made person-to-person, so relationships matter).Clara Shih, The Facebook Era (Upper Saddle River, NJ: Prentice Hall, 2009), 2. By connecting socially with key individuals, not only can you open lines of communications with potential customers, but you can also build your knowledge of your prospect base.
Professional networking sites like LinkedIn are increasingly important as well. (In fact, the Selling U section of this chapter includes information about how you can use professional social networking sites to help you network to find a job.) And there are many industry-specific networking sites you can join, like Sermo for doctors or INmobile.org for people in the wireless industry.Jessica E. Vascellaro, “Social Networking Goes Professional,” Wall Street Journal, August 28, 2007, http://online.wsj.com/article/SB118825239984310205.html (accessed June 9, 2009). Your profile on professional networking sites becomes a tool for selling yourself as a brand. These sites allow you to list your education, professional experience, and testimonials from satisfied customers, and as you add contacts, you become connected to their contacts, allowing your network to grow.Clara Shih, The Facebook Era (Upper Saddle River, NJ: Prentice Hall, 2009), 2.
Link
This article includes examples of how some major companies are using Twitter to drive sales.
http://www.sellingpower.com/content/newsletter/issue.php?pc=1007
Power Prospecting Source #4: Business Directories in Print
Forget Google for a minute. It might surprise you to know that your local library can actually be a potential goldmine for finding prospects in B2B sales. If you spend even twenty minutes with a knowledgeable librarian, he can point you to business lists, journals, and business directories that will help you generate a pool of leads to contact. Your ideal customer profile is an important guiding tool here.
Source: Philadelphia Business Journal, used with permission.
If you want customer information that’s location specific, check out your local chamber of commerce listing. It’s one of the best sources for finding local businesses. If the listing is not at the local library, chances are the librarian will have the contact information for the chamber office.
You can also review business lists and directories published by local newspapers and regional business journals. Local newspapers and their Web sites often provide listings of local businesses along with key information about the company. Also, the Book of Lists is published locally by the American City Business Journals in several cities—for example, the Philadelphia Business Journal publishes the Book of Lists for the Philadelphia, South Jersey, and Delaware area. It is a book that includes lists of companies organized by groupings. For instance, the fastest-growing companies, minority-owned businesses, and lists of companies by industry such as video production companies, health care companies, public relations agencies, law firms, and more are included with the contact information, profiles, and key facts for specific businesses in your state or city. You can generally find these books at your local library, and they’re an excellent source for digging up prospects that most closely match your ideal profile. Business lists are also published by other business journals such as Crain’s in some key cities or are available online (also see Power Prospecting Source #6: Trade Journals and Business Journals below).
If you want to search businesses by industry, ask a reference librarian to help you look up the North American Industry Classification System (NAICS) code and the Standard Industrial Classification (SIC) code that most closely matches your ideal prospect’s business—or access the indexes online, and bring the codes with you to the library. NAICS and SIC codes are numbering systems that classify businesses by their particular industry, so they can be valuable search criteria to mine general business directories (e.g., Ward’s Business Directory of U.S. Private and Public Companies) for specific kinds of companies. For example, you could use the SIC code 6371 to find all businesses that deal with pension, health, and welfare funds.Occupational Health and Safety Administration, “SIC Search,” United States Department of Labor, www.osha.gov/pls/imis/sic_manual.display?id=56&tab=group (accessed June 9, 2009). You can also search through industry-specific directories like the Standard Directory of Advertisers, and you can check out professional trade associations related to your prospect profile. These organizations, whose members all operate in a particular industry, are especially good places to look if your ideal prospect is a smaller business because smaller businesses and individuals are the most likely to join. Ask your librarian if she can access a copy of Gale’s Encyclopedia of Associations, which lists more than 160,000 trade organizations. Finding a relevant association should be no problem, as you can find a professional organization for virtually any industry you can think of. Even the pecan shellers of America have a professional association!David Whitford, “Built by Association,” Inc., July 1994, www.inc.com/magazine/19940701/3005.html (accessed June 10, 2009).
Power Prospecting Source #5: Online Databases and Directories
Going to the library can be hugely helpful because it gives you access to people who are pros at finding information. Also, the added perk is that your library will probably give you free access to several online business directories and databases.Boston Public Library, “Directories on the Internet,” www.bpl.org/research/kbb/websites/dirs.htm (accessed February 15, 2010). Of course you can search these directories from the comfort of your own home or office, but if you want the deluxe package—the most up-to-date directories that cover industries of all types nationwide—you’ll have to pay a price. Online business directories, such as those listed in the table below, are searchable by industry and will give you access to company contact info, number of employees, financial standing, industry rankings, names of executives, and other company profile information. Most of these directories allow you to search businesses by SIC or NAICS codes.
So how do you know which business directory to use? For one thing, it helps to know whether your ideal prospect would be a private company or a public company or whether it could be either. Is your ideal prospect a large organization that attracts top executives? In this case, you’ll mostly be searching for public companies—companies that sell stocks and bonds to the general public. Public companies are required to file financial information and other company reports with the U.S. government, so these organizations are easier to find in general business directories, and their directory listings usually provide more detailed company information.Center for Business Research, “Public vs. Private Companies,” Long Island University, www2.liu.edu/cwis/cwp/library/cbr/publicvprivate.htm (accessed June 10, 2009). However, not all large companies are publicly owned. State Farm Insurance and Cargill Foods, for example, are both private companies.“About Hoovers Handbook of Private Companies 2009,” Hoovers, images.hoovers.com/images/i/books/lookinside.pv2009.pdf (accessed June 10, 2009). If you’re only interested in smaller, local businesses, you will be dealing with private companies, or companies that aren’t owned by the public. In this case, some directories and databases will be more helpful to you than others.
Another thing to consider is whether you want the option to refine your search to include a number of criteria closely matching your ideal prospect profile. Several online databases allow you to input multiple search terms like location, company size, and minimum and maximum sales volumes.
Table \(1\): Online Databases and Directories for Prospecting
Database or Directory Good source for private companies Good source for public companies Description
infoUSA
http://home.infousa.com
• For B2B prospecting: Allows you to search for businesses by criteria such as industry, SIC, sales volume, and number of employees. Particularly useful for finding smaller companies. Their Web site offers a video with instructions on how to build a business list.
• For B2C: Provides phone and e-mail contact lists for consumers by criteria like income, geography, and/or interest. See their instructional video for more detail.
Dialog
http://www.dialog.com
• Allows researchers to perform advanced searches based on a number of criteria, such as company financial information, industry trends, and market research.
• Option for subscription to automatic news alerts that will keep you up-to-date on your target industries and prospects.
Bizjournals
http://www.bizjournals.com/bizjournals/sales_ marketing/prospecting
• Offers several directories that are searchable by industry.
• Allows you to subscribe to company-specific and industry-specific e-mail alerts.
• Option to create a customized prospect list by specific search criteria.
• Provides access to local Books of Lists for location-specific company profiles.
Hoovers
www.hoovers.com
• For B2B: Contains directories that are searchable by industry, region, and other characteristics; also provides detailed information about companies including address, phone number, key decision makers, financial data, business strategy, competitive information, and more.
• For B2C: Provides phone and e-mail contact lists for consumers by criteria like income, geography, and/or interest.
Standard & Poor’s
www.netadvantage. standardandpoors.com
• Directory that is searchable by a number of criteria, including NAICS code.
• Has data on more than 85,000 private companies.
• Includes biographies of corporate executives and directors.
D&B Million Dollar Database
www.dnbmdd.com
• Searchable by several criteria, including NAICS and SIC codes.
• Option to create a customized prospect list by specific search criteria.
D&B Prospector
www.dnb.com/us/dbproducts/sales_marketing/find.html
• Option to search using over thirty-five search criteria to create an ideal prospect profile as a search tool.
Mergent Online
http://www.mergentonline.com
• Directory that includes domestic and international annual reports from 1996 to the present.
Directory of Corporate Affiliations
http://www.corporate affiliations.com
• Directories searchable by location, revenue, industry, NAICS and SIC codes, and so on.
• Especially good for finding out about key individuals in your target companies.
• Search tool for finding out about company relationships and outside vendor relationships
Power Prospecting Source #6: Trade Publications and Business Journals
Where could you go to learn that three bottled beverage companies have recently lightened their package designs, that a new biodegradable shrink film is now on the market, and that the Pharmaceutical Packaging Forum has chosen a location for its next event? These definitely aren’t top headlines on Yahoo! But to people in the packaging and packing materials industry, this is important news, and many of them use Web sites like Packworld.com to stay updated. Trade publications, journals geared toward people who work in a certain industry, and trade Web sites are good sources for netting prospects. For instance, if you work for a company that designs food and beverage packaging, and your department specializes in bottle design, you might read an article on Packworld.com and find out that Pepsi has released a new, eco-friendly bottle design for its Aquafina product that uses 50 percent less plastic than the 2002 version.“Beverage Bottles Lighten Up,” Packworld, May 1, 2009, www.packworld.com/news (accessed June 10, 2009). You decide to make a call to some managers at competing companies like Fiji. You tell these prospects that you’ve read about their competitor’s new bottle design and ask if they are interested in some packaging updates as well, which will help save on shipping costs and provide some good PR.
Many industry trade journals offer free e-mail newsletters or even free copies of the magazine. If you don’t know the best trade journals to read in the industry in which you are interested, ask a professor. Your professor will be happy to show you copies of specific trade journals and the corresponding Web sites. It’s a good idea to take the time to sign up for the free updates and check to see if the publication offers a free subscription to the magazine.
But what if your ideal prospects aren’t limited to a particular industry but are specific to a certain location? In this case, business journals, which are often regionally published and offer business news and industry information for particular cities or states, will be helpful. Your local library will undoubtedly have a subscription to one, or even several, business journals for your region. Additionally, Bizjournals.com links you to the Web sites for forty regional business journals.
Power Prospecting Source #7: Trade Shows and Events
If you’ve ever been to a trade show or expo, like a career fair or bridal show, you know they’re a good place to find out about products and services about which you might not otherwise be aware (and to get some fun free giveaways while you’re at it). While most people who stop by a given booth at an expo might not be seriously interested prospects, trade show displays and product demonstrations generate enough strong leads to make this activity a worthwhile prospecting endeavor. For one thing, trade shows are industry-specific events that have the advantage of bringing your target market to you. If you are a horse breeder and you know that an estimated ten thousand visitors will attend the Horse World Expo in Syracuse, New York, you might decide it’s worthwhile to go.Paige Palmateer, “Inaugural Horse World Expo Coming to Syracuse,” CNY Business Journal, May 4, 2007, findarticles.com/p/articles/mi_qa3718/is_20070504/ai_n19304825/?tag=content;col1 (accessed June 10, 2009). You could look into giving a presentation about judging horse pedigrees, for instance, or maybe you will pay to set up a booth with videos and photos of the horses you breed and sell.
As a salesperson, you can use trade shows not only to present and demonstrate your products but also to identify and qualify prospects.Barton A. Weitz, Sephen B. Castleberry, and John F. Tanner, Jr., Selling: Building Partnerships (New York: McGraw-Hill Irwin, 2003). Asking a few specific questions can help you assess a prospect’s needs and determine whether he has a genuine interest—as well as the resources—for buying. Trade show booths usually have a place for leads to enter their contact information so you can follow up with your prospects and save leads in your customer database. If you are a sales representative for a textbook company and you attend a faculty book fair at a large university, when professors stop by your booth, you might ask them which texts they are currently using and what they like or dislike about these books. This is a quick way to identify potential need. One professor might tell you she uses such-and-such a textbook, which is thorough, but her students don’t find it very engaging. Aha! You have identified a need, and you now have a prospect. You might tell the professor about a textbook that covers similar information but uses a more conversational style and ask if she would like you to send her a complimentary copy. If she says yes, you now have an opportunity to take her contact information, and you have permission to follow up.
Power Prospecting Source #8: Advertising and Direct Marketing
When you think of “junk mail,” you probably think about something you would normally throw in the trash. But have you ever received a direct-mail advertisement that you’ve actually considered, or even responded to? Maybe you’re a member of the American Library Association, and someone has sent you an e-mail about an upcoming library conference in a nearby city because you opted in, or gave permission to receive information from the company. Or maybe a local real estate agent has sent out fliers to the residential areas in your zip code and you just happen to be thinking of selling your house.
As a sales professional, direct marketing, or communication in the form of direct mail or e-mail sent directly to your potential prospects, gives you the advantage of reaching a large pool of leads without having to invest the time to individually contact each one. Methods such as direct mail and e-mail allow your prospects to self-qualify since only the ones with genuine interest will follow up. On the flip side, direct mail yields a lower rate of return than most other methods: usually only about one to three percent.Tony Alessandra, “Direct Mail Prospecting,” Speakers Roundtable, www.speakersroundtable.com/sales-training-tony11.html (accessed February 15, 2010).,Tony Alessandra, “Direct Mail Prospecting,” Speakers Roundtable, www.speakersroundtable.com/sales-training-tony11.html (accessed February 15, 2010). E-mail has similar response rates depending on the offer or communication. These methods can still be worth the investment, considering the relatively low inputs of time and money it takes to reach so many.
However, the time and money you do put into direct mailing or e-mail campaigns will be wasted if you send out your communications at random. There are three ways you can go about generating targeted mailing lists:
1. Every major city has organizations that specialize in mailing list research, allowing you to order up-to-date address lists organized by zip code, income, age, interests, or other characteristics that matter to you. For as little as \$25, you can get lists of up to a thousand prospects.
2. Many of the business directories and databases you read about earlier in this section provide e-mail and postal mailing addresses for businesses and private households based on specific criteria.
3. Professional salespeople also develop personal directories for their mailing lists. When you meet prospects, trade business cards with them. If these prospects pass your initial stages of qualification, you can add them to your personal list of mail recipients.Tony Alessandra, “Prospecting, ” Assessment Business Center, www.assessmentbusinesscenter.com/media/articles/article_prospecting.pdf (accessed February 15, 2010).
Power Prospecting Source #9: Cold Calling
In the last ten years, Pat Cavanaugh, CEO of a Pittsburgh-based promotional products company, has grown his business 2,000 percent—and he’s done almost all of it through cold calling. Cold calling, or making an unsolicited phone call or visit to a prospective customer, can be quite effective for the salespeople who know the right approach, but it’s also most salespeople’s least favorite prospecting activity. For one thing, you never know whether the person on the other end of the line will be rude or hang up on you altogether. Additionally, most salespeople feel pressured to actually sell their product or make a pitch during a cold call, but according to Cavanaugh, cold calling isn’t about making sales; it’s about establishing a connection with the prospect.Susan Greco, “The Nonstop, 24-7 CEO Salesman,” Inc., August 2000, www.inc.com/magazine/20000801/19766.html (accessed June 11, 2009).
According to Cavanaugh, it’s essential to get the prospect to like you in the first thirty seconds.Susan Greco, “The Nonstop, 24-7 CEO Salesman,” Inc., August 2000, www.inc.com/magazine/20000801/19766.html (accessed June 11, 2009). While this may sound like it’s putting a lot of pressure on you as the caller, you can actually think of it as a way of taking the pressure off. Remember, you don’t have to sell your product during the call; the goal is only to make a positive connection. You don’t have to lay the schmooze on either. Instead, be direct and sincere, and be yourself. Your prospect, who is probably very busy, will appreciate directness and brevity.
Hanzo Ng, CEO of the Malaysian company Sales Ninja, agrees. Ng says the goal of the cold call should be to find out whether your prospective buyer’s needs match your solutions. If you know you can’t help your lead solve her problems, you shouldn’t pursue the call further.Hanzo Ng, “Prospecting, Cold Calling & Networking,” Malaysian Business, October 1, 2008, findarticles.com/p/articles/mi_qn6207/is_20081001/ai_n30902653/?tag=content;col1 (accessed June 11, 2009). A cold call is a perfect way to find out at what stage the lead is in of his buying process. She might still be a lead for future sales, but at this time she isn’t a qualified prospect. For that matter, if your lead seems unreceptive, you might also decide to end the call or to offer to try back at another time. Ultimately, it’s important that your prospective buyer doesn’t feel like she’s being pressured in any way; people have come to expect pushy salesmen and saleswomen on the phone, and you want to set yourself apart from this perception.
If the lead does have a problem that you can address, you should go ahead and offer to make an appointment to meet in person. Again, there should be no pressure on either end; your prospect will accept an appointment if she is interested. If she doesn’t agree to an appointment, don’t try to press it. Sometimes, it may simply be a matter of timing: your prospect might ask you to call back in few months. In this case, get your calendar out and set up a specific time when you can try to call back. For instance, “Three months from now will be early March. Is it all right for me to try calling again then?” If she agrees, go a step further and ask something like this: “In the meantime, would it be OK if I sent you occasional updates by e-mail to let you know about new developments and promotions with our product?” This enables you to periodically follow up so that you maintain a connection with your lead.Keith Rosen, “Keep the Lines of Communication with Your Prospects Open,” AllBusiness, www.AllBusiness.com/sales/sales-management/4001387-1.html (accessed June 11, 2009).
Finally, it’s important to research your prospect before making a call. You should know the size and scope of the company, key people, company culture, and anything about the company that has recently come up in the news. Doing your research allows you to personalize your introduction. After explaining who you are, you might say, “I recently read in Crain’s Chicago Business that your company’s number one priority in the coming year is doubling revenues by increasing your sales force….” Doing your research and keeping a few simple tips in mind should take the pressure off in cold calling and give you the confidence to establish crucial prospect connections.
Power Prospecting Source #10: Be a Subject Matter Expert
Wouldn’t it be great if, rather than going out to track down prospects, you could get your prospects to come to you? Presenting yourself as a subject matter expert, an authority in your field, is one secret for making this happen. CEO and consultant Keith Ferrazzi, started using this technique shortly after graduating from college. Even though he didn’t have much experience under his belt as a new graduate, he picked an area and began researching until others in his industry came to know him as an expert and would go to him for consultation and advice. Set up a blog or write articles offering free advice. According to Ferrazzi, you should make a habit of writing and publishing articles in your industry.Keith Ferrazzi, “To Be Known, or Unknown,” Inc., www.inc.com/resources/sales/articles/20061001/kferrazzi.html (accessed June 11, 2009).
If you include your contact information and a brief bio on the page, then qualified prospects will often find you on their own. For instance, maybe you work for a company that sells résumé and cover letter consulting services for job seekers. You decide to write an article explaining “10 Things to Avoid When Dressing for a Job Interview,” and you post the article on your blog and submit it to CollegeGrad, a Web site that publishes helpful blog posts like yours. You allow CollegeGrad to use your article for free in exchange for posting a link to your Web site in the margins of the Web page. Now when people perform a Google search on “dressing for a job interview,” your article may come up, ensuring that a number of people who match your ideal prospect profile see the information about you and your product.
When generating B2B leads, you can often find prospects by offering Web-based seminars, or Webinars, with helpful advice on some aspect of marketing, or by publishing informative reports (white papers) that people can download for free. For instance, a marketing consulting firm might offer a white paper on “Increasing Your Open Rate on E-mails” that businesses can download for free as long as they register their information on the firm’s Web page. Requiring users to register allows the firm to track contact information for new leads with whom they can then follow up by e-mail, cold call, or mail. Even better, if a lead finds that the free advice they downloaded is useful, they will quite likely contact the firm voluntarily to find out about the marketing services they provide.
Organizing Your Prospect Information
If you’ve ever ordered shoes from Zappos, you might be aware that the company is known for its excellent customer service. But you might not know one of their secrets to achieving this: keeping detailed records of every interaction they have with a customer. These records are part of a customer relationship management (CRM) system, the tools a company uses to record and organize their contacts with current and prospective customers. If you ever shop at Amazon, you’ll notice the product suggestions that pop up on your screen when you log on. That’s also an example of how CRM is used.“Making Customer Relationship Management Work,” Inc., 2001, www.inc.com/articles/2001/07/23102.html (accessed June 11, 2009).
Choosing a System
CRM software allows you to maintain relationships in a systematic way, following up more consistently with your leads and continuing to meet the needs of your existing customers. If the individual with whom you’ve been doing business at a particular company leaves, you should update that in your database and begin prospecting for another lead at the company. If you’ve recently mailed information to some of your leads, CRM software will help you keep track of which customers the mailing went to and how recently it went out, so you know when to follow up with those prospects by phone. You have a huge range of CRM programs from which to choose, and while these applications were once large-business luxuries, more recently there are versions that are priced within the reach of smaller businesses as well.Karen M. Kroll, “CRM: Software as a Customer Service,” Inc., 2007, technology.inc.com/software/articles/200706/CRM.html (accessed June 11, 2009).
On the other hand, depending on the type of sales and prospecting your company does, you may only need to use a contact management system (CMS), a system that keeps track of your customer calls and meetings, which is usually less expensive than CRM software. CMS programs are another means of tracking and organizing customer and prospect information, but unlike CRM, CMS programs don’t track all information about every customer interaction. If you are the only person from your organization dealing with a particular prospect (e.g., if you’re a stockbroker or a real estate agent), you usually only need CMS software. The CMS will allow you to keep current contact and company information on your prospects and to record detailed notes about your conversations with them. But if your company uses multiple methods and/or multiple salespeople to communicate with a prospect (think Zappos.com or Best Buy), then CRM will be a better tool so that each salesperson who interacts with the customer can record their interactions with that individual or company and so that your organization know how and when to follow up.Andrew Boyd and Alex Jeffries, “The Crucial Difference Between Contact Management and CRM,” E-commerce Times, January 29, 2009, http://www.ecommercetimes.com/story/smb/65995.html?wlc=1244423929 (accessed June 11, 2009).
Gathering Intelligence
If you know your prospect is an eight-year-old online auction house with fifty-two employees operating out of Atlanta, that’s information—statistics you regularly update in your customer databases. These are facts that your competitors can also easily access using a simple online directory search. But what about the last time you visited your prospect in person? While waiting to meet with your contact, you overheard the receptionist talking about the complaints the company had been getting recently because of their confusing Web page layout. If you represent a Web design firm, that’s valuable information, and it’s news your competitor can’t access. In other words, it’s not just information, it’s intelligence. You can use this intelligence to your advantage when you put it together with other information. In this situation, assume you happen to know that one of the competing design firms in town just lost its best online retail specialist, while your company has two designers who have worked with similar online retailers in the past. So you know your company can address your prospect’s need in a unique way. Now you’re armed with competitive intelligence. Keeping your eyes and ears open for intelligence during every interaction is an important part of prospecting, and it’s particularly important to track the intelligence you gather in your customer databases. You never know when it might prove useful.
It’s also helpful to think about information that will help you make a personal connection to your prospect (remember from Chapter 1 how important the emotional connection is). Your observations and information gathering should carry over to personal details like your prospect’s family, his birthday, or his hobbies. Include these insights as part of your organized records, too. It might seem strange at first to make a formal record of personal details, but keeping track of things like the name of your prospect’s two children sends the message that you care about the person, not just his business, and this in turn builds customer loyalty. Upscale hotels like the Four Seasons do this kind of customer relationship management particularly well. Receptionists and concierges track personal details of repeat customers, learning to greet them by name and ask about specific details from previous visits: “Did your sister like the gift you bought her last time you were here?” or “How was your recent trip to Japan?”
Keep It Up-to-Date
Things can change quickly in business, particularly at large companies. The account manager you spoke with last month may have moved to another company yesterday, or the purchasing agent who seemed excited about your product last year may have had to deal with significant budget cuts this year that prevent him from buying again. That’s why it’s crucial to keep your prospect information current. If your competitor sees an opportunity before you do, you’re likely to lose yourself a prospect. And if the individual with whom you’ve been doing business at a company is no longer working there, it’s important to find another key person to contact soon if you want to keep your customer.
Several online business directories (like those mentioned earlier) let you subscribe to customized alerts that will notify you when one of your target companies appears in the news, when there’s turnover of key personnel, or when companies in your industry merge or split off. Most of the directory services have a fee, but there are a number of ways to stay current, on industry news at least, without paying. RSS (Really Simple Syndication) readers (Microsoft Outlook has one, and so does Google) allow you to subscribe to specific news feeds, like The Hollywood Reporter or Advertising Age’s Web page, so that you can keep abreast of the news that affects your industry without having to go out and mine several Web pages every day. Google News Alerts (http://google.com/alerts) is a free service that sends you e-mail updates of the latest Google search results based on your choice of search criteria so you can keep current on your competitors and prospects.
Qualifying Your Prospects
After you’ve identified your prospects, it’s important to understand that all customers are not created equal. Some customers are willing to form business partnerships and grow with you over time while others are just looking to do business with whoever offers the lowest price. Some prospects may never be able to help you or your company achieve your business goals, or their goals may not be strategically aligned with yours, even if you really like doing business with them. Choosing customers carefully will save you time and energy and help you meet you goals. You don’t want to spend several hours writing up a proposal for one of your prospects only to find out they were never genuinely interested.Paul Cherry, Questions That Sell: The Powerful Process of Discovering What Your Customer Really Wants (New York: AMACOM, 2006), 37.
Think back to the sales funnel and the idea that you start out with a large pool of leads and end with a much smaller number of customers. While it is important to cast your nets broadly when you’re rounding up leads, you’ll work most effectively if you weed out the likely from the unlikely early on. You can qualify your leads to determine whether they are legitimate prospects by discovering whether they have the willingness and the ability to make a purchase. Consider these five questions to help you meet your qualifying objectives:
• Does your prospect have a need? This is the most basic thing to figure out about your prospect. There is no use pursuing another individual in the company or delivering a persuasive presentation if there is nothing you can do for this person or organization. If you sell new cars, and your lead is satisfied with the car he bought three months ago, you don’t have anything to offer him.
• Does he or she have the authority to make the buying decision? You can try to sell candy to a five-year-old, and he’ll probably want to buy it, but unless you can convince his parents to make the purchase you don’t have a sale. Similarly, your lead at a company may love your product and tell you it’s exactly what her company needs. But if she isn’t the person with the power to buy, she isn’t a qualified prospect. This doesn’t mean you should write the company off, but you’ll have to figure out how to get in touch with the person who can make the buying decision.
• Does he or she have the resources to purchase the product or service? Sometimes knowing the answer to this question involves contacting the lead and asking some questions. Other times, you can figure this out by doing company research before ever getting in touch with the lead. You wouldn’t have tried to make a major sale to Circuit City just before they went out of business because they wouldn’t have had the resources to buy.
• Does he or she have the willingness to purchase the product? Even if your lead has the resources and authority to buy, he might not be interested in what you’re selling. He might be dead set on a Caribbean cruise when you are selling packages to a ski resort.
• Do you have access to the influencer or decision makers? This is relatively straightforward in B2C sales, but in B2B, it can be hard. If you wanted to sell your clothing line to Macy’s, you couldn’t go downtown to your local branch and pitch your product. Large organizations have layers of personnel, and it’s challenging to ferret out the people whose can influence the buying decision. Think about whether you can reasonably access these individuals.
Managing Your Prospect Base
So you’ve qualified your prospect and you have his or her information in your CRM system. It would be nice if that were all it took. But your CRM is only a way of tracking and organizing customer information; making an action plan, a specific plan of approach, for each customer is up to you. And you won’t make any sales if you don’t act.
After qualifying, you might have some prospects with a clear need, buying authority, and a fairly high level of interest, while others seem uncertain. If you classify your prospects as “hot,” “warm,” and “cold,” you can prioritize by devoting the most initial energy to your top potential customers.Derek Brown, “Growing and Managing Your Prospect Pipeline,” Coreconnex, February 2, 2009, http://www.coreconnex.com/2009/02/04/growing-and-managing-your-prospect-pipeline (accessed June 11, 2009). No two customers are alike. This means that even though you’ve qualified prospects A and B and determined that they do have needs you think you can meet, those needs will be different, possibly drastically so. It’s a good idea to begin your action plan by conducting a careful needs analysis—that is, what specific problems is this prospect facing and how can my product help solve those problems?
Finally, think about the next steps in the sales process. Based on this customer’s specific needs, how will you design your preapproach? What details should be in your presentation, when should you make your presentation, and how and when will you try to close? Develop a timeline and plot out the steps. If you can envision the sale, you are already halfway there.
Key Takeaways
• Prospecting takes creativity and knowledge. You have to look for potential buyers in many places.
• Existing customers and referrals can be excellent sources of prospects because the customers are already familiar with your service and can speak on your behalf.
• Networking provides the opportunity to leverage your existing relationships to develop new leads.
• Business directories and databases (in print and online), trade publications, business journals, are all excellent sources to identify leads.
• Trade shows and events give you an opportunity to talk to prospects.
• Advertising and direct marketing provide a way to reach out to many prospects who may have an interest in your product or service.
• Cold calling is an opportunity to approach the prospect and learn more about how you can meet her needs.
• Being a subject matter expert can set you apart and help generate leads because of your expertise.
• Qualifying the lead includes identifying if the prospect is ready, willing, and able to make a purchasing decision about your product or service.
Exercise \(1\)
1. Assume you are selling staffing services to banks and financial institutions. Identify three sources you would use to identify prospects.
2. Imagine that you sell real estate in your area. Discuss three ways referrals can find you.
3. Assume you are selling advertising. Identify three trade organizations that you might use as sources for leads.
4. Assume you are responsible for donations at a local nonprofit organization that provides services for battered women. You are looking for possible corporate sponsors for your shelter. Visit your campus library and review at least two of the databases or directories listed in this section and identify two leads from each one.
5. Assume you sell lumber to construction companies. How would you use a trade show to identify leads?
6. Identify the industry for each of the following NAICS codes. How would this information be helpful in prospecting?
• 44
• 62
• 71
• 54 | textbooks/biz/Marketing/The_Power_of_Selling/07%3A_Prospecting_and_Qualifying_-_The_Power_to_Identify_Your_Customers/7.04%3A_Go_Fish_-_Resources_to_Help_You_Find_Your_Prospects.txt |
Learning Objectives
• Understand how to identify prospective employers.
If you’ve ever applied for a job or an internship, you know how frustrating it can be. You might scour the local paper or Craigslist for new postings, only to find one or two promising leads. This is especially true if you’re applying during peak times (e.g., the beginning of summer, when all the students are looking for work at once) when you know that tens, maybe hundreds of others, are sending in applications for the same positions. The good news is that now that you know about prospecting and qualifying, you are in control of your job search and have the power to set yourself apart from your competitors.
Three Steps to Prospecting for the Right Employer
You don’t have to limit yourself to a handful of job prospects. Once you know where to look, you’ll be overwhelmed with the possibilities. There is no need to wait for your prospects to post job openings or to find your résumé somewhere and approach you; instead, you identify your “buyer” and approach them. Most job seekers look for advertised positions through Internet job sites, newspaper want ads, or employment agencies. This is a fair starting point, especially if some of your target companies have posted vacancies. But it’s important to know that only about one-fifth of the jobs are actually advertised this way.Katherine Hansen and Randall Hansen, Dynamic Cover Letters: How to Write the Letter That Gets You the Job (Berkeley, CA: Ten Speed Press, 2001), 2. The other four out of five positions are never publicly announced; they might be filled internally, by networking (covered in Chapter 3), or through cold-contact (or unsolicited) applications. This means that prospecting and qualifying potential employers (whether or not they are advertising for a position) is likely to yield good results, provided you do your research first.
If this sounds far-fetched—What? You can send an application when there’s no job posting?—think about J. Crew. When the company has new merchandise, they send out a catalog. You don’t usually request the catalog, but when it comes, if you like J. Crew’s products, you’ll take a look, and you might just buy. Just because a company hasn’t posted a position doesn’t mean there isn’t a need. Let them know what you have to offer.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 140.
Step 1: Build Your Ideal Company Profile
If you could work for your dream company, what would it look like? Would it be a fast-paced, competitive environment with good opportunities for advancement? Would it be a creative organization where you could work collaboratively with like-minded individuals? Would it be a company that includes social responsibility as part of its mission statement? Would you work for a nonprofit, where you could see firsthand the difference you were making in the world? Just as you begin prospecting by building an ideal customer profile,Brian Carroll, “10 Lead Generating (Prospecting) Tips for Sales People,” B2B Lead Generation Blog, May 21, 2007, blog.startwithalead.com/weblog/2007/05/10_lead_generat.html#ixzz0GAhpeddB&B (accessed June 11, 2009). you should also prospect potential employers by visualizing your ideal work environment.
Consider not only the criteria that are most important to you (e.g., benefits, company values, advancement opportunities), but also location. Do you want to stay in a particular region of the country? Is it important that you live in or near a big city? Do you want to live somewhere with good outdoor recreation? Is there some other condition that matters to you? You’re free to choose. FindYourSpot.com is a resource that can help you with your location decision. You can also look at lists like Relocate-America’s Best Places to Live and then visit Salary.com (use the Cost of Living Wizard) to determine how much more or less it will cost you to live in your favorite location.
Finally, you should consider which employers will be interested in the skills you have to offer. But don’t sell yourself short here, either. Just as in prospecting you should never write off a lead without investigating it, you should also never write off a lead in your job search. If you can see how your skills would benefit a company, that company is a potential employer.
Essentially, there are three things to consider when you build your prospective employer profile:
1. What are the most important characteristics of your ideal company?
2. In which location would you most like to live?
3. Which companies might be interested in the skills you have to offer in return?
You can use all these factors as guidelines to generate a list of target companies. Building the ideal company profile isn’t about saying “wouldn’t it be nice if.…” Instead, it’s about empowering you to go out and find the employer for whom you want to work.
Step 2: Make a List of 25 Target Companies
So how many companies should you consider? Definitely more than the four or five that have recently posted ads in your local paper. Think about the sales funnel model: cast your net broadly to begin, but after some qualifying research, you should have a list of at least twenty-five prospects you’d like to target. Don’t define your targets too narrowly. For instance, if you’re going into accounting, consider service providers (accounting firms), but also consider companies that have an accounting department and recruiting firms that are interested in people with your skills.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 140.
Twenty-five prospects is a good rule of thumb for the top of your funnel because it doesn’t leave you with so many that you will overwhelm yourself with research and applications, but it is enough to allow for the fact that some prospects will drop out along the way. After additional research and contact with your prospects, you will find that some don’t meet your qualifications after all. Some companies in turn might not be willing to give you an interview; others might give you an interview, and even hang onto your résumé, but will tell you they don’t have any openings at the moment. Others might give you an interview but decide your qualifications aren’t what they are looking for. Even as the funnel narrows, an initial pool of twenty-five prospects should leave you with a number of companies that are interested in you and in whom you are also interested. Just as you learned earlier in this chapter, prospecting is never ending so you should always be adding new qualified prospects to your target company list.
Finally, it is critical that as you define your prospects and perform your research, you keep records. Think about the contact management systems businesses use to organize and track their prospects. While you don’t need such a complex system for a job search, taking notes on Post-its or scraps of paper that you might or might not find later on, or trying to commit details to memory, will sabotage your hard work. You can use a simple spreadsheet in Excel to organize and track prospective employer information. Even if you don’t consider yourself an organized person, if you use a simple tool like this one, you have the ability to keep your job search organized—and make your life much easier.
Step 3: Forget about “To Whom It May Concern”
If you ever get mail addressed to “Resident at (your address),” you know that these are the letters that end up straight in the trash. If someone can’t be bothered to find out your name, you won’t bother yourself to read their mail. The same is true with your job search: keep in mind that people, not organizations or departments, are ultimately responsible for hiring. So it’s essential to find key individuals at each company, especially when you’re sending out cold-contact cover letters and résumés. You want to make sure your letters actually get read, and if you open your letter with a general, impersonal address, it immediately sends the message that you don’t care enough to learn about the company and its people—more likely than not, your letter will end up in the recycle bin.Katherine Hansen and Randall Hansen, Dynamic Cover Letters: How to Write the Letter That Gets You the Job (Berkeley, CA: Ten Speed Press, 2001), 4.
On the other hand, a little knowledge can go a long way. If a letter with the hiring manager’s name on it comes across his desk, he isn’t likely to ignore it. The best thing to do is begin with the company’s general number listed on their Web site (or in a directory or phone book) and ask the receptionist for the name, contact info, and title for the hiring manager in your field. If the receptionist gives you the name of the human resources manager, be persistent until you get the name of either the hiring manager, the head of your targeted department, or the company president (if it is a smaller organization). Especially if a company hasn’t announced that they are hiring, sending a letter to human resources means that your hiring manager—who might very well be interested in what you have to offer—will probably never receive your application. If calling the company’s general number doesn’t get you the contact information you need, the directory of Corporate Affiliations is an online source where you can find contact information for the key individuals in many companies.
You’ve Got the Power: Tips for Your Job Search
Every Company Should Get More than One
You might think that you should send only one letter to each company. Don’t stop there! Increase your chances of getting a call by sending as many letters as possible to appropriate hiring managers at each company. For example, if you are applying to an advertising agency for a position in account management, send a letter to the agency president, vice president of account services, account directors, account supervisors, even account executives. Don’t be afraid to send your letter to people like the president or vice president. Often times they will pass it along to the hiring manager and ask him to follow up with you.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 140.
Sources for Prospecting: How to Identify Your Target Companies
So how do you go about finding prospective employers? The task may seem overwhelming, but there is a wealth of resources to help you once you’ve asked yourself some questions to help guide your search. You can start by choosing the specific area of your field you’d like to focus on.“Do the Research That Supports Your Job Search,” The Riley Guide, May 2009, rileyguide.com/jsresearch.html#r201 (accessed June 11, 2009). For instance, an environmental designer might choose to specialize in sustainability issues, health care environments, or the design of retail spaces. Your prospects should be the companies who hire people with your skill set and particular focus.
A number of good online business databases can get you started here; many are the same directories and databases you would use to find prospective buyers for your products (see the previous section). Keep in mind that while many of these databases charge a fee for their services, your local or school library should have free subscriptions. Directories are good resources for finding industry-specific companies (e.g., accounting firms if you’re an accountant). But since you want to keep your search open to several kinds of companies, try using a combination of prospecting sources.
Many sources you would use for prospecting potential customers are also good sources for finding employment prospects. You can try membership lists for professional organizations, such as the American Marketing Association or the American Institute of Architects. It’s especially helpful to look for local chapters or organizations in the city in which you would like to work. For example, at the Philly Ad Club’s Web site, you can find a list of over one hundred advertising agencies in the region. Trade publications and trade Web sites are good sources for industry and employment information as well—as are business journals and business journal Web sites. Just as you might subscribe to an RSS (Really Simple Syndication) feed or Google News Alerts to stay up-to-date on your leads and competitors in business prospecting, you can do the same when prospecting for employers by subscribing to feeds for trade Web sites or business journals. Again, don’t underestimate the effectiveness of going to your local library. Ask your librarian to point you to some business lists, journals, and directories and take advantage of their free online subscriptions.
Table \(2\): Sources for Finding Your Target Companies
Business Directories and Databases
Riley Guide
rileyguide.com/careers.html
This Web site is loaded with information on job searching, and it provides a customized Google search to help you identify target employers. Best of all, it’s free.
Hoovers
www.hoovers.com
The site allows you to search by industry and geography. It also provides the name of the top companies in an industry segment.
Advertising Redbooks
www.redbooks.com
The Web site contains information on over 20,000 advertising companies. This is an excellent source if you’re considering work in advertising or marketing.
Business Lists
Book of Lists Published in most major cities by American City Business Journals, these have contact information, company profiles, and key facts for specific employers in your targeted region. Most libraries have a hard copy available at no charge.
Bizjournals
http://www.bizjournals.com/bookoflists
The site links you to the Book of Lists for 40 U.S. cities (for a fee).
“Best of” and “Top” Lists Top Entry Level Employers, Fortune 100 Best Companies to Work For, The Fastest-Growing Technology Companies, and The Best Places to Launch a Career are some examples. Check local publications as well as national publications such as BusinessWeek, http://www.businessweek.com/managing/career, and Fortune, money.cnn.com/magazines/fortune/management.
Professional Membership Organizations
Local Professional Organizations Location and industry specific: Use your local online resources to identify local organizations. For example, http://www.iloveseattle.org includes a listing of local professional organizations for multiple industries.
National Professional Organizations
www.associationjobboards.org
The Web site includes a listing of many professional organizations. Also, check out the Web sites of national organizations; many include links to local chapters. For example, http://www.smei.org, the home page for Sales and Marketing Executives International includes a link to local chapters.
Trade Journals and Web Sites These often have listings for the top companies in their industry.
Keep your ideal employer profile in mind as you generate leads. If you know the region or some specific cities in which you’d like to live, that can help refine your search because many directories are searchable by state or city. If you want to find a company with specific characteristics, business lists are good sources for prospects. For instance, if family-friendly companies are a priority, you could search Working Mother’s list of “100 Best Companies,” or if you want a workplace with young employees that offers good training and opportunities for advancement, you might search CollegeGrad.com’s list of “Top Entry Level Employers.” Fortune publishes an annual list of the top one hundred companies to work for overall (money.cnn.com/magazines/fortune/bestcompanies/2009), and they also provide top company lists by state, if you are considering a particular region of the country. Of course, the “Fastest-Growing Companies” list in national and local business publications is always a good reference with which to start.
Qualifying Prospective Employers: Four Things to Consider
After doing industry research, you might have a fairly large list of potential companies, but you can narrow it down to your twenty-five targets by doing more directed research on each of your prospects.
Company Web Sites
According to Amazon’s Web site, the company defines itself as technologically innovative, customer-centric, and a global leader in e-commerce. If you were to browse the Safeco Insurance Web site, you would find a company that describes their core values as diversity and an inclusive work environment, community outreach and sponsorship, and service that reaches a broad customer base. Any company’s Web site will give you insight into how the company presents itself: their mission and values, the benefits of the products and services they offer, and the culture they want to cultivate. The design of the Web site itself can tell you something about the company. Are they conservative or cutting edge and creative? Is the page well organized and well maintained, or is it convoluted and difficult to navigate? Additionally, even if you plan to cold-contact an employer, the company’s career page will let you know if the organization has any advertised vacancies.
Insider Perspectives
The Web site lets you know what the company wants you to know about itself. But what about what other people are saying about a company? That’s certainly something that you’ll want to find out. Some Web sites, like Vault or WetFeet, offer honest, insider profiles of companies based on employee surveys about things like company culture, dress code, diversity, hours, vacation time, and opportunities for advancement. Does the company have a relaxed atmosphere? Do they expect employees to work long hours? These are things that the company Web site itself won’t tell you.
Company News
It’s also a good idea to check the news for the latest on what’s happening in a company. While companies promote their own good news, the media picks up everything in between. For instance, when the MGM Mirage corporation was facing massive debt and the possible failure of its extravagant City Center construction project, the news hit major papers across the country. But if you had gone to the company’s Web site or checked their press releases, you would have found announcements about “cost savings,” followed by praise for the scope and incredible amenities of the Mirage’s construction project—clearly a very different picture. To get company news, you can search national news sites for archived articles, or if you want to learn about a smaller, localized company, try searching local newspapers. It’s also a good idea to set up Google News Alerts or subscribe to RSS feeds for your field of interest (see the more detailed explanation in the previous chapter goal) so that you are constantly updating your intelligence, just as you would for a prospective buyer.
Company Stats
Finally, when qualifying prospective companies, there are a handful of other things to consider. How does the company measure up against its competitors? How large is the company? Is it profitable? For public companies you can use databases like D&B and Hoovers to research stock prices, quarterly earnings, and senior management changes. You can access this information on multiple companies at a time by taking advantage of free database subscriptions at your local library, or you can go to individual company Web sites to gather stats. Publicly held companies usually post recordings of quarterly conference calls with analysts on their Web sites in the investor relations section.
While you won’t be able to research stock prices or quarterly earnings on private companies, you can still find out about personnel turnover using most online databases. Ask yourself how this turnover might affect the way business is conducted and check the Better Business Bureau (BBB) to find out if any complaints have been lodged against the company. Finding an employer that closely matches your ideal profile is well within your power, if you consider yourself—your unique brand—as a solution that can meet a prospective employer’s needs. The prospects are out there just waiting to be identified.
Key Takeaways
• To get the job you want you need to prospect to find prospective employers.
• It’s best to create a list of twenty-five target companies for which you would like to work.
• Do your prospecting thoroughly to identify not only the companies but also multiple hiring managers at each company.
• You can use the same tools to identify your target companies that you use to identify sales prospects.
• Qualify your employment leads with additional research about the company from the company Web site, insider perspectives, company news, and company stats.
Exercise \(1\)
1. Create your ideal prospective employer profile using the following points:
• What are the most important characteristics of your ideal company?
• In which location would you most like to live?
• Which companies might be interested in the skills you have to offer in return?
2. Discuss how the sales funnel applies to your job search.
3. Visit your campus library and meet with the librarian to learn about the databases, directories, or business lists that are available for your job search. Use at least two different sources to identify target companies (hint: the Book of Lists is available in many cities and provides a list of top companies in several categories).
4. Using the list you created in Exercise 3, conduct further research about each company and identify at least three hiring managers to whom you can send your résumé and cover letter. | textbooks/biz/Marketing/The_Power_of_Selling/07%3A_Prospecting_and_Qualifying_-_The_Power_to_Identify_Your_Customers/7.05%3A_Selling_U_-_How_to_Use_Prospecting_Tools_to_Identify_25_Target_Companies.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand the seven steps of the selling process and how to identify and qualify sales prospects.
• You can list the seven steps of the selling process and how they work.
• You can understand the vital role of prospecting in the selling process.
• You can compare and contrast the difference between a lead and a prospect.
• You can discuss the role of the sales funnel.
• You can identify ten prospecting sources.
• You can understand how to qualify leads to become prospects.
• You can apply the tools of prospecting to your job search.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. List the seven steps of the selling process.
2. Why do salespeople qualify their leads before they call on them?
3. When a customer says, “It’s too expensive,” that’s an example of which step in the selling process?
4. True or false: After the sale is made, the salesperson’s job is done.
5. Why is prospecting considered the foundation of the selling process?
6. Describe the sales funnel.
7. Describe the difference between a lead and a prospect.
8. Identify at least three business directories or databases that you can use to identify prospects.
9. Identify three business journals that can be used for prospecting.
10. Why is cold calling effective for prospecting?
11. What is a subject matter expert? How can being a subject matter expert help you prospect for leads?
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. Following are two roles that are involved in the same selling situation—one role is the customer, and the other is the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the customer and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and do a role-play in groups or individually.
Count on Me
Role: Controller
You are the controller of a paper company. You currently have an internal accounting department, but since your company is growing so quickly, you are considering using an accounting services company to supplement the internal department. You met a sales rep from AccountSource at the last trade show, and their services sounded like what you need at your company.
• What do you expect the sales rep to know about you and your business when she calls you?
• What do you want to know about AccountSource and the sales rep when she calls?
• What will convince you to agree to meet with the sales rep?
Role: Sales rep for AccountSource
You are prospecting for new customers because your sales goals have increased and you need to expand into new areas. You met the controller from a paper company at the latest trade show, and you think this could be a good lead. You have some questions that you would like to ask the controller to see if this is a qualified lead.
• Will you conduct research before you call the lead or after?
• What research, if any, will you do?
• What questions will you ask the controller?
• How will you qualify this lead?
ACTIVITIES
1. Visit your campus career center to learn about prospective target companies, especially those that interview on campus. Do research on the companies including the names of hiring managers in the department in which you may want to work.
2. Create your complete list of twenty-five target companies including at least three hiring managers at each company.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Prospecting and qualifying, preapproach, approach, presentation, handling objections, closing the sale, and follow-up.
2. Qualifying helps save time so you don’t waste time calling on people who don’t have the time, money, or authority to purchase your product or service.
3. Handling objections.
4. False. The salesperson’s job really begins when the sale is closed.
5. When prospecting is done correctly, the other steps in the selling process build upon it.
6. The sales funnel is a helpful way to visualize the process of finding and qualifying new prospects and ultimately converting them to customers. Not all leads become prospects, and not all prospects become customers.
7. A lead is a qualified prospect.
8. There are several databases and directories, including Directory of Corporate Affiliations, Hoovers, and D&B Million Dollar Database.
9. There are several business journals including Wall Street Journal, Business Journals (by city), Crain (by major city).
10. Cold calling gives you an opportunity to talk to the prospect and learn more about his goals and how you can add value.
11. Subject matter experts are people who are authorities in their field. Subject matter experts share their knowledge at trade shows, at industry events, on blogs, and in other online communities and social networks. Being a subject matter expert helps establish you as being a leader in a particular area. Prospects usually want to learn more from and do business with subject matter experts. | textbooks/biz/Marketing/The_Power_of_Selling/07%3A_Prospecting_and_Qualifying_-_The_Power_to_Identify_Your_Customers/7.06%3A_Review_and_Practice.txt |
The Preapproach: The Power of Preparation
Video Ride-Along with Tonya Murphy, General Sales Manager at Radio Station WBEN-FM
You met Tonya Murphy in Chapter 3 when she talked about the power of relationships. Part of building relationships that work is doing your homework. It’s not enough to simply use the information you gathered when you were prospecting and qualifying.
Ride along with Tonya and learn how she researches and develops an “I know” statement as part of her preapproach before every sales call.
8.02: Researching Your Prospect - Going Deeper
Learning Objectives
• Explain how to research a qualified prospect and list resources to conduct prospect research.
Spring break is just around the corner. You and your friends definitely want to go away somewhere great. You decide on Cancún, Mexico, as a destination. Since you want to get the best plane fare and hotel rate, you will have to book early. That means planning, coordinating, and even doing some research on the area. You want everything to be perfect—after all, this is spring break.
Just as preparation made your spring break trip come together perfectly, preparation also makes a sales call successful. By now you’ve identified and qualified your prospects, you’ve come up with an action plan, and you’re probably eager to get down to business. However, you can’t just call your prospect or show up at his door without doing your homework first. How big is his business? What are his business goals? What is his company culture? Is he already doing business with any of your competitors? In what ways do your products or services present a solution he could use? The preapproach, or the process of finding out the answers to these questions, is critical.Neil Rakham, The SPIN Selling Fieldbook (New York: McGraw-Hill, 1996), 39. Doing your research and coming prepared gets your prospect’s attention and shows him that you care. It gives you the power to sell adaptively and puts you ahead of your competitors.
Keep in mind that when someone ultimately decides to do business with you, he is trusting you with one of the things that’s most important to him—his money. Furthermore, he is trusting in you above all other people and companies to help him with his challenges. Consider that your company is using personal selling because customers want additional information or customization of the product or service in order to make a decision. People only buy from people they trust.C. J. Ng, “Customers Don’t Buy from People They Like, They Buy from Those They Trust,” EzineArticles, August 7, 2008, ezinearticles.com/?Customers- Dont-Buy-From-People-They-Like,-They-Buy-From-Those-They-Trust&id=1391175 (accessed July 15, 2009). You have to earn that trust every day. The first step starts here: how well are you prepared to earn his respect and trust?
Gather Information
By the time you’re ready for the preapproach, you’ve already done some initial research as part of the qualifying process. With the preapproach, you take your research to the next level; you find out as much as you possibly can about the company or individual with whom you want to do business. As marketing and strategy expert Noel Capon says, a thorough understanding of your prospect’s business processes and challenges gives you the crucial insights you’ll need to offer specific, workable solutions your customers can use. Gathering this information demonstrates personal commitment and boosts your credibility with your prospects.Noel Capon, Key Account Management and Planning (New York: The Free Press, 2001), 142.
Your research will pay off whether you’re preparing to contact a new prospect—a target account—or whether you’re working with an existing customer. In Chapter 7, you read that some of your best prospects are the customers you already have. It’s particularly important to identify your key accounts, your current customers who are—or have the potential to be—your most significant sources of sales. Maybe you sell insurance, and you’ve contracted with a large restaurant chain to provide their employee health and dental plan. This key account is one of the largest companies with whom you do business, so you make an extra effort to stay informed about developments that affect this company. You’ve recently received a news alert that due to an unstable economy the restaurant chain has decided to cut employee hours. As a result, many of the staff members are now working part-time and no longer qualify for full health benefits. Based on this information, you call your contact at the company and offer to provide a more flexible and less expensive partial employee benefits package for which their part-time workers could still qualify. You tell her that this solution will serve her company’s need to cut costs and will allow them to retain employees who might otherwise become dissatisfied and leave.
Whether you’re contacting new or existing customers, it’s important to have your specific call objectives in mind and to clearly map out the information you’ve already gathered about the company so that you can refer to it during the call. You can keep this information organized using a precall planning worksheet that lists the key company statistics you’ve identified as part of your research and includes a checklist detailing the purpose of the call: the information you’d like to learn about the company, the solutions or key facts you plan to communicate, and any other goals you hope to achieve. The worksheet doesn’t have to be complex; it can be as straightforward as the sample in Figure \(1\). Your customer relationship management (CRM) or contact management system (CMS) may also provide a place for you to do your precall planning work. A sample precall planning worksheet is shown in Figure \(1\).
Listing your goals in writing before you make a sales call gives you the power to measure the success of your call. Did you get the information you needed? Did you communicate the information you listed in your checklist? If not, how can you adapt your approach and set goals for your next sales call?
Going Deeper with the Fundamentals: What You’ll Want to Know
The first sales call (or calls) is often an extension of the qualifying process. Even if the company passes initial qualification, as you learn more you might find out that they aren’t your ideal customers after all. You might discover that your contact at the company is about to leave or change positions. Or you might realize that the company’s current situation isn’t one in which they’re willing or able to buy. The following are some things you’ll want to know as you research the company during your preapproach.
About the Company
• Demographics. Understanding the basics will help you ensure the company fits your ideal prospect profile and allow you to tailor your solution to fit the company’s particular situation. What kind of business is it? How large is the business? How many locations do they have? How many people work for them? Where is the home office located? How many years have they been in business?
• Company news. Tracking company news is another way to discover opportunities for sales. Has the company put out any recent press releases? (You can generally find these on the company Web site in the investor relations, press release, or press room section.) Has the company recently appeared in the news? (Setting up Google News Alerts at http://www.google.com/alerts for your current and potential customers will keep you up-to-date on this.)
Don’t just read the news; creatively think about what the news is telling you about selling opportunities with a prospect. For example, if you were selling paper goods (cups, lids, straws, bags, cup jackets, napkins, etc.) to coffee shops, you would have read a press release about the test marketing of McCafés several months before the national launch. Then you would have read about the announcement of the national launch a few months before it was planned to occur. These press releases are selling opportunities. You might think it would only be a selling opportunity if you were selling to McDonald’s, but that’s not true. The fact is McDonald’s announced that it was about to expand the market for premium coffee. That’s an opportunity to help your customers and prospects. For example, what if you suggested that your customers and prospects print an advertisement on their bags, napkins, cups, and cup jackets to announce a promotion called “Morning Joe Wake-up Call”? “Buy a cup of coffee every day for ten days and get a free cup of Joe!” This helps increase their sales, which ultimately increases your sales. You could bring this idea to your customer or prospect in advance of the McCafé launch and discuss how your idea can help him build his brand prior to the competitive effort. Now that’s using company news to drive sales.Gerry Tabio, “Creative Solutions,” presentation at Greater Media Philadelphia Sales Meeting, Philadelphia, PA, May 14, 2009.
• Financial performance. Keeping up-to-date on the company’s financial performance will help you determine whether your prospect is currently able to buy, which might lead you to discover sales opportunities. All publicly held companies are required to post their quarterly earnings on their websites. Generally there will be a link for “investors” or “investor relations” on the company home page that will take you to financial data, including a recording of the company’s quarterly earnings conference call. It’s a good idea to listen to these conference calls to learn important information about the company’s strategy and financial performance.
Link
Listen to the Most Current Quarterly Earnings Conference Call for Macy’s
phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-webcasts
About the Company’s Customers
• Customer demographics. Are the company’s products used by businesses or individual consumers? If consumers, what age, education, and income level? If businesses, what size and kind of businesses? Knowing the organization’s customer demographics will help you tailor your solution to the company. For instance, if you’re selling clothing designs to Old Navy, knowing that the company appeals to families and that it draws in value-conscious customers, you might send them samples from your more basic and reasonably priced clothing line, rather than your top-of-the-line products or your trendiest designs.
• Size of customer base. In B2B sales, it’s important to know whether your prospect serves many customers or primarily works with a few large accounts. Microsoft, for example, sells its products to large corporations, but they also deal with individual consumers. Some companies, on the other hand, work with a few large accounts, so their success is very dependent on the success of their key customers. If your prospect is a sporting goods manufacturer that only sells its products to Dick’s Sporting Goods, Dick’s Sporting Goods’ financial performance will affect the performance of your prospect’s business.
• What customers are saying about your prospect. You can learn a lot about a company by paying attention to its reputation with customers. If the business has a lousy customer service record, they might not treat their vendors well either. This is why it’s worthwhile to read customer reviews as part of your qualifying process. For instance, if you do business with airline companies, you might prefer to fly with Southwest (whose customer reviews say things like “This is an airline I’ll use again and again!”) than United Airlines (where one reviewer writes, “United Airlines hands down has the worst customer service of any company I have ever dealt with”). For large companies, doing a Google search will often bring up customer reviews on the organization, or you can try a Web site like Epinions. For local companies, try searching your regional Better Business Bureau (BBB) to see if any customer complaints have been filed against the company.
About the Current Buying Situation
• Type of purchase. In Chapter 6, you learned the different types of buys—straight rebuy, modified rebuy, or strategic alliance. Knowing that information is extremely valuable during your preapproach research. Is the customer making a first-time purchase of the product? (For instance, maybe you’re selling disaster recovery services to a company that has previously lived with the risk of not having their data backed up.) Or will this purchase be a rebuy? Maybe the customer is an interior design firm. The firm already buys paint from a certain supplier but is thinking of making a modified rebuy: purchasing a more environmentally friendly line of paints, either from the same supplier or from someone else (hopefully you!). On the other hand, maybe the design firm is already buying from you and is perfectly happy with the paints and with you as a supplier, so it decides to make a straight rebuy of the same product. It’s also possible that your prospect is considering a strategic alliance with your company in which your organizations would make an agreement to share resources. For example, Pepsi has a strategic alliance with Frontier Airlines in which Frontier agrees that all the soft drinks it serves on board the airline will be Pepsi brand.“Frontier Airlines Partners with Pepsi,” Breaking Travel News, January 9, 2003, www.breakingtravelnews.com/article.php?story=40005018&query=inflight (accessed July 15, 2009). Knowing the type of purchase will help you position your solution to best fit the situation.
• Competitor/current provider. If your prospect is already buying from another company, you’ll want to know who your competitor is. What do you know about this company and their products? Most important, what are your competitor’s strengths and weaknesses? Consider the interior design firm that is about to make a rebuy. If you’ve done your research, you might be able to tell the firm, “I know your current supplier offers a high-quality paint product in a wide range of color choices. Our company offers a wide range of color choices, too, and our product consistently gets high reviews. However, unlike your current provider, we also have a line of soy-based paints, which are better for the environment and for your customers’ and employees’ health than the regular latex variety. Using soy-based paints will increase your reputation as a progressive, socially responsible business.” Knowing your prospect’s current supplier gives you the power to favorably position your product by highlighting the things that set you apart from the competition.
• Current pricing. If the information is available, find out what your prospect’s current supplier charges for their product or service. This information will give you the edge to competitively position your solution. If you charge less than your competitors, you can highlight your product as a cost-saving alternative. If your products cost more, you might consider offering a discount or other benefit to provide a better solution. On the other hand, if your products are more expensive because they’re of a higher quality, you should emphasize that fact. For example, soy-based paint is generally more expensive than latex paint, but depending on your customer’s needs, the extra cost might be worth the benefits of a healthier, “greener” product.
Preparation Is Essential
ih, sales representative at Lupin Pharmaceuticals, talk about how she prepares for a sales call.
About the Contact Person
• Title and role in the company. This is basic and essential information to know. It will help you to personalize your communications and will give you a better sense of your business situation. What role does this person have in the buying decision? Are you dealing with an influencer in the organization? Does this contact person have the authority to make a buying decision, or is this person a gatekeeper, a person with whom you must talk in order to get to the decision maker?
• Professional background. How long has this person been at the company, and what positions has he held? What roles has he had at other companies? This information will help you to adapt your communications and solutions to the individual. You can find valuable information on professional social networks such as LinkedIn and Plaxo.com and use it as you prepare your approach and presentation. For instance, you might find out that someone in your network knows the person you are planning to approach and she can provide an entry for you. You might also learn that the person you plan on calling on was previously a buyer at two other companies and usually likes to bring in his previous vendors. If that’s the case, you might adapt your approach to include benefits that you have brought to other buyers who switched to your company.
• Personal information. Everyone likes to do business with people they like. Learning what you can about your contact’s family, hobbies, and interests demonstrates that you care about him as an individual and helps you build a relationship with your customer. This is useful information to keep on hand for the opening of the sales call when you want to put your prospect at ease and convince him of your goodwill. And it’s good information to use as follow-up or just to keep in touch. (“I know you are a huge University of Florida fan so I thought you would enjoy this video of the team’s summer training camp.”)
• Essential problem(s) your contact needs to solve. Knowing this information takes you right to the heart of the issue. Maybe your prospect is the marketing manager at the company and has recently been given the task of finding a new breakthrough idea for a promotional product to give away at a major upcoming industry trade show. Or maybe your prospect owns a grocery chain and needs to increase her sales in the frozen food area with organic products. Learning the specific problems your contact faces in his role at the company is the only way you can adapt your solution to meet his needs. The best way to identify your prospect’s problem (or opportunity) is to do extensive research on the company.
• Motivation for buying. If your contact is already buying from another supplier, what reasons might he have to start buying from you instead? For instance, is he dissatisfied with the quality of his current provider’s service or the price of the product? If he is satisfied, what value can you bring that provides a reason for him to consider changing suppliers? On the other hand, if this is a first time purchase, what will drive his initial decision to buy?
About Your Existing Customers
Your current customers are your best prospects. While you might be excited about a new account, make sure you don’t spend so much time and energy on new prospects that you neglect the ones with whom you’ve already established a relationship.
• Opportunities to expand the relationship. There’s no better place to increase your sales than with your existing customers. They know you and your product or service, you know them and their needs and challenges. So start by leveraging the information you already know about your customer’s business. This is the best way to expand your relationship. For instance, if you have sold fitness equipment to a regional chain of health clubs and you know that it is important for them to minimize maintenance costs and down time, you could target the buyer as a prospect for the new line of weight machines with hydraulics. You could also expand your research and determine how much money the club could save in a year based on the number of machines and include that as part of your presentation. This is establishing your value proposition, what you have to offer that your prospect or customer is willing to pay for.
If your customer is using some of your services in combination with your competitor’s services, this is also a sales opportunity: find out how satisfied your customer is with the competitor’s services and see if you can come up with a better solution. (“You’re currently using our hydraulic weight machines, but I see that you’re buying your exercise machines from this other company. Did you know that we offer treadmills, exercise bikes, and elliptical machines that come with free maintenance and product replacement guarantees?”) If your customer has a contract with this competitor, finding out when the contract expires will help you time your sales call effectively.Marcel Sim, “Leveraging Your CRM System to Expand Your Client Relationships,” Get Entrepreneurial, August 12, 2008, www.getentrepreneurial.com/customer-service/leveraging_your_crm_system_to_expand_your_client_relationships.html (accessed July 15, 2009).
And what about your contracts with the customer? If you have a service-level agreement (SLA) with the customer, you can leverage this opportunity to strengthen the customer relationship. SLAs define the terms of the service you will provide, and they generally expire after a certain length of time (think about the contract you have with your cell phone provider). Establish open lines of communication to make sure your customer is consistently satisfied with your service. You might discuss expanded service options he can purchase, or you could offer a discount for renewing the contract early. Consider giving a short survey to gauge your customer’s satisfaction level and find out whether there are additional services you might be able to offer her.
You can also consider moving into other departments of the organization: use your CRM system to track the organizational structure of the company and find the influencers in other departments. Of course, you can ask your current contacts at the company for referrals of other prospective buyers within the company.Marcel Sim, “Leveraging Your CRM System to Expand Your Client Relationships,” Get Entrepreneurial, August 12, 2008, www.getentrepreneurial.com/customer-service/leveraging_your_crm_system_to_expand_your_client_relationships.html (accessed July 15, 2009). Maybe you’re formatting documents for the research branch of the company, but you know the company also has a communications department that puts out brochures, reports, and newsletters. You can scan your CRM database (or look on the company’s Web site) for the names of managers in the communications department and ask your contact in the research department if he could give you a good referral.
• Opportunities for synergy. How can you partner with your customer in new ways that will benefit both companies? For instance, maybe there’s an opportunity for a strategic alliance like the one between Pepsi and Frontier Airlines: Frontier buys exclusively from Pepsi, while Pepsi helps promote Frontier. Or are there additional services or products you offer that, used in combination with your customer’s current purchases, would create an even stronger solution? For example, Linksys has its Linksys One program, which offers B2B customers high-speed wireless networks combined with an Internet telephone service and several software services. By combining one company’s software and hardware products and services, customers are able to streamline their work, creating a simpler, more efficient system.Shonan Noronha, “The Joy of Work,” Inc., August 1, 2007, www.inc.com/sourcebook/prup/20070801.html (accessed July 15, 2009). If you can demonstrate potential synergy with an existing customer—that is, collaboration that produces greater results than individual products, services, or parties could produce alone—you have an opportunity to expand your business with that customer.
Sources of Information
When you want to dig deeper with your research, you can often return to the same sources you used during the qualifying process and simply get more specific with the information you gather.
• Online searches. Search online databases and directories such as Hoovers and current news stories on Yahoo! Finance, Bloomberg, and other business Web sites (see Chapter 7 for a complete list of sources for company information) to find out about company demographics and key people in the organization. If you want to learn more detailed information about your contacts in the company, try online professional social networks like LinkedIn.
• Business directories. Remember the value of your local library where you can search business directories in print and access some online directories free of charge.
• Publicly available contracts. Real estate closings, government contracts, and other vital information that is part of public records can help provide pricing, terms, and other important data that can help you benchmark against the competition and better understand your prospect’s current situation.
• Trade journals. Trade journals are a good source for learning more about people and companies in your target industry. Making a habit of reading these publications (or subscribing to RSS [Really Simple Syndication] feeds, as described in Chapter 7) helps keep you up-to-date on developments in these companies and in the industry.
• Blogs, social networks, and online forums. These online resources can provide insight about the prospect, the competition, and the environment. Many company employees and executives post regularly about their perceptions and feelings on many topics. These comments can provide valuable insight about the prospect.
• Professional organizations. Joining professional organizations (in person and online) can help you build relationships with contacts at your target companies. These organizations also serve as a source for competitive knowledge and for your connection to industry buzz.
In addition to these sources you’ve already used, consider another powerful resource: people. If you’ve already formed a relationship with key people in your target company, you can ask them for referrals to influencers in other departments of the organization. Your contacts at an organization have inside knowledge and will usually be able to tell you whom to talk to if you want to make something happen. If they’re satisfied with the service you’ve been providing, these contacts are often happy to give you the names of others who might be able to use your solutions. Complementary salespeople can also be an excellent source of information about a prospect. For example, if you are selling computer hardware you might find nuggets of information from the person who sells office furniture. You can help each other by sharing insights and information.
It might surprise you to know that competitive salespeople can also be a resource. If you’re a member of a professional organization, if you attend conferences or tradeshows, or if you’re simply connected in your community, you’ll probably know competitive salespeople. While your competitor isn’t going to give you the inside scoop on a prospect he’s currently pursuing, he might share some useful insights about companies or people he has worked with in the past. Maybe he used to do business with one of your current contacts and can tell you things to avoid or things that will impress her. (“She will eat you alive if you don’t have all your information.”) Maybe one of your target companies is an organization he has sold to in the past, and he has some useful advice about the way they work. Never underestimate the power of relationships and networking.
Key Takeaways
• The preapproach is a critical step that helps you earn your customer’s trust and sell adaptively; this is true whether you are meeting with a new customer—a target account—or an existing customer—one of your key accounts.
• Before you make your sales call, you should know the objectives of the meeting. You should record these objectives, along with basic company information, on a precall planning worksheet.
• Preapproach research includes information like company demographics, company news, and financial performance to help you discover sales opportunities and go deeper in your qualifying process.
• Research the company’s customers, the current buying situation, and your contact person at the company to help you tailor your sales approach.
• Research your existing customers to find opportunities for expanding the relationship and creating more sales.
Exercise \(1\)
1. Assume you have identified Gap as a prospect for your product line called “Green” Jeans, blue jeans made with completely recycled materials. You are preparing for a sales call with the denim buyer in the Gap’s home office. What demographic information would you gather about the company during the preapproach stage? What would recent company news tell you in preparation for your sales call? What do current customers think about Gap? What is your value proposition, and how does it fit Gap’s need?
2. Imagine you work for a company that sells interior design services and acts as an art broker (finding and purchasing artwork to display) for large companies. One of your customers has used your broker services in the past, but you are hoping to expand the relationship. What additional information would you need to know to make a proposal?
3. Assume you are selling payroll services to small businesses. Identify three pieces of information you would learn about your prospect during your preapproach research and identify the sources where you would find the information.
4. Imagine that you sell life insurance. Describe how customer demographics can help you with your preapproach research.
5. Assume you are selling security systems and you have just qualified a prospect, Fine Dining, Inc., that owns a chain of fifteen restaurants in the area. Your contact is Lee Crowan, the operations manager. The corporate office is located in the Willowwood Corporate Center in Willowwood. You have learned that the chain is growing, with expansion to ten new restaurants planned in the next twelve months. You have also learned that security is a major issue since two of the existing restaurants have had break-ins during the past six months. Complete a precall planning worksheet for your upcoming call with Lee Crowan at Fine Dining, Inc.
6. Assume you are selling financial services to consumers. You have identified a couple in their forties as qualified prospects. They are interested in retirement planning. What are three questions you would ask them during your initial meeting with them? | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.01%3A_Introduction.txt |
Learning Objectives
• Understand how to identify needs and opportunities.
Imagine you wanted to sell a new digital camera to your teenage sister. How would you convince her to buy? You might start by thinking of the things that matter to teenagers—specifically your sister. Maybe you’d say, “It’s small and lightweight so you can fit it in your purse and take it with you when you go out with your friends. It has a new sleek design, and you can customize it by ordering it in one of six different colors.” You’ve considered things your sister might need (a camera she can take on a night out), and you’ve identified an opportunity that might appeal to a teenaged girl (a combination of appearance, style, and functionality).
Now what if you were selling the same product to your grandmother? She might be more concerned with reliability than appearance, and she might also be intimidated about using a digital camera if it’s a technology she hasn’t tried before. “This camera doesn’t have a lot of bells and whistles,” you could say. “It’s straightforward and easy to use and makes an excellent choice for a first digital camera purchase. It’s perfect for taking pictures of the grandkids. It has also been highly rated as a reliable and high-quality product.” You’ve addressed her problem (intimidation about using a new technology), and you’ve helped her discover opportunities (taking photos of the grandkids).
Even though you’re selling the same product to both people, you’re using a very different approach. Ultimately, what you’re selling is not a product but a solution based on your customer’s specific needs. This is the heart of the preapproach. There are three simple steps you can follow to turn your products and services into customer-specific solutions.
Step 1: Complete a Needs and Opportunity Analysis
Great salespeople don’t sell, they solve. As you research your prospect, you should be able to identify problems that are specific to that person or organization: Do they need to reduce costs? Do they need to increase sales? Do they need to drive traffic to a Web site or generate leads for their new service? Or maybe they need something that will set their brand apart from their competitors. In the case of individual consumers, the problem might be very different: Does she want to have the latest in fashion without couture prices? Does she want the latest technology “toys” as soon as they are available? Does she want a car that is a dependable form of transportation and friendly to the environment?
Sometimes people are forthcoming about their problems, but many times it’s up to you to ask the right questions; the ones that will uncover what your prospect needs or where opportunities exist. (Remember from Chapter 1 that is one of the traits of a successful salesperson.) For instance, if your prospect is buying from a competitor, you might ask questions like “What were your expectations when you signed up for this service? What has your actual experience of the service been? What would you like to see happen differently?” The prospect might not fully realize what his problems are.Paul Cherry, Questions That Sell: The Powerful Process for Discovering What Your Customer Really Wants (New York: AMACOM, 2006), 25. Often, especially in B2B sales, the goal of your first sales call will simply be to identify your prospect’s specific areas of need. You won’t make a pitch; you’ll just ask questions and listen.Mark Anthony, “The Psychology of Selling,” BNET, April 1995, findarticles.com/p/articles/mi_qa3629/is_199504/ai_n8730867/?tag=content;col1 (accessed July 15, 2009).
Asking questions often opens up opportunities you might not otherwise discover. There will be occasions when your prospect doesn’t have an immediate problem she can identify, but if you’ve done your research and know something about her goals and priorities and if you ask the right questions, you have the chance to uncover useful opportunities. What can help him achieve his goals even more efficiently? What kinds of results would he like to see?Geoffrey James, “Solution Selling Is Dead,” BNET, October 29, 2007, blogs.bnet.com/salesmachine/?p=158&tag=content;col1 (accessed July 15, 2009). What would he like to have if he only knew it was possible?
Think about the advent of the cell phone. Consumers had a problem: their lives were getting busier, and they wanted to be able to communicate on the go. They needed a phone they could use when they weren’t at home or in the office. What do you do on a car trip if you get lost or your car breaks down? How do you find someone in a crowded place? How can people get in touch with you if you’re almost never home? Cell phone providers figured out consumers’ problems, and they solved them. Then along came the iPhone. Most cell phone users wouldn’t have said they needed a device that could capture videos and photographs, play MP3s, store a day planner, surf the web, run hundreds of different applications—oh, and make phone calls too—using a single slick interface. But Apple saw an opportunity, and they helped consumers to see it too: over a million iPhones sold the first weekend the product came out in stores.Philip Elmer-DeWitt, “Munster: 500,000 New iPhones This Weekend,” Fortune, June 18, 2009, apple20.blogs.fortune.cnn.com/2009/06/18/munster-500000-new-iphones-this-weekend/ (accessed July 15, 2009).
Step 2: Brainstorm Solutions and Generate Ideas
Once you’ve identified your customer’s problems, take the time—either with a team or on your own—to brainstorm solutions and opportunities that address your prospect’s specific needs. Sometimes solving your prospect’s problem is a straightforward task, but often with larger sales, particularly B2B sales, coming up with a solution that is tailored to your customer’s needs requires time and thought. No two prospects are the same, so no two solutions will be exactly the same. When Joel Ronning, CEO of e-commerce company Digital River, wants to solve customer problems and generate ideas, he sits down with the senior employees of his company for a brainstorming session. The technique has boosted sales, earned the company hundreds of thousands of dollars, and led to a small business award for “best idea.”Allison Stein Wellner, “A Perfect Brainstorm,” Inc., October 1, 2003, www.inc.com/magazine/20031001/strategies.html (accessed July 15, 2009). As a salesperson, your job is to solve customer problems, not push a product. In other words, you’re offering solutions that include unique and different ideas, not selling products. For this reason, brainstorming—the process of generating ideas—is a crucial part of the selling process.
When you go into a brainstorming session, there are several techniques that will help you generate effective results.
• Know your problem or opportunity. If you’ve already completed your needs analysis, you’re off to a good start. According to James Feldman, a Chicago-based idea-generation consultant, “Most people do not identify their problem correctly” going into the brainstorming session. Once you have a clear idea of the problem or opportunity, set it out in specific terms to guide your brainstorm. Just make sure you don’t define the problem so narrowly that you’ll limit your results. Start the session by stating the objective. What problem do you want to solve? It also helps to frame the question in positive terms. For example, rather than asking “How will this company’s new computer system change the way they do business?” you could ask “How can this company get the most out of their new computer system?”Allison Stein Wellner, “A Perfect Brainstorm,” Inc., October 1, 2003, www.inc.com/magazine/20031001/strategies.html (accessed July 15, 2009).
• Generate; don’t evaluate. Brainstorming isn’t about coming up with the best, most carefully polished solutions. As Gary Kopervas, chief creative strategist at Backe Digital Brand Marketing, says, “When you’re brainstorming, don’t be perfect; be prolific.” Get your ideas out there, on paper, without disrupting the flow. Once you’ve exhausted your resources, you can worry about sorting out the stronger ideas from the weaker ones. If you’re too critical of your ideas to begin with, you’ll never access that part of your brain where the creative ideas are generated. In fact, Kopervas has devised the Five Fs of Brainstorming to guide a more effective process. They are outlined in Figure \(4\).Adapted from Gary Kopervas, “More Effective Brainstorming,” presentation at Saint Joseph’s University, Philadelphia, PA, October 28, 2008.
• Push beyond the wall. At some point during every brainstorming session, whether group brainstorming or individual, people tend to hit a wall. Ideas flow quickly, and then they seem to stop altogether. Cognitive psychologist Paul Paulus says this point in the session may seem like a wall, but in reality it’s just “a space in [the] brain.” Pushing past this space often leads to the best ideas.Allison Stein Wellner, “A Perfect Brainstorm,” Inc., October 1, 2003, www.inc.com/magazine/20031001/strategies.html (accessed July 15, 2009).
• Seek strategic stimuli. Sometimes you have to disrupt your normal routine to get the ideas flowing. Putting yourself in a new environment or doing something with your hands—molding clay, for instance—can often be a surprising way to unlock ideas in your subconscious that your rational mind might otherwise block off.
Brainstorming, as an idea-generation tool, is a proven and powerful part of creative development. However, keep in mind that some of the ideas you come up with in the brainstorming process will be stronger than others. A great idea has two important elements: it solves your customer’s problems and, in B2B sales, it reinforces your customer’s brand. Consider consultant Mike Rubin’s solution to a problem faced by one of his customers, a Harley-Davidson dealer, who wanted to boost sales and appeal to a broader customer base. Mike’s Famous Harley-Davidson Dealership was already drawing in the “hard-core” bikers, but the store’s owner wanted to reach the more conservative, baby boomer demographic too. By turning the dealership into a destination, complete with a Harley museum and restaurant, Rubin hit on a solution that both addressed the customer’s problem and remained true to the Harley brand image. The restaurant, designed to resemble a factory cafeteria, appealed to tough bikers and families alike, and the museum—also a family-friendly draw—was laid out in a warehouse style that reflected the company’s brand image of independence, toughness, and the open road. The result? In three years, bike sales increased from 800 to over 1,700 annually.Donna Fen, “(Re)born to Be Wild,” Inc., January 2006, www.inc.com/magazine/20060101/reborn.html (accessed July 15, 2009).
Power Selling: Lessons in Selling from Successful Brands
They Practice What They Preach
Ideo, a premier product development company, believes that innovation is the only path to success. Collaboration and idea generation are a way of life at the company that invented the Apple mouse, Polaroid I-Zone pocket camera, and Palm V. This article highlights how they support and encourage this creative culture.Linda Tischler, “Seven Secrets to Good Brainstorming,” Fast Company, December 19, 2007, www.fastcompany.com/articles/2001/03/kelley.html (accessed October 31, 2009).
www.fastcompany.com/articles/2001/03/kelley.html
Source: Fast Company
If you are working out of your home and you don’t have a group of people with which to brainstorm, it’s not a problem. Get your colleagues in other areas involved by having a brainstorming conference call. Or have a virtual brainstorming session through your professional social network by using the discussion feature on LinkedIn, getting ideas from your followers on Twitter, or creating a wiki where people can share ideas at any time and see the ideas that others have created.
The bottom line is that selling is all about selling your brand (remember from Chapter 1 that a brand is unique, consistent, and relevant and has an emotional connection with its customers). When you really understand your customer and their needs and motivations, you can be extremely creative about the way you position and tell the story of your brand.
How Ideas Are Born
Tim Brown, the CEO of the creative design firm Ideo, discusses how ideas are created.
Source: SocialEdge
Step 3: Identify General and Specific Benefit Statements
Once you have brainstormed a customer-specific solution, you want to find a way to showcase your solution in the best light. How will you present this idea to your prospect so that he can immediately see its relevance to his situation? How will you establish the value proposition you have to offer? How will you position your idea as a benefit to your prospect, not a self-serving sales pitch? As part of your preapproach, you should identify both a general and a specific statement to highlight the benefits of your solution or opportunity. When you deliver value to your prospect, you earn the opportunity to be a business partner, not just someone who is trying to sell something.
Imagine you work for a dairy products distributor that sells wholesale to restaurants. You’ve researched one of your prospects, a downtown deli, and have identified one of its major problems: the company is losing business to the sandwich place across the street. Your prospect may not yet realize the source of the trouble, but you have an idea. It seems that the prospect’s competitor has cheaper sandwiches, and you know for a fact that part of the problem lies in the cost of the ingredients. Your prospect currently pays 10 percent more for the cheese it gets from its current vendor than you would charge for the same product. If the deli started buying cheese from you, it would be able to lower the cost of its sandwiches to a more competitive price and draw some of the sales that are going to its competitor. You have also brainstormed how the deli can create a “signature sandwich”: a unique combination of meat and cheeses that only it offers. The sandwich provides a point of difference for the deli and a reason for previous deli customers to come back. In other words, you are helping to build your prospect’s brand and business with a great idea.
This is a good solution, but you can’t walk into the deli and tell your prospect, “I want to sell you some cheese.” Your prospect doesn’t need cheese; he needs to increase his sales, and he’ll probably tell you to go away because he already has a dairy products vendor. It’s your job to frame the solution in such a way that your customer can easily see its relevance to his problem; you want to answer the “What’s in it for me?” question early on in the sales call.Todd Natenberg, “What’s in It for the Prospect? Everything—If You Tell Them,” SelfGrowth.com, http://www.selfgrowth.com/articles/Natenberg12.html (accessed July 15, 2009). Begin by drafting a general benefit statement, a statement that gives the big picture of how your solution will meet your prospect’s need. For instance, you might say, “I have an idea for a way to increase your sandwich sales by 15 percent.” Your statement showcases a solution rather than a product.
General benefit statements, as opposed to specific benefit statements, are broad enough that they would be important to most people.Philip Gerber, “The Sales Professional: Initial Benefit Statement,” Houston Business Review, April 2005, http://www.houstonbusiness.com/HBReview/contributors/philipgerber/gerberarchive13.html (accessed July 15, 2009). They might address things like improving company visibility, expanding the business, increasing profits, or cutting costs. The specific benefit statement, on the other hand, comes once you’ve grabbed your prospect’s attention. It identifies the particular way your solution applies to your prospect, and it demonstrates that you’ve done your research and understand the needs that are unique to his company or situation. For instance, you might say, “Your food cost is too high, and it’s keeping you from competing with other businesses. I can help you cut your food costs so that you can afford to sell your breakfast burrito for under \$2.99. Would that be something you would be interested in?” If you’ve done your research and brainstormed an effective solution, your benefits statements are the tools that will give you the power to convey that information clearly and effectively.
Table \(1\): Benefit Statement Examples
General Benefit Statement Specific Benefit Statement
I have an idea that can help you lower your labor costs. Is that something you might be interested in? If I can prove that I can help you reduce your labor costs by 10 percent, would you be willing to make a commitment?
I have some ideas about how to increase traffic to your Web site. Is that something that is of interest to you? If I can show you how our social networking tool can drive 15 percent more traffic to your Web site during key seasonal periods, would you be willing to consider it?
I have some ideas about how to decrease your transaction time and take care of more customers every hour. Is that something you are interested in? If I can show you how our product can decrease your transaction time for each customer by at least one minute, would you be interested in looking at the proposal?
Key Takeaways
• Good salespeople don’t sell products; they sell solutions to their customers’ problems or challenges.
• Your research, including the questions you ask your customer, should help you identify needs and opportunities.
• Once you have identified your customers’ problems and goals, brainstorm solutions and opportunities that will meet their needs.
• Knowing the best solution for your customer will help you craft a general benefits statement and a specific benefits statement that will help the customer envision the way your solution or opportunity meets his needs.
Exercise \(1\)
1. Think about a local bank that offers free checking accounts. How does free checking provide a solution for a business customer? How would this solution be different for an individual customer? How do you think the personal banker changes her sales pitch based on the customer?
2. Describe a time when you made a purchase, or modified a planned purchase, because a salesperson revealed an opportunity that you wouldn’t have otherwise considered.
3. Think of the last major purchase you made where you bought from a salesperson (not online). Did the salesperson adapt his or her approach to address your specific needs and concerns? If so, how?
4. Imagine that you sell Hershey’s chocolate products to grocery stores. One of your prospects said that he cannot carry the complete line of Hershey’s Kisses because there isn’t enough shelf space in the store. Conduct a short brainstorming session to identify ten ideas that might solve this prospect’s problem.
5. Assume you worked in the Apple Store. Identify one general benefit statement and one specific benefit statement for each of the following:
• iPod
• MacBook Pro
• iTunes
6. Assume that due to the recession, donations to the Make-A-Wish Foundation are below expectations. The foundation’s director of development has asked your class to identify ideas to increase donations in the next three months. Work in teams of two to conduct a brainstorming session using the guidelines covered in this section. Each team should present their ideas to the class. | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.03%3A_Solving_Not_Selling.txt |
Learning Objectives
• Learn how to set SMART precall objectives.
Identifying your prospect’s need is only part of your preapproach research. There’s still more research and planning for you to do before you meet with or speak to the customer.
Determine Your Objectives
If you haven’t determined what you hope to achieve before going into your sales call, it will be difficult to figure out what to say once you arrive or once you have your prospect on the phone. Setting precall objectives is a strategically important step. If you have clear goals, you will be more confident and appear more organized, and it’s more likely that you will see results. Your customers are busy people, and you don’t want to waste their time. They will appreciate your organization and will be more likely to trust your judgment if you come prepared. You also don’t want to waste your time or your company’s time. According to Hoovers, the average sales call costs a company nearly \$400!Gary Duncan, “Every Sales Call Requires an Objective and Decision,” Denver Business Journal, October 13, 2006, http://denver.bizjournals.com/denver/stories/2006/10/16/smallb8.html (accessed July 15, 2009).
As you plan your meeting, ask yourself this question: “What will success look like for this call?”American Institute of Public Certified Accountants, “Successful Selling Tips: The Sales Objective,” www.aicpa.org/Professional+Resources/CPA+Marketing+Toolkit/SellingTips6.htm (accessed July 15, 2009). That may seem like a question with a straightforward answer, but success doesn’t always mean closing the sale. In some situations, you’ll experience a one-call close, but with larger sales, particularly in B2B sales, the sales cycle, or the length of time it takes to go from the first contact with the customer to closing the sale, is generally longer—sometimes even taking up to a year or longer. Consider Telegraph Hill Robes, a San Francisco-based company that sells bathrobes to upscale hotels with spas. Buying enough bathrobes to stock a hotel spa is a large investment, one that most customers have to carefully consider. The sale has to clear with two contacts at every company: the general manager and the head of housekeeping. As a result, when Telegraph Hill first started selling its product in 1996, its average sales cycle was two years!Susan Greco, “The Need for Speed,” Inc., April 2007, www.inc.com/magazine/20070401/salesmarketing-smart-selling.html (accessed July 15, 2009).
If you know that you are facing a longer sales cycle, the goal of your initial call might be gathering and conveying specific information to move forward in the sales process or further qualify your prospect. According to Gary Duncan, principal of the sales training organization Leadership Connections, “In more complex sales it’s realistic to set a precall objective of establishing rapport and trust, making new contacts in the organization, qualifying your prospect’s budget, or discovering what your prospect’s decision-making process is. For instance, you might decide you want to find out who your prospect’s current vendors are, any issues your prospect has with the services she is receiving, and what her goals are for future purchases.”Gary Duncan, “Every Sales Call Requires an Objective and Decision,” Denver Business Journal, October 13, 2006, http://denver.bizjournals.com/denver/stories/2006/10/16/smallb8.html (accessed July 15, 2009). You should also consider your prospect’s objectives: what outcome is she hoping for from this call?
Sometimes, setting strategic, information-gathering objectives may actually help you shorten your overall sales cycle. Take Acumen, a company that sells high-capability accounting software to corporations. Originally, the company’s sales cycle lasted around nine months. However, once the company became more strategic in its precall planning, designing a system of rigorous qualifying questions that its salespeople had to resolve before making a sales pitch, Acumen actually decreased its average sales cycle to somewhere between three and six months. Asking detailed questions during early sales calls allowed the company to cut back on the time it wasted brainstorming solutions and making sales pitches for underqualified leads.Susan Greco, “The Need for Speed,” Inc., April 2007, www.inc.com/magazine/20070401/salesmarketing-smart-selling.html (accessed July 15, 2009).
Make Your Objectives SMART
So it’s early in the process of a complex sale, and you are setting your goals for your next meeting with your customer. You know it will primarily be an information-gathering session because you need to know more before you can propose a workable, specific solution. However, if you go into the meeting with a vague plan like “I want to find out more about my prospect’s business,” you won’t accomplish much.Skills Connection, “How to Get Better Results from your Sales Meetings,” video, March 3, 2008, http://www.youtube.com/watch?v=1P6bU1efZbI (accessed July 15, 2009). Instead, you might come up with a goal similar to the one mentioned earlier: “By the end of this meeting, I want to know who my prospect’s current vendors are, what issues or challenges he faces with this vendor’s services, and what three priorities he has for future purchases.” This objective, like all effective precall objectives, is SMART. That is, the goal is Specific, Measurable, Actionable, Realistic, and Time-bound.Virtual Strategist, “How to Set SMART Goals,” video, M3 Planning, October 17, 2008, http://www.youtube.com/watch?v=uThBb3kGf4k (accessed July 15, 2009).
• Specific. The goal should clearly define which actions you want your customer to take, what information you hope to convey, and/or what information you hope to learn from your sales call. In the example cited by Gary Duncan, the salesperson is setting out to gather three specific pieces of information.
• Measurable. You want to be able to measure the results of your efforts so that you’ll know at the end of your sales call how close you came to achieving what you set out to do. This will help you strategize about which actions to take next. The first two parts of the example are measurable with a simple yes or no (Did I find out the names of the current vendors? Did I identify issues and challenges my customer has encountered?), and the last part of the goal is quantifiable (How many of my customer’s priorities was I able to help him articulate?).
• Actionable. If a goal is actionable or attainable, it’s something you can actually do. It might involve asking questions, explaining something, or suggesting something. Whatever the case, it should be something on which you have the ability to act. In some instances, the actionable goal might be as simple as closing the sale: “By the end of the meeting, I plan to convince my prospect to sign a contract.”
• Realistic. If you set your goal too high or try to move your sales process along too quickly, you will only be setting yourself up for disappointment and failure. Ask yourself, “What can I reasonably hope to accomplish given the current situation with my prospect?” If you decide you want to get appointments with ten top people in the organization during your first contact with the company, or if you intend to close a major account by your first call, you will probably not be able to achieve what you set out to do.
• Time-bound. Not only should you know what you hope to achieve, but you should also know when you hope to have it accomplished. In the example objective, your time frame is “by the end of the sales call.” Other times, you might set a specific date—for example, “Get the prospect to agree to schedule a face-to-face meeting by the 15th.”
SMART objectives give you the power to sell strategically by setting goals you can achieve. Another powerful tool is the simple act of putting your goals down in writing. Not only are you likely to make a stronger commitment to your goals when you have them on paper, but you will also be able to use your written goals for reference later on—even during the sales call if you need to.Roy Chitwood, “Every Sales Call Must Have a Clear Objective,” Puget Sound Business Journal, September 26, 1997, http://www.bizjournals.com/seattle/stories/1997/09/29/smallb3.html?page=2 (accessed July 15, 2009).
Setting SMART Objectives
Watch this short video about setting SMART objectives for your sales calls.
Source: Skills Connection
Key Takeaways
• It’s important to know exactly what you want to accomplish when you go into a sales meeting.
• The goals for your sales call should be specific, measurable, actionable, realistic, and time-bound: SMART.
• Setting SMART goals will help you direct your approach, take action, and measure the results of your sales call.
Exercise \(1\)
1. Which of the following is a SMART goal for your first sales call on a prospect to sell car insurance? Rewrite each of the other goals to be SMART.
• Identify current insurance carrier and conduct needs analysis by Friday.
• Call the customer and ask some questions to learn about his current situation.
• Conduct online research about the customer and understand why he chose his current insurance carrier.
• Call at least six new prospects by the end of the day today.
2. Imagine you sell Web site consulting services and are going into a sales call with an existing customer. You want to expand the selling relationship in two ways: by extending your contract with the customer for another two years and by getting referrals for the network support department. Identify your SMART goal for this sales call.
3. Assume you are a financial advisor and you are meeting with a prospect for the first time. Identify a SMART objective that you would set prior to your first meeting.
4. Describe the difference in the sales cycles between selling jeans to a college student compared to selling a home to a newly married couple. What impact will that have on your SMART objectives?
5. You are a sales rep for medical supplies and just took on a new prospect, Springfield Nursing Homes, a regional chain of twenty-two nursing homes. You have a contact, but you are not clear if he is a decision maker. In the past, the company has allowed each nursing home to make its own purchasing decisions, but it is moving toward a more centralized approach. This is an excellent opportunity for you to present your comprehensive product line. You are preparing for your first call, and your sales manager has asked you to review your SMART objectives for the call with him. What are your SMART objectives for the call? How you will present them to your sales manager? | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.04%3A_Getting_Smart_about_Your_Sales_Call.txt |
Learning Objectives
• Discuss key elements of presentation preparation.
Once you’ve done your research, brainstormed your solution, and set your SMART objectives, you’ve got a good foundation to move forward. The only homework left to do is planning your sales presentation. Even if you have a stellar solution to offer, and even though your objectives may be clearly defined, you can’t make your sales pitch hoping to just “wing it.” A well-planned presentation can often be the thing that makes or breaks a sale. If your customer sees you as well prepared (i.e., if you have thoughtfully tailored your style, presentation materials, and agenda to match what you know about your contact and his company culture), you will go far in establishing a strong rapport with your customer and earning his trust and respect.
Four Ps of Presentation Preparation
Preparing your sales presentation can seem like an overwhelming task. How long should you speak, and how much time should you allow for questions? Should you use demonstrations or examples? How formal should you be? What points should you address first? Here are four general guidelines to keep in mind as you begin the planning process.
Prioritize Your Agenda
Your presentation should be well organized. Think about how you want to lead in, when you will introduce key information in your presentation, and when you will use product demonstrations. When Tom Szaky, CEO of the garden products company TerraCycle, gives a sales presentation, he prepares by drawing up an agenda that prioritizes the information he wants to convey and arranging it in a strategic order. For example, Szaky knows that if he presents his product near the beginning of the presentation, his customers will make their buying decision before they know what makes TerraCycle unique, so he starts off all of his presentations by talking about the features that set his company apart.Stephanie Clifford, “Practice, Practice” Inc., February 2007, www.inc.com/magazine/20070201/features-sales-performance-szaky.html (accessed July 15, 2009). Not only will prioritizing your agenda give you a strategic edge, but it will also help your customer to see that you are organized. Bring copies of your agenda to distribute at the beginning of the meeting so that your customers can follow along with you as you give your presentation.
Personalize It
At this phase in the preapproach you should have some knowledge about your contacts in the company, and you should understand the company’s particular culture and priorities. As you plan your presentation, you can use this knowledge to tailor your approach to your prospect. What tone will you set for the presentation? Is your prospect a “fun” company that would respond well to humor or interactive opportunities during the presentation? Are you presenting to a group of busy executives who would value an efficient, no-nonsense approach? Think about the level of formality your customers will expect. This will dictate how you dress, how you speak, and how you design your visual aids and demonstrations. When Tom Szaky gives a presentation to buyers from Wal-Mart (one of his biggest customers), he dresses casually, perhaps wearing a corduroy jacket, a John Deere cap, and frayed shoes.Stephanie Clifford, “Practice, Practice” Inc., February 2007, www.inc.com/magazine/20070201/features-sales-performance-szaky.html (accessed July 15, 2009). Wal-Mart presents itself as a no-frills company, and this attitude carries over into its corporate culture. Understanding this aspect of the company and the contacts with whom he’s working—representatives from the garden department—Szaky adapts his approach to match.
Power Player: Lessons in Selling from Successful Salespeople
Do Your Homework…Even When You Know Your Customer
Cris Cavanaugh, now a CustomerCentric selling affiliate, learned the hard way that assuming in selling is not a good thing. He was asked by a customer to do a presentation at a conference. Cavanaugh accepted and gave a confident presentation. He failed miserably because the audience was not as well educated on the topic, so the audience was left confused. Cavanaugh now asks questions and gets input before every presentation because he realizes that every audience, just like every customer, is not the same.“Approach Every Presentation as If It Were Your First,” Selling Power Presentations eNewsletter, February 20, 2006, http://www.sellingpower.com/content/newsletter/issue.php?pc=569 (accessed March 16, 2010).
Prepare Illustrations
People respond best to things they can see and experience for themselves. Your sales presentation won’t be complete without product demonstrations and visual aids to inspire your customers and help them see the value of your product firsthand. As you develop this aspect of your presentation, consider slides or handouts that will reinforce key points. Consider the things that will best help this particular customer visualize your solution as a winning one. For example, in one presentation to Wal-Mart buyers, Szaky displayed a binder full of newspaper clippings in which TerraCycle had helped Wal-Mart generate positive publicity. He also used a short video and brought in a live plant grown with his potting mix. In addition, because his contact at the company had asked to see what the product might look like on the sales floor, Szaky brought in a merchandizing mockup to help his buyers visualize TerraCycle’s potting mix in their stores.Stephanie Clifford, “Practice, Practice” Inc., February 2007, www.inc.com/magazine/20070201/features-sales-performance-szaky.html (accessed July 15, 2009).
Practice
Finally, once you’ve created your presentation, practice it. Practice in front of a mirror, deliver the presentation to family members and colleagues (if you can get a willing audience!), and run over your agenda until you know it inside and out.Lahle Wolfe, “How Do You Practice Your Sales Presentation?” online discussion board, About.com, June 11, 2008, http://sales.about.com/b/2008/06/11/how-do-you-practice-your-sales-presentation.htm#gB3 (accessed July 15, 2009). You want the presentation to come off smoothly, but you also want it to seem natural. Even experienced salespeople like Tom Szaky practice a presentation—perfecting their pacing and delivery and making sure they know their stuff—before going into a sales call.Stephanie Clifford, “Practice, Practice” Inc., February 2007, www.inc.com/magazine/20070201/features-sales-performance-szaky.html (accessed July 15, 2009).
KEY TAKEAWAY
As you plan your sales presentation, keep four things in mind:
1. Prioritize and organize your agenda.
2. Personalize the presentation to match your customer’s needs and preferences.
3. Prepare visual aids and product demonstrations to illustrate your point and engage your audience.
4. Practice your delivery.
Exercise \(1\)
1. Think of ways you might personalize a sales presentation for the following situations:
• You are a public relations manager pitching a story about your company’s new chic waterproof boots to the editorial staff of a fashion magazine.
• You are a commercial real estate agent making a presentation to top-level managers at an accounting firm for the new location of their downtown office.
• You are a video game developer presenting your newest game concept to a small start-up company that makes video games.
2. Assume you are the director of development for Jessica’s Haven, a nonprofit organization that provides support to children with terminal illnesses and their families. You have identified Gymboree as a prospective corporate donor. Develop an agenda for a sales call to learn about how Gymboree might support Jessica’s Haven and share information with the company about who the nonprofit serves and how it operates.
3. If you were the salesperson for Red Bull and you were calling on a major grocery store chain, identify three potential illustrations that you could use during your presentation.
4. Describe how your preapproach would differ (in dress, tone, conversation) for each of these situations:
• Selling pharmaceuticals to a doctor
• Meeting with the dairy farmers of Wisconsin to sell cheese packaging
• Calling on a professor to sell textbooks
• Selling computer software to a start-up liquor manufacturer | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.05%3A_Prepare_Your_Presentation.txt |
Learning Objectives
• Learn about six different ways to get your cover letter and résumé to the right people.
Now that you understand how preparation can help you be successful in selling, let’s go back to selling the most important brand of all—you! In the Selling U section in Chapter 7, you did your research, identified and qualified your twenty-five target companies, and obtained the contact information for at least two key people at each organization. Of course, there is still some homework to do before you see the payoff of securing an interview. As Andrew Sum, director of Northeastern University’s Center for Labor Market Studies, says, “You’re never going to find anything unless you apply.”Steven Greenhouse, “Bright Spot in Downturn: New Hiring Is Robust,” New York Times, May 5, 2009, www.nytimes.com/2009/05/06/business/economy/06hire.html (accessed July 15, 2009). However, you can think of this step in the process as the exciting part. Consider what happens when a company releases a new product. The company doesn’t keep the news to themselves, discreetly shipping the product out to stores with the hopes that the right buyers will just happen to find it. Instead, it leverages every resource it has to get the word out. Think about the new Prius. Toyota took advantage of publicity surrounding the car’s fuel efficiency to generate buzz with newspapers, radio, and television reporting on Prius-related press releases. Toyota leveraged Web resources (e.g., blogs, discussion forums, product fan sites) and highlighted positive product reviews in its press releases and online.“Toyota Promotes Prius Buzz with New Forum,” Company Car Driver, June 16, 2009, www.companycardriver.co.uk/news/article/?art_ID=315742919 (accessed July 15, 2009).
When a company has designed a new product or brand, it is excited to let people know about it. The more enthusiastically it shares the news, the better the payoff. The same should be true of your job search. You are a new brand that is about to go on the market, you know you have unique qualities to offer, and you should be excited to let other people know this about you, too. Sending the news to potential employers at your target companies is a good way to start. If you take advantage of this tool, in combination with five other power-packed tools for getting the word out, you will be surprised by the positive results you see.
Power-Packed Tool #1: Professional Social Networking
You learned about the power of networking, and especially professional social networking, in Chapter 3. More and more companies are turning to professional social networks such as LinkedIn to identify potential candidates for jobs. But it’s not enough to simply create a profile on LinkedIn. To be noticed on a massive professional networking site, just as in the real world, you have to stand out. That means completing your profile, adding content, participating in discussions, and linking to other content, such as your blog. Also, share your content by joining groups on LinkedIn, such as The Power of Selling (a group of selling professionals to support you in this class and beyond), Sales and Marketing Executives, and Salesblogcast.com, or other groups in your area of interest. These groups include thousands of professionals with whom you can connect and network. And ask people such as supervisors from your job, internship, or volunteer organization; professors; or other professionals to speak on your behalf by posting a recommendation about you.
Link
Powerful Profile
Meet Mig Pascual on LinkedIn by clicking on his profile using the link below. Mig uses content to build his personal brand by providing complete experience, including topical videos, slide shows, and book recommendations to demonstrate his skills. In addition, he has several recommendations from supervisors and colleagues. This powerful profile works—just take a look at the number of connections Mig has in his network. You can connect with Mig and ask him to join your network by clicking on “View Full Profile” (you will need to create a profile before you can ask Mig to join your network).
www.linkedin.com/in/migpascual
Power-Packed Tool #2: Direct Mail
Direct mail is a powerful but often overlooked source you have for getting your cover letter and résumé to people who are making hiring decisions. Now that you’ve done your research and identified your twenty-five target companies and key decision makers at each one, it’s time to put that information to work.
You might think that sending letters to companies that don’t currently have open jobs posted might be a waste of time. The fact is that hiring managers don’t like to post jobs, as it takes time and energy to come up with the job description, clear it through all the proper channels, sort through résumés and cover letters, and interview potential employees. This means that a number of your contacts may have open positions they haven’t yet publicized, and they would be delighted if a qualified candidate like you could save them the hassle of a drawn out hiring process. And if you’ve done everything correctly (e.g., addressed your cover letter individually to key hiring managers, not just human resources), but your letter doesn’t end up in the right person’s hands, your contact at the company may very well pass your résumé on to someone else who would be a better fit. (“Hey Dave, is your department still looking for a marketing assistant?”) If you want your letter to stand out even more, consider sending it to some top prospective employers with a return receipt requested or via FedEx. It’s a good way to ensure that the recipient received your cover letter and résumé and there’s a good chance your letter will get opened quickly.
Sending your cover letter and résumé to several people at your twenty-five target companies will set you apart from your competitors because very few people send information by mail these days. Think about the number of e-mails you get in your in-box daily. A letter stands out, and the best part about sending direct mail to your target companies is that it’s easy to do. You can use the spreadsheet you created in Chapter 7 to easily personalize cover letters and envelopes to the people at your target companies by using the mail merge feature.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 142. Watch the video below to see how it’s done. Keep in mind that hiring managers are busy people, and sometimes letters get lost or forgotten. If you don’t get the response you were hoping for, send your letter to the same people in your mail merge again in three to four weeks.Kim Richmond, “10 Ways to Get the Word Out about Your Brand,” presentation in the How to Market Yourself as a Brand to Get the Job You Want Workshop Series, Upper Merion Township Library, King of Prussia, PA, June 1, 2009.
How to Do a Mail Merge
You can personalize hundreds of cover letters in just minutes using the Mail Merge feature in Word (Microsoft or Mac). Watch this video to see how easy it is to do.
Power-Packed Tool #3: Company Web Sites
During the preapproach to a sales call, a good salesperson spends time at her prospective company’s Web site, researching the organization and its key people in greater depth so that she can go into the meeting knowledgeable about basic company facts and informed of any recent developments. This is also an important technique when researching prospective employers—and it’s a task that requires minimal effort on your part. If one of your target companies contacts you for an interview, the knowledge you gained from this Web site research will prove useful.
The online job boards for your twenty-five target companies are another avenue for getting the word out about your brand. It doesn’t hurt to apply for published positions, particularly if you take steps (using techniques described here and in other chapters) to set yourself apart from the majority of other applicants. If the Web site gives you the option, sign up for e-mail alerts that will let you know when new positions open up. Company Web sites are excellent resources for finding advertised positions because the job descriptions posted there are often more detailed than the descriptions you might be able to find through general online job boards.LT International, “Job Searching: The Importance of Examining Company Websites,” BNET, January 2008, jobfunctions.bnet.com/abstract.aspx?docid=915723 (accessed July 15, 2009). Moreover, many companies post open positions only on their Web sites to avoid the cost of posting on other job boards.
Power-Packed Tool #4: Online Job Boards
The benefit of online job boards like Monster.com, CareerBuilder.com, and Yahoo! HotJobs is that they make it a snap to perform searches by industry and keyword, and they often return a wealth of results. In fact, Internet job boards have recently become one of the fastest growing online categories.Sarah Radwanick, “Job Search Ranks as Fastest Growing U.S. Online Category in 2008,” Reuters, January 22, 2009, www.reuters.com/article/pressRelease/idUS243039+22-Jan-2009+PRN20090122 (accessed July 15, 2009). These sites can be an excellent avenue for learning about career opportunities in your target industry, and they should be an ongoing part of your efforts to find the right employer.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 133. These sites might help you find job opportunities through companies that you wouldn’t have otherwise considered working for, and they will certainly keep you informed about the kinds of positions for which people are currently hiring in your industry and the particular qualifications for which many employers are searching.
Most sites will allow you to set up e-mail alerts (customized by your chosen keywords) so that new job postings come to your in-box regularly. It’s best to enter as many keywords as you can think of that are relevant to your interests and experiences so that you don’t miss anything. For instance, if you want a job in advertising, you would choose advertising as a keyword, but you could also list words like promotions, account executive, account manager, account coordinator, customer services, brand manager, advertising agency, and social media.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 139. You might also consider creating a separate e-mail account to keep track of your job-related e-mails, particularly if you have subscribed to alerts through several job search Web sites. In fact, it’s a good idea to go through a number of Web sites so that you can stay informed about as many opportunities as possible. You can go through general job boards like Vault.com or CareerBuilder.com, industry-specific job boards like MarketingSherpa.com, location-specific job boards like SeattleRecruiter.com, or a combination of these options.
Table \(2\): Online Job Boards
General
CollegeGrad.com
http://collegegrad.com
Career information and job board directed at college students
Vault.com
vault.com/wps/portal/usa
Job board, internship opportunities, and information on career planning
Experience
www.experience.com
Job board, articles, and career planning advice
CareerBuilder.com
careerbuilder.com/
One of the largest job boards on the Internet; includes career planning articles
WetFeet
wetfeet.com
Job board and career planning information
Craigslist
http://www.craigslist.org/about/sites
Location-specific job boards
Yahoo! HotJobs
hotjobs.yahoo.com
Large job board with articles on job searching
Riley Guide
rileyguide.com/
Job board and career planning information and resources
Industry Specific
Association Job Boards
www.associationjobboards.org/find.cfm
Includes links to Web sites of professional associations and job boards
SMEI
smei.associationcareernetwork.com/Common/HomePage.aspx
Job board for sales and marketing executives
Accounting Jobs Today
www.accountingjobstoday.com
Job board for careers in accounting and finance
Jobs in the Money
www.jobsinthemoney.com (inactive)
Job board for accounting and finance
Accounting.com
http://www.accounting.com
Job board for accounting positions
Sologig.com
http://www.sologig.com
Job board for freelancing, contracting, consulting, and temporary work
MarketingSherpa.com
http://www.marketingsherpa.com
Job board for marketing; includes articles
Marketinjobs.com
www.marketinjobs.com
Job board for marketing
TalentZoo.com
www.talentzoo.com
Job board for marketing, advertising, and PR
Stylecareers.com
http://www.stylecareers.com
Job board for fashion, apparel, and retail
Mediabistro.com
http://www.mediabistro.com
Job board for marketing
Source: Adapted from Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 221–23.
Although it’s important to use direct mail when submitting a cold-contact application, when you apply for positions you find on online job boards, you should apply through the Web site using the format they prescribe. Just make sure you include a cover letter when you submit your résumé. Hiring managers are likely to throw away résumés that come in without cover letters because a cover letter is what allows you to personalize your application, sending the message that you care enough to make an effort in your job search. Finally, keep in mind that while many job seekers rely entirely on online job boards for their searches, and while these sites can be a good avenue for learning about opportunities, they are not an end-all method. They are strongest when used in combination with your direct-mail campaign and the other power-packed tools mentioned in this chapter.
Power-Packed Tool #5: Get Out There
Finally, when you want to let people know you are on the market and have unique skills to offer, consider integrating a number of methods discussed in other chapters of this book to let people see your face. Phone calls, letters, and online communications are critical to your job search, but nothing creates an impression and establishes personal connections like face-to-face interaction.
• Informational interviews. (See the Selling U section in Chapter 5.) Develop a list of contacts that work in your field of interest and get in touch with several of them to ask about setting up an informational interview: “You do what I would like to do. Could I come in and learn about how you got into the industry?” People naturally love sharing their knowledge and expertise, so most of your contacts will be more than willing to help.“Informational Interviewing Tutorial: Learn about How an Informational Interview Should Be an Integral Part of Your Networking and Job-Hunting Plan,” Quintessential Careers, www.quintcareers.com/informational_interviewing.html (accessed July 15, 2009). Informational interviews are excellent resources for establishing connections and generating job leads.
• Mentors. You are never too young nor too old to have a mentor. Mentors can help you develop your knowledge and skills, build your network, and learn inside information about working in your chosen field.Kim Richmond, “10 Ways to Get the Word Out about Your Brand,” presentation in the How to Market Yourself as a Brand to Get the Job You Want Workshop Series, Upper Merion Township Library, King of Prussia, PA, June 1, 2009. Mentors are your allies: the people who most want to see you succeed—and the ones who often have the resources to help you do so.
• Networking. (See the Selling U section in Chapter 3.) It’s impossible to overstate the importance of building your network. Online tools like LinkedIn are powerful resources, but face-to-face networking with personal and professional connections alike can generate surprising results. Who knows, your stylist might tell you, “Oh yeah, my brother-in-law is in sales. You might want to talk to him about a job. I’m not sure if he has any jobs open, but I’ll give you his number so you can touch base with him.”
• Internships and professional organizations. (See the Selling U section in Chapter 14.) Internships are an excellent way to network, learn more about working in your chosen field, gain valuable experience, and sometimes get your foot in the door at a company. Another way to get exposure in any industry is by joining and getting involved in professional organizations. In Chapter 14, you will learn more about the value of applying for internships and joining professional organizations.
Power-Packed Tool #6: Follow-Up
Following up helps you maximize your efforts after networking, applying for an online job, sending direct mail, contacting someone via networking (online or offline), and visiting a job fair. You will leave a good impression, help your contacts to remember you, and set yourself apart from other applicants. Follow-up can sometimes have surprising benefits, so even when a door seems closed, make the effort to send a personal note or thank-you. Consider a college graduate who integrated follow-up into her job search. Shortly after applying for a public relations position at one of her target companies, she received a letter saying the position had been filled. Anika followed up on this letter with a note, thanking the interviewer for her time and mentioning how much she had enjoyed their meeting and her visit to the company. A week later, she got the position—the candidate the company originally hired had changed her mind. Because she was the only applicant who had followed up, she stood out, and the company hired her as a replacement.
Consider these techniques that will allow you to make the most of your follow-up efforts:
• Send thank-you notes. Send a personal thank-you note to everyone in your online network who gives you a referral and to anyone with whom you have an informational interview.Allison Doyle, “Informational Interview: What Is an Informational Interview and How It Can Help Your Career,” About.com, http://jobsearch.about.com/cs/infointerviews/a/infointerview.htm (accessed July 15, 2009). Also, send a thank-you note or e-mail to contacts you meet at career fairs. It’s best to send a thank-you e-mail the same day, then follow up with a handwritten note. When you write your handwritten note and mail it the day of your meeting or interview, your contact will usually receive it the next day. And do it in a timely manner. Don’t let weeks go by—send your notes within a day so that they arrive while you are still fresh in your contact’s mind.
• Call. Call your twenty-five target companies one week after you mail out your cover letter and résumé. If you are sending your direct mailings to at least two contacts at each company, it won’t be realistic to follow up with everyone. Pick the key contact at your target company—usually the hiring manager in your targeted department—with whom you want to follow up and make sure you actually get her on the phone when you call. If the call goes to voice mail, you can leave a message, but try back again until you reach her.
It’s also important to keep thorough records of your communications with your target companies and contacts. Use the Excel spreadsheet you created for your mailing list to record the date you mailed your cover letters and résumés, the date you followed up, the result of your follow-up, and any future actions you need to take (e.g., call back in one week). You can use a similar system when you follow up with your online job board applications. Postings listed on online job boards don’t always provide the contact info for individuals at the company, but whenever they do, make sure you follow up with this person by phone one week after you have submitted your résumé and cover letter.Kim Richmond, Brand You, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008), 145.
Follow-up is an opportunity to take advantage of the research you’ve been doing and any information you’ve gathered from tracking a company’s RSS feeds or Google News Alerts. For instance, say you want to work in the entertainment industry and you’re following up with a hiring manager at Epic Records. You’ve found out through the company’s RSS feed that they’ve recently released an online collection of bonus tracks, live recordings, and previously unreleased songs by the group Incubus,“Epic Records to Release The Vault—A Comprehensive Look and Listen inside Incubus,” Reuters, June 2, 2009, www.reuters.com/article/pressRelease/idUS154717+02-Jun-2009+BW20090602 (accessed July 15, 2009). so you mention this to the hiring manager when you follow up about your application. This lets the hiring manager know that you’ve done your research and are genuinely interested in the company, which helps establish a rapport.
Key Takeaways
• You will never see the payoff from your potential employer research unless you get the word out. Let people know you are on the market for a job.
• The most important step to ensure your résumé reaches decision makers is direct mailing your cover letter and résumé to contacts at each of your twenty-five target companies—a task you can accomplish easily with a mail merge.
• Keep an eye on the Web sites of your twenty-five target companies to find out about new job postings and stay updated on developments at each company.
• Online job boards will let you find out about new advertised positions daily and can help you identify opportunities you might not have otherwise considered.
• Use networking sites like LinkedIn to make new contacts and connect with people in your industry.
• Follow up—after sending a direct mailing, after meeting someone at a career fair, and so on—to strengthen relationships with people that can help you find a job.
• Leverage techniques mentioned in other chapters—informational interviews, mentoring relationships, networking, internships, and professional organization memberships—to help get the word out about your brand.
Exercise \(1\)
1. Visit the Web sites of five of the companies on your target twenty-five list. Sign up for a job agent and complete a profile, if those are options on each Web site.
2. Visit three online job boards. Sign up for a job agent and complete a profile, if those are options offered on the sites.
3. Identify at least one person with whom you can meet for an informational interview. Contact the person and meet with him to learn about how he got into the business and ask him for additional contacts with whom you can network.
4. Identify at least two professional organizations that may be of interest to you. Visit the Web sites to see their upcoming events and plan to attend a meeting or event for each one. Explore membership information and learn about the benefits and cost of membership. Join each organization’s group on LinkedIn, Twitter, and Facebook to keep up-to-date on events and discussions. | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.06%3A_Selling_U_-_Six_Power-Packed_Tools_to_Let_the_Right_People_Know_about_Your_Brand.txt |
Power Wrap-Up
Now that you have read this chapter, you should be able to understand the preapproach in selling.
• You can describe the role of key and target accounts.
• You can complete a precall planning worksheet.
• You can list resources to use to conduct preapproach research about prospects.
• You can identify needs and opportunities of prospects.
• You can generate ideas for your prospects in an effective brainstorming session.
• You create general and specific benefit statements.
• You can determine SMART precall objectives.
• You can explore six different ways to get your cover letter and résumé to the right people.
TEST YOUR POWER KNOWLEDGE (AnswerS ARE BELOW)
1. What is the difference between a key account and a target account?
2. Why is a precall planning worksheet completed?
3. Why are customer demographics important in B2B selling?
4. What is the best source of prospects?
5. What is the role of trade journals in researching your prospects?
6. What are some important pieces of information you should learn when you are researching a prospect?
7. List and explain at least three sources of information you would use when researching your prospect.
8. Should you filter your ideas during the brainstorming process? Why or why not?
9. Name two techniques of effective brainstorming.
10. Create a general benefit statement to use if you were selling Starbucks coffee to your friend.
11. What do the letters SMART stand for?
12. Write a SMART objective for your first meeting with a prospect during which you want to learn who is the decision maker.
13. Name at least one thing you should do to prepare for your presentation to a prospect.
14. Name at least three ways to get your cover letter and résumé to the right people.
POWER (ROLE) PLAY
Now it’s time to put what you’ve learned into practice. Following are two roles that are involved in the same selling situation; one role is that of the sales manager and the other is that of the salesperson. This will give you the opportunity to think about this selling situation from the point of view of both the sales manager and the salesperson.
Read each role carefully along with the discussion questions. Then, be prepared to play either of the roles in class using the concepts covered in this chapter. You may be asked to discuss the roles and role-play in groups or individually.
Green and Bright
Role: Sales Manager for GreenWay Lighting Company
You are the sales manager for GreenWay Lighting. Your product, LED lighting, can save companies up to 30 percent on their lighting bills starting in the first year after purchase. Target customers are industrial companies, such as manufacturers, that have large facilities. One of your sales reps would like to have a brainstorming session with you, the marketing director, product manager, and several other sales reps before approaching a new prospect, JR Papermills. Before the brainstorming session, you meet with the sales rep to discuss the following:
• What information has the sales rep gathered about JR Papermills, and why is the company a good prospect?
• What information has the sales rep gathered about the person with whom he is meeting at JR Papermills?
• What are the SMART objectives that the sales rep has developed for the first sales call?
Role: GreenWay Lighting Sales Rep
Your company markets and sells energy-efficient LED lighting to businesses and other facilities. You have qualified JR Papermills as a prospect due to the size of the facility (500,000 square feet), number of lights (one million), and plans for expansion (new manufacturing plant planned to be operational by the end of next year). You’ve done your homework about the company, and you learned that they always like to invest in products that give them a return in the first year after purchase. You want to set up a brainstorming session with several people in the company to help develop ideas you can use when you approach this prospect.
• How will you convince your sales manager that JR Papermills is a promising prospect that is worth taking the time for a brainstorming session?
• If you want to gather more information about the prospect, where would you go to learn more about the company? Where would you go to learn more about the person with whom you are going to meet?
• How would you use your preapproach research to structure a brainstorming session?
ACTIVITIES
1. Join at least three new groups on LinkedIn (you should have already set up your profile). Then, add at least three additional people to your network every week based on discussions that take place in the groups. Participate in discussions and keep in touch with the new people in your network.
2. Use the list of twenty-five target companies you developed in Chapter 7 and do a test mail merge to see how it works.
TEST YOUR POWER KNOWLEDGE AnswerS
1. Target account is a new, qualified prospect. Key account is an existing customer that is or has the potential to be a significant source of sales.
2. It is an organized way to research and learn about your qualified prospect. It is the information gathered here that helps you plan your approach and presentation and the questions you want to explore.
3. B2B selling requires understanding your prospect as well as their customers, which usually include the end user.
4. Existing customers.
5. Trade journals can give you insights about trends in the industry, your prospect’s company, and even the prospect himself.
6. About the company: demographics, financial performance, company news; about the company’s customers: demographics, size of customer base, what customers are saying about the prospect; about the current buying situation: type of purchase, competitors and current provider, current pricing; about the contact person: title and role in the company, professional background, personal information, essential problem your contact needs to solve, prospect’s motivation for buying,
7. Online databases (e.g., Hoovers), business directories (e.g., Bizjournals.com), trade journals, company Web site, LinkedIn, blogs, social networks, company employees, complementary and competitive salespeople.
8. During brainstorming, it’s best not to filter ideas in order to generate as many ideas as possible. Then, the ideas should be prioritized and modified in order to be implemented.
9. Know your problem or opportunity; generate, don’t evaluate; push beyond the wall; use strategic stimuli.
10. I have an idea that will refresh your mind and give you a different environment to work in. Does that sound like something you would be interested in?
11. Specific, measurable, actionable (or achievable), realistic, time-bound
12. Learn who is the decision maker and who are influencers for the buying decision at this account by the end of the first sales call.
13. Prioritize the agenda, personalize the presentation, prepare illustrations, and practice.
14. Professional social networking, direct mail, company Web sites, online job boards, follow-up, and getting out there (networking, informational interviews, professional organizations, internships). | textbooks/biz/Marketing/The_Power_of_Selling/08%3A_The_Preapproach-_The_Power_of_Preparation/8.07%3A_Review_and_Practice.txt |
The Approach: The Power of Connecting
Video Ride-Along with Tonya Murphy, General Sales Manager at Radio Station WBEN-FM
You heard Tonya Murphy talk about the importance of the preapproach in the video ride-along in Chapter 8. Now she wants to provide you with insights about the moment of truth…the first time you actually come in contact with the customer. The approach is that critical step when the customer decides if she is going to be open to hearing your presentation.
Ride along with Tonya and hear her tips about what it takes to make a successful approach. Based on Tonya’s experience, you only have fifteen seconds to win over the customer. You need a strong approach.
9.02: First Impressions Make All the Difference
Learning Objectives
• Understand the role of first impressions and the importance of a strong approach.
When Paul McCartney returned to New York in July 2009 to play a concert at Citi Field, the new stadium built in the place of Shea Stadium where The Beatles first invaded the American music scene in 1965, the atmosphere was electrifying. He started the concert by saying, “Welcome to the new Citi Field Stadium. It’s been a long time since I’ve been here.… I have a feeling we’re going to have a little bit of fun tonight.”“Paul McCartney’s first concert at City Field,” video, July 22, 2009, http://www.youtube.com/watch?v=cdHC6OJPShQ (accessed July 26, 2009). Then he played The Beatles’ classic “Drive My Car,” and the crowd went wild.“Paul McCartney at Citi Field Opening Song ‘Drive My Car,’” video, July 17, 2009, www.macca-central.com/news/?id=3070 (accessed July 26, 2009).
Paul McCartney didn’t need to talk to the audience. In fact, people didn’t come to hear him speak at all; they came to hear him sing. But Paul McCartney clearly understands the power of a strong approach. His brief welcome, tip to the past, and promise for a great show were all part of his short but effective sales approach. While you might not think of Paul McCartney as a salesperson, his concerts, just like those of other rock stars and recording artists, are actually sales presentations for his new songs and albums.
In all types of selling, the approach precedes the sales presentation. In the case of the concert, you probably already know Paul McCartney and what to expect from him. But when you are meeting someone for the first time in sales, your approach won’t be successful unless you how you make a good first impression.
First Things First
“You only get one chance to make a first impression.” This is a saying you’ve probably heard many times before. First impressions are quickly formed, difficult to change, and can have a lasting effect.BNET Health Care Industry, “Social Perception,” BNET, March 2001, findarticles.com/p/articles/mi_g2699/is_0003/ai_2699000324/?tag=content;col1 (accessed May 16, 2010). Think of a first date, your first day of high school or college, or any job interview you have gone into. You were probably nervous because you knew the importance of making a good first impression. Similarly, the sales approach is the most intimidating point of the sales process for many salespeople because they know that the decision to buy or not to buy can often start with this initial contact. The approach is your first phone call to your prospect, the moment on the sales floor where you walk over to a new customer and say, “That’s our newest model, and it has one terabyte of capacity. Do you record a lot of videos or music?” or your first visit to a target business when you ask to set up a meeting with your prospect. You’ve done your research, your planning, and your preparation, but the approach is where the rubber meets the road.
The Six Cs of the Sales Approach
While prospecting and the preapproach are entirely under your control, the approach is the first part of the sales process where you actually come in contact with your prospect and you’re not quite sure what she will say; this can be a little nerve wracking. However, if you’ve researched your prospect, and if you go into the sales call prepared, you can have confidence that you will be able to adapt your sales approach to your individual customer. Keep in mind that you aren’t selling a product during your approach; you are actually introducing yourself and opening up the way for the opportunity to make your sales presentation later. Consider these six Cs, or things to keep in mind before and during your sales approach. These six points will help you anticipate your customers’ responses, adapt, and execute your approach with success.
The Six Cs of Selling
• Confidence
• Credibility
• Contact
• Communication
• Customization
• Collaboration
Confidence
If you know your product inside and out, and you’ve set your objectives and prepared a general benefit statement, you will be well equipped going into your call, so have confidence. (On the other hand, confidence without preparation is a sure recipe for disappointment, so make sure you actually have done your homework first.) Not only will a confident attitude set the tone for the meeting and help you build credibility with your customer, but it will also help you perform your job better. As psychologist William James said, “Attitude at the beginning of a difficult task…more than anything else, will affect its successful outcome.”Brian Johnson’s Philosophers Notes, “Inspirational Quotes: William James,” http://philosophersnotes.com/quotes/by_teacher/William%20James (accessed May 16, 2010).
Of course, feeling and appearing confident in a stressful situation is more easily said than done, but there are some simple psychological tricks that can help. For in-person sales approaches, sales coach Jim Meisenheimer suggests giving yourself an affirmation before heading into the meeting. For instance, tell yourself “This will be one of the most positive sales calls I have ever had with a new prospect.”Jim Meisenheimer, “7 Things to Do to Prepare for Your First Sales Call,” EzineArticles, ezinearticles.com/?7-Things-to-Do-to-Prepare-For-Your-First-Sales-Call&id=2409769 (accessed May 16, 2010). If you believe you will succeed, it is more likely that you will succeed. In addition, dressing well for your sales call (discussed in greater detail later in this chapter), will help you feel more confident and professional.
For sales calls that happen over the phone, prepare for your call by organizing your workspace first. Clear off your desk and make sure you have everything you will need within easy reach—calendar, note pad and pen, fact sheets, precall planning worksheet, and anything else that might be helpful during the call.Craig Harrison, “Warming Up to Cold Calls,” Expressions of Excellence, Fall 2001, http://www.expressionsofexcellence.com/ARTICLES/warmcoldcalls.htm (accessed July 30, 2009). You should also try standing up (because people feel more powerful when they are standing) and smiling while you talk (it will relax you and will help you to use a positive, energized tone of voice).Business Link, “Planning to Sell,” www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1081503204 (accessed July 30, 2009).
Credibility
Building credibility is one of the most important challenges you will face early on in the sales call; you want to convince your customer that you are competent, that you offer valuable solutions, and that you are trustworthy.Thomas A. Freese, Secrets of Question Based Selling (Naperville, IL: Sourcebooks, Inc., 2003), 113. As sales strategist Thomas A. Freese writes, “Without credibility, sellers won’t even get a chance to take a swing at the ball.”Thomas A. Freese, Secrets of Question Based Selling (Naperville, IL: Sourcebooks, Inc., 2003), 116. Open the conversation by introducing yourself and your company; if you are meeting your customer in person, make eye contact and offer a firm handshake. Next, briefly explain the purpose of your call (without making your sales presentation). Your customers are busy people, and will appreciate it if you are direct. In addition, an up-front manner like this conveys trustworthiness.
Depending on the type of sales situation you are in, you may be approaching your prospect, or they may be approaching you. In B2B sales, you are generally approaching your prospect, so you have researched them first. While qualifications like a proven track record, satisfied customers, or number of years in sales might help establish your credibility, according to Jeff Thull, CEO of Prime Resource Group, these qualifications are expected, and listing them isn’t an effective way to lead off your sales call. Thull says exceptional credibility comes when you can demonstrate that you have done your homework. In other words, it’s not what you know about your company and your product that will impress your customer; it’s what you know about your customer and his situation.Jeff Thull, “How to Establish Sales Credibility: It’s Not the Stories You Tell, It’s the Questions You Ask,” MarketingProfs, February 6, 2007, http://www.marketingprofs.com/7/thull15.asp; Neil Rackham, The Spin Selling Fieldbook (New York: McGraw-Hill, 1996), 40. Later in this chapter, you will learn about specific ways to do that.
Contact
By now you might be wondering how you should approach your prospect. Do you want to make your first contact in person, on the phone, or over e-mail? The way you make contact will depend on the specific selling situation. Consider whether you are in a situation in which you will initiate the approach, whether your customers will initiate the approach, or whether your selling will include a mixture of both. For instance, maybe you work for a company that specializes in corporate training and personal development services, and your customers include referrals (in which case the prospect is approaching you) as well as prospects you have identified through research (in which case you are contacting them). Even retail selling can include a mixture of both. If you are selling cars or fine jewelry for instance, your customer might come into the showroom or store and ask you for help directly, or he might just start looking around, in which case you would approach him. Of course, because of the environment, in most retail situations the approach happens in person.
While there’s not one set way to make an approach, the constant is to make every approach personal. Every situation is different—some approaches may be made at a trade show, while others may be made in an office, or even on the phone—but it’s always a good idea to show appreciation. “In every conversation, include at least one appreciative remark,” according to Rosalie Maggio, best-selling author of How to Say It and The Art of Talking to Anyone. Praise the other person’s business acumen, charity work, or even her taste in shoes. As long as the appreciation is brief, sincere, and specific, the feeling will be remembered long after the words are forgotten.”Robert Jones, “How to Make a Powerful First Impression,” Entrepreneur, November 17, 2008, http://www.entrepreneur.com/startingabusiness/selfassessment/article198622.html (accessed July 30, 2009).
On the other hand, in situations where you are generally approaching the customer first, it’s important to think strategically about the way you want to contact your prospects. E-mail is one of the most efficient and least expensive ways to get in touch with a large number of prospects, but e-mail—like direct mail—is impersonal and has a low response rate: 2 or 3 percent at best.Joanna L. Krotz, “5 Steps to Hitting Your Direct Mail Targets,” Microsoft Small Business Center, http://www.google.com/search?client=safari&rls=en&q=5+steps+to+hitting+your+direct+mail+targets&ie=UTF-8&oe=UTF-8 (accessed July 30, 2009). (Just think of all the “junk” e-mails you delete or send through your spam filters on daily basis). E-mail can work as an extension of the qualifying process because only the prospects with genuine interest will be motivated enough to respond. This makes e-mail a useful approach for smaller, less complicated sales that require the seller to deal with a large number of prospectsSean Mize, “What’s the Most Effective First Contact with a Prospect—Email or Phone?” EzineArticles, ezinearticles.com/?Whats-The-Most-Effective- First-Contact-With-A-Prospect---Email-Or-Phone?&id=1206246 (accessed July 30, 2009). (e.g., insurance or real estate). On the other hand, e-mail is not the most effective way to reach your best prospects, especially not in complicated B2B sales—after all, in relationship selling you want your approach to be as personal as possible.
Face-to-face interaction is definitely the most personal approach you can make, but it is also the most difficult. In large B2B sales, since your contacts are decision makers with high levels of responsibility, they are busy people. You wouldn’t just show up at their businesses without an appointment. In these cases, it’s best to call first and ask your contact if you can schedule a time to meet with her in person. Of course, you might get sent right to voice mail, especially when you are trying to contact a busy manager. If you’ve tried a number of times and can’t get through, you can leave a message, but make sure you follow up by calling back later in the day or the next day. Be persistent and call back until you can speak to someone. Also keep in mind that there are always exceptions to the rule. You might have the opportunity to make a face-to-face first contact (and secure an appointment for a sales presentation) if you know your B2B prospect will be present at a trade show or industry event you plan to attend.
Communication
Whether you approach your prospect in person or over the phone, you want to build good rapport. After all, wouldn’t you rather do business with someone you like? Your customer will too. “Most decision makers base their purchasing decisions on who they are buying from, not what they are buying,” says Ray Silverstein, sales columnist for Entrepreneur online.Ray Silverstein, “How Do I Build Customer Rapport?” Entrepreneur, July 25, 2007, http://www.entrepreneur.com/management/leadership/leadershipcolumnistraysilverstein/article182144.html (accessed August 1, 2009). Rapport building happens at every step of the sales process, but it begins with your first interaction.
For in-person sales approaches, keep in mind the powerful elements of nonverbal communication that were covered in Chapter 5, such as when people communicate face-to-face, only about 20 to 30 percent of that communication is verbal.Katherine Toland Frith and Barbara Mueller, Advertising and Societies (New York: Peter Lang Publishing, 2003), 34. This means that it is important to focus not only on what you are communicating but also on how you communicate it. You can make an instant positive connection simply by remembering to smile. This is critical: people are naturally wired to smile in response to others’ smiles, so by smiling you will put your prospect at ease and help create a positive atmosphere.Geoffrey James, “Principles of Building Rapport,” video, March 9, 2009, BNET, blogs.bnet.com/salesmachine/?p=1461&tag=content;col1 (accessed August 1, 2009). In addition, consider that people are more likely to trust and respond favorably to people who are similar to them.Geoffrey James, “How to Build Rapport on the Phone,” BNET, September 18, 2007, blogs.bnet.com/salesmachine/?p=128&tag=content;col1 (accessed August 1, 2009). Responding to your prospect’s body language and posture with a similar body language and posture, or mirroring, helps to establish rapport. Learn about the power of nonverbal communication and mirroring during a sales approach in this short video.
Video Clip
Interview with Larry Pinci, Author of Sell the Feeling
Learn how to create rapid trust.
blogs.bnet.com/salesmachine/?p=447
And don’t forget to bring some business cards with you. You’ll want to exchange business cards with the person with whom you are meeting.
On the other hand, when you communicate over the phone, you won’t be able to use body language to help put your prospect at ease or establish rapport; your voice (including your pitch, tone, enunciation, and word choice) is the only tool you have.Geoffrey James, “How to Build Rapport on the Phone,” BNET, September 18, 2007, blogs.bnet.com/salesmachine/?p=128&tag=content;col1 (accessed August 1, 2009). Sales coach Wendy Weiss suggests recording your voice as you practice your sales approach and listening to how you sound. Is your tone convincing and confident? Does your voice have warmth and passion in it? Are you speaking clearly enough to be understood? Listening to your recorded voice will help you hear how you sound to other people.Wendy Weiss, “Your Voice Is Your Instrument,” Sales Information, 2004, www.sales.net63.net/1134.php (accessed July 30, 2009). Speech and language professor Daniel R. Boone adds that “the two most common difficulties in telephone conversations are speaking too loudly or speaking too softly,” so it’s important to pay attention to your volume as well as your tone.Daniel R. Boone, “Is Your Voice Selling You on the Phone?” American Salesman, August 1, 1993, AllBusiness, www.AllBusiness.com/marketing/direct-marketing-telemarketing/393038-1.html (accessed July 30, 2009). Finally, while you can’t mirror your customer’s body language over the phone, you can subtly reflect his style of speech. If your prospect speaks quickly, try speeding up your speech as well. If the prospect has a drawl, consciously slow your voice down to match his pacing. Pay attention to the way he speaks and also to his word choice and conversational style and adapt your style to match.Geoffrey James, “To Sell More, Listen to Your Voice,” BNET, September 19, 2007, blogs.bnet.com/salesmachine/?p=129 (accessed August 1, 2009).
You might be thinking, so now I know how to communicate with my prospect, but I still don’t know what to communicate. The “what” of your sales approach will depend on the specific selling situation and your precall objectives. In some cases, like retail for instance, your approach might be immediately followed by a sales presentation, but in other cases, particularly larger B2B sales, the purpose of the first contact is to set up an appointment for a sales presentation. In the next section of this chapter you will read more about the dos and don’ts of opening lines, or approaches, in different selling environments.
Approach Like the Pros
Learn about sales approaches and other best practices in selling by subscribing to the Selling Power newsletters. There are several different versions including one that focuses on the pharmaceutical industry and one for software. All e-mail newsletters are free when you sign up at http://www.sellingpower.com/content/newsletter/index.php.
Customization
Tailoring your sales approach to the individual customer is one of the keys to relationship selling. Even in retail situations in which the prospect is approaching you first (so you aren’t able to research her beforehand), you would approach different customers differently. Consider the example from Chapter 7 for instance: selling a gym membership to a prospect who walks into your fitness club. If a woman with two young children comes in, you would probably spend time showing her the child care center, and you would discuss any family centered activities your club offered. If she expressed an interest in aerobics or Pilates, you would show her the class schedule and the fitness rooms where the classes are held. Adaptive selling—especially in situations in which you haven’t been able to prepare—involves observation, listening, and asking directed questions to uncover what your prospect needs and cares about.
John Brennan, president of Interpersonal Development, suggests using intuition to customize your behaviors and the substance of your communications to your customers’ buying style. “If [something in the interaction] does not feel right,” he says, “pay attention.” Tune in to your customer’s responses. If you get the sense that he wants simplicity, don’t go into too much detail. On the other hand, if he uses detail in his own responses, use a higher level of complexity when you respond back.John Brennan, “Adapt Your Style to Win over the Customer,” EvanCarmichael.com, www.evancarmichael.com/Sales/395/Adapt-your-style-to-win-over-the-customer.html (accessed August 1, 2009). Ultimately, the trick is to get inside your customer’s head. Ask yourself, “What would I care about and want to know if I was this person? What would I respond well to?” Is your customer an individual consumer? Is he a technical expert? Is he someone working to earn the respect of higher-level managers in his company? Putting yourself in your customer’s shoes and adapting accordingly will help you earn his trust.John Brennan, “The Art of Adaptation,” EvanCarmichael.com, www.evancarmichael.com/Sales/395/The-Art-of-Adaptation.html (accessed July 30, 2009).
Power Player: Lessons in Selling from Successful Salespeople
Great Selling Skills Never Go Out of Style
In 1946, when the American Tobacco Company’s account was up for grabs, big advertising firms across the country competed to earn its business. Ben Duffy, the president of a small advertising firm in New York City, also decided to take a shot at the account. Duffy made a phone call and successfully secured an appointment with the president of the tobacco company, but he knew he was just a small firm up against advertising giants and that he would have to do something to set himself apart during the sales call. As he thought about what to do, Duffy decided to put himself into his prospect’s shoes. “What questions would I have on my mind if I were the president of American Tobacco?” he asked himself. He made a list of fifty questions then narrowed that list down to ten. The next day when he met with his prospect, Duffy said, “I thought you would have some questions about me, my company, what’s in the deal for you, and what’s in it for me, so I made a list.” Surprisingly, the president had also made a list of ten questions, and seven of the ten questions on the two men’s lists were the same. By putting himself in his prospect’s shoes, Duffy established quick rapport and walked out of the office that day with a \$15 million advertising account.See www.bradskiles.com/yahoo_site_admin/assets/docs/Larry_Wilson.24852250.pdf (accessed May 16, 2010).
Collaboration
You’ve learned how relationship selling is about partnering in Chapter 3. Of course all sales have a bottom line (you ultimately want to close the sale), but your customer has something he wants out of the transaction, too. In relationship selling you want to focus on your customer so he gets what he wants; when you do this, your selling becomes a collaborative process. When you practice collaborative selling, both you and your customer get more out of the situation, and you create ideas that would not have been possible for each party working individually.
Consider a recent selling partnership between Pandora, an online streaming radio site, and Whole Foods Market. Doug Sterne, Pandora’s director of sales, approached the natural foods retailer about locally targeted advertising spots in the San Francisco Bay Area. He told Whole Foods that one of Pandora’s goals is keeping advertising to a minimum, only airing one commercial per hour of radio time, but that selling advertising is necessary to Pandora’s continued success. Meanwhile he learned from Whole Foods that one of their goals was “for listeners to see Whole Foods as a place where they could get complete meals.” By sharing their objectives this way, the two companies were able to build an advertising campaign that included fifteen-second audio spots targeting listeners within a certain distance of various Whole Foods locations as well as time-specific promotional ads: one in the morning promoting a lunch special and one promoting a fish special closer to the dinner hour. The collaboration resulted in a successful return on investment for both parties, and Whole Foods is planning to expand their advertising purchases to include the Los Angeles area soon.Andrew Hampp, “Pandora Set to Expand Thanks to New Royalty Ruling,” Advertising Age, July 13, 2009, adage.com/mediaworks/article?article_id=137878 (accessed May 16, 2010).
Dress the Part
When you meet a customer face-to-face, appearance is an important part of the first impression, so make sure to put careful thought into what you wear to your sales call. A good rule of thumb is to dress a little better than you think your customer will dress.Dave Kahle, “What Are Your Views on Dress? Does it Matter?” The Kahle Way, http://www.davekahle.com/qa/dress.htm (accessed May 26, 2010). It’s hard to go wrong dressing more professionally than you need to, but you can go wrong by dressing too casually. What you wear is as much of a communication as what you say or how you use body language; so make sure to dress appropriately and professionally.
At the same time, make sure you know something about your customer and his company culture. As sales coach Dave Kahle says, “You should, within the context of the customer’s world, look successful, confident, and competent.”Dave Kahle “What Are Your Views on Dress? Does it Matter?” The Kahle Way, http://www.davekahle.com/qa/dress.htm (accessed May 16, 2010; emphasis added). If you sell agricultural supplies to farmers, or you sell products to maintenance supervisors or people who wear uniforms, for example, dressing too formally will separate you from your customer. However, these cases are the exceptions rather than the rule. When you are selling to managers within a company, dress will be more formal. Find out about the company culture to learn whether dress is business casual or “coat and tie” and dress up a notch.
Key Takeaways
• Remembering the six Cs of the sales approach—confidence, credibility, contact, communication, customization, and collaboration—will help you make a good impression when you contact your prospect for the first time.
• Techniques like preparation, research, and dressing the part can help you maintain confidence going into the call.
• It is important to establish credibility early on by communicating to your prospect, both verbally and nonverbally, that you are professional, well intentioned, and trustworthy.
• Decide how you will make the initial contact with your prospect; this varies depending on the selling situation.
• Good communication is essential to rapport building in relationship selling; it involves not only knowing what to say but also knowing how to listen.
• Customization, tailoring your sales approach to the individual customer, is also key in relationship selling.
• A good salesperson works not only to achieve his own objective but also to help his customer achieve her objective. Collaborative selling creates ideas that would not be possible for each party working individually.
Exercise \(1\)
1. Explain how a salesperson would customize her approach to two customers: a busy, high-powered executive and a friendly, conversational small business owner.
2. You are preparing for a meeting with a manager from a computer gaming company. From your research on company demographics you know that the firm is relatively small, the employees are mostly twenty- and thirty-something males, and the company characterizes itself as creative, fun, and cutting edge. Based on this information, how would you dress for your sales call?
3. Your company specializes in pool cleaning and maintenance services, and you have identified a large health club that has several locations as a prospect and conducted research on the business. You think you have identified some opportunities to help the customer save money. One service option provides biweekly maintenance visits, and the customer pays monthly. Another involves monthly service visits and biannual training sessions at your customer’s business so that their staff can learn to perform routine maintenance tasks on their own. You are preparing to approach the health club’s manager to set up a sales call. How would you approach the manager? What other type of information would you want to know before you make your approach? What role would each of the six Cs have in your approach? | textbooks/biz/Marketing/The_Power_of_Selling/09%3A_The_Approach-_The_Power_of_Connecting/9.01%3A_Introduction.txt |
Learning Objectives
• Understand how to make contact with your prospect.
What is the worst pick-up line you’ve ever heard? How did the person on the receiving end react? Chances are he or she was not very impressed. During a sales approach there are also certain opening lines to avoid—and others that will be more successful. The following section offers some pointers (and reminders) that will give you the power to start the selling relationship off on the right foot.
During Every Sales Approach
While sales approaches can vary widely depending on the selling situation, there are a few standards that always apply.
Always Get the Customer’s Name Right
There’s nothing more off-putting in a sales approach than a salesperson misspelling or mispronouncing your name. If the salesperson can’t be bothered to learn something as basic as your name, it sends the message that he doesn’t care about you as a person, and it certainly gets the relationship off to a bad start. In e-mails, double check that the customer’s name isn’t misspelled or mistyped. For telephone or in-person approaches make sure you’ve figured out how to pronounce the prospect’s name during your preapproach research. Ask contacts who might know (a receptionist, for instance, or your referral source) if you are unsure. And if the prospect has a difficult name, and you can’t get a confirmation on pronunciation, avoid using his name in your opening lines.
Always Listen
As sales consultants Andrew Sokol and Ike Krieger say, during a sales call, “Don’t be interesting; be interested.”Andrew Sokol and Ike Krieger, “What to Say When You Meet a Prospect,” video, ArticlesBase, www.businesssuccessbuilder.com (accessed August 1, 2009). In other words, don’t try to impress your customer by spending a lot of time talking about your qualifications or how wonderful your company or product is; instead, show your prospect that you are genuinely interested in getting to know him and in understanding his needs. The only way you can do this is to listen. Ask questions and then let your customer do the talking. During in-person sales calls you should engage in active listening, which was discussed in Chapter 5. Show the customer that you are really listening by adopting a listening posture: look the customer in the eye and lean forward or incline your head while she’s talking. In any sales approach you should restate the essential points your customer brings up, both to check for accuracy of understanding and to show that you are paying attention.Edward Delgaizo and Seleste Lunsford, Secrets of Top Performing Salespeople (New York: McGraw-Hill, 2003), 54.
Listening Power
(click to see text)
Listening is called “white magic,” and it can help you be a successful salesperson. The best way to listen is to ask good questions and then listen to the answers. The person who is asking the questions has the control. Find out why by watching this video.
Listening is one of those skills that is easier said than done. While people naturally want to talk, they feel most appreciated when someone else is listening. That’s when people open up and share their goals, wants, and needs. Salespeople are often known for their ability to talk, but it is listening that makes the best salespeople.
Video Clip
The 70/30 Rule of Listening
Hear how author and sales trainer Shane Gibson learned about listening…the hard way.
www.salesvideopodcast.com/mp4/listening.mp4
Source: SalesVideoPodcast.com
You might think about listening as something you do in person or on the telephone, but listening is also a strategy online. Author and sales trainer Shane Gibson has coined the term “Listening 2.0” to describe the need to “listen” to the online conversation before you begin broadcasting your message.
Link
Listening 2.0 Podcast
If you think social media are all about getting your message out, it’s not that simple. This podcast provides effective ways to listen before you speak online.
www.closingbigger.net/2009/10/social-media-listening-strategy
Source: ClosingBigger.net
Be Ready with Your Elevator Pitch
Have you ever heard the term “elevator pitch”? It’s a concise description of a product or service that should take no longer than an average elevator ride.Aileen Pincus, “The Perfect (Elevator) Pitch,” BusinessWeek, June 18, 2007, http://www.businessweek.com/careers/content/jun2007/ca20070618_134959.htm (accessed July 26, 2009). Every salesperson has an elevator pitch for the product or service he is selling. That way, he can tell people about his product in under sixty seconds, and it’s a perfect way to start a conversation or phone call and helps to make a good first impression. In fact, everyone from a CEO to an entrepreneur has an elevator pitch about her company to tell potential investors, shareholders, and other stakeholders. Most listeners don’t have the time to hear all the details about a product or service in the first minutes of a conversation so the elevator pitch provides just enough information so the audience knows what he is talking about and wants to know more. In other words, “An elevator pitch is an overview of an idea, product, service, project, person, or other solution and is designed to just get a conversation started.”Chris O’Leary, “Elevator Pitch 101,” January 27, 2009, Elevator Pitch Essentials, http://www.elevatorpitchessentials.com/essays/ElevatorPitch.html (accessed July 26, 2009).
Video Clip
Elevator Pitch
Watch a business owner give her elevator pitch for her idea about green weddings on a business television show.
www.blinkx.com/video/elevator-pitch-green-weddings/XEE1QusdKnmWQRvx73KUnQ
Your elevator pitch comes in handy when you are making an approach on the phone or in person. It’s the perfect opportunity to tell someone about your company and product or service in less than sixty seconds so that you can engage her in conversation. Remember, an elevator pitch isn’t a sales presentation; it’s simply a way to begin an interactive conversation and get to your ultimate goal—a meeting with the decision maker.
Approaching by Telephone
Establishing rapport can be a challenging task when you make your approach by phone because you can’t read your customer’s body language or other visual cues, and she can’t read yours. There is also the possibility that you will catch your prospect during a busy or inconvenient time. For telephone approaches, it’s best to be brief and direct and to save small talk for your in-person meeting or for a later, scheduled phone call.
Do Give Your Name and the Purpose of Your Call in the First Twenty Seconds“Tips for Successful Cold Calling,” AllBusiness, www.AllBusiness.com/sales/selling-techniques-telesales/1355-1.html (accessed May 16, 2010).
Your prospect will probably decide whether or not he is interested in what you have to say within the first twenty seconds of the call, so it’s best to be direct and get this essential information across early on. You might say something like “This is Shamika Lorenz from Selling Solutions, a firm that specializes in helping businesses reduce their selling costs, and I’m calling to let you know about an upcoming seminar for small business owners in your area.” Such directness also conveys honesty and lets your prospect know that you won’t waste his time.Sharon Drew Morgan, “This is a Sales Call: How to Begin Prospecting Calls with Integrity,” EzineArticles, ezinearticles.com/?This-is-a-Sales-Call:-How-to-Begin-Prospecting-Calls-with-Integrity&id=34073 (accessed August 2, 2009).
Do Prepare a Script for Your Opening Statement
Because you want to get your prospect’s attention in the first twenty seconds, it’s important not to stumble over your words or sound like you are rambling. After you have given your name and the purpose of your call, offer a reference point based on your preapproach research. For example, “I read that your start-up has recently opened a new downtown location.” This will personalize your approach and help establish your credibility. Next, lead into a general benefit statementSharon Drew Morgan, “This is a Sales Call: How to Begin Prospecting Calls with Integrity,” EzineArticles, ezinearticles.com/?This-is-a-Sales-Call:-How-to-Begin-Prospecting-Calls-with-Integrity&id=34073 (accessed August 2, 2009). that will address your prospect’s “what’s in it for me?” question.
Do Ask “Is This a Good Time?”
Keep in mind that asking for permission helps build trust and allows the customer to feel like she is in control of the call.Sharon Drew Morgan, “This is a Sales Call: How to Begin Prospecting Calls with Integrity,” EzineArticles, ezinearticles.com/?This-is-a-Sales-Call:-How-to-Begin-Prospecting-Calls-with-Integrity&id=34073 (accessed August 2, 2009). However, it’s important to think about the way you phrase your question. It is always easier for people to say yes to a question than to say no, so when you open with something like “Did I catch you at a bad time?” all your customer has to do is agree with you (“Yes, this is a bad time.”), and the call is effectively over. On the other hand, if you ask whether this is a good time, a yes response will work in your favor.Pieter Petoors, “How to Contact Your Prospect by Phone,” Pieter’s Blog, March 10, 2009, pietpetoors.com/blog/how-to-contact-your-prospect-by-phone (accessed August 2, 2009). Your customer is only likely to say no if this really is a bad time, and if that happens, you are well positioned to say “I understand. Would Monday at 10:30 be a better time to talk?”Michael McGaulley, “Phone Sales Skills: Your First Contact with the Prospect,” Sales Training Source, 2009, ezinearticles.com/?Phone-Sales-Skills---Your-First-Contact-With-the-Prospect&id=4068383 (accessed August 2, 2009).
Don’t Start Off by Asking, “How Are You Today?”
This common greeting is one you probably use without thinking twice about it. But opening a sales call this way over the phone (when you are contacting a busy stranger who doesn’t know why you have called) can be off-putting and will probably come across as insincere.Joan Guiducci, “The First 7 Seconds of a Cold Call,” AllBusiness, August 1, 1998, www.AllBusiness.com/sales/selling-techniques/690353-1.html (accessed May 16, 2010).
How to Get through Voice Mail to Get to the Right Person
If you are trying to get to the right person in a company and you are getting the voice mail runaround, use these simple steps:
1. Press “0” during the voice message to try to get to the operator.
2. Visit Gethuman.com to find out the “secret” to getting a human to answer the phone at over 1,200 companies.
3. Be cordial and professional to whoever answers the phone. He has the power to give you valuable information to get you to the person you want to talk to so engage him in conversation and thank him for his help.
Don’t Launch into Prolonged Explanations
As sales coach Sharon Drew Morgan says, “Your prospect is obviously not sitting by the phone waiting for a call from you.”Sharon Drew Morgan, “This is a Sales Call: How to Begin Prospecting Calls with Integrity,” EzineArticles, ezinearticles.com/?This-is-a-Sales-Call:-How-to-Begin-Prospecting-Calls-with-Integrity&id=34073 (accessed August 2, 2009). You want to be personable when you call, but you also want to keep in mind that for busy decision makers, phone calls are interruptions, so the more business oriented the interruption, the better.Michael McGaulley, “Phone Sales Skills: Your First Contact with the Prospect,” Sales Training Source, 2009, www.how-to-sell-your-better-mousetrap.com/phone_sales_skills.html (accessed August 2, 2009).
The Perfect Telephone Approach
Watch this example of how to make an effective sales approach on the phone.
Source: YouTube
Leaving a Voice Mail Message
Sometimes it is difficult to reach the person by phone. Although it’s a good idea to call back at different times of the day to see if you can catch the person, it is also a good idea to leave a short voice mail to introduce yourself, your company, a brief reason for your call, and when you will call back.
Effective Voice Mail Messages
Learn some tips for doing an effective approach via voice mail.
Source: YouTube
Approaching by E-mail
While an e-mail approach is less personal than an in-person or telephone approach, it might be your best method, depending on the type of sale in which you are engaging. For instance, Internet marketing coach Sean Mize says of his business, “I generate 2,000 subscribers via the Internet every single month, so to try to contact all those individuals by phone, unless I have a huge telemarketing room, would be absolutely impossible.”Sean Mize, “What’s the Most Effective First Contact with a Prospect—Email or Phone?” EzineArticles, ezinearticles.com/?Whats-The-Most-Effective- First-Contact-With-A-Prospect---Email-Or-Phone?&id=1206246 (accessed July 30, 2009). Here are a few things to keep in mind.
Do Write a Number of E-mails in Different Styles and Tones
Online marketing expert Daegan Smith suggests crafting about fifteen different e-mail templates so you can choose between them when you want to get in touch with a prospect.Daegan Smith, “How to Contact Business Prospects, ArticlesBase, April 28, 2008, http://www.articlesbase.com/communication-articles/how-to-contact-business-prospects-398144.html (accessed August 2, 2009). You can think of it a little like building up your wardrobe so that you have different things you can wear on different occasions: you wouldn’t wear the same clothes to a baseball game that you would wear to a business meeting. You also wouldn’t send the exact same communication to all your prospects. The bottom line is that you want the e-mail to be as personal as possible.
Do Send a Well-Written E-mail
Keep in mind that an e-mailed sales approach is still a first impression, even though the communication doesn’t involve any immediate contact. While the e-mail should be personal, it should be more formal than the personal e-mails you send to friends. You want to sound knowledgeable and credible, which means paying close attention to your word choice and style. Give the e-mail the same attention you would give to a business letter. This also means reading the e-mail several times before sending it to check for spelling and grammar mistakes, just as you would with any other business correspondence.Daegan Smith, “How to Contact Business Prospects,” ArticlesBase, April 28, 2008, http://www.articlesbase.com/communication-articles/how-to-contact-business-prospects-398144.html (accessed August 2, 2009).
Example of an Effective E-mail Approach
Here is a sample e-mail used to approach prospects to hire the Acme Company to create a logo. This e-mail was reproduced with permission from The Writers For Hire Web site.The Writers For Hire, Inc., “Sample Sales Emails: Personal Sales Email,” www.thewritersforhire.com/personal-sales-email.htm (accessed July 27, 2009).
Do Follow Up Persistently
Don’t get discouraged if you don’t get a response to the first or second e-mail you send. In B2B sales, it often takes about twelve e-mails before contacts reply, so be persistent.Daegan Smith, “How to Contact Business Prospects,” ArticlesBase, April 28, 2008, http://www.articlesbase.com/communication-articles/how-to-contact-business-prospects-398144.html (accessed August 2, 2009). If your prospect doesn’t respond right away, it doesn’t mean that he isn’t interested in what you have to offer—just assume that he is a busy person with plenty of other distractions that come across his desk every day. If you continue to send your e-mails regularly, eventually the message will register on your prospect’s “radar screen.” Of course, you don’t want your e-mails to be an annoyance either, so consider including an “unsubscribe” option somewhere in the body of the message for the prospects who truly aren’t interested so that they can request to be removed from your e-mail list.Sean Mize, “What’s the Most Effective First Contact with a Prospect—Email or Phone?” EzineArticles, ezinearticles.com/?Whats-The-Most-Effective-First-Contact-With-A-Prospect---Email-Or-Phone?&id=1206246 (accessed July 30, 2009).
Don’t Send E-mails That Look Like Templates
Again, the goal is to make your e-mails as personal as you can. If you have a number of e-mails drafted, select the one that seems most appropriate to the specific prospect(s) you want to target, and include your prospect’s name in the heading and body of the e-mail.Daegan Smith, “How to Contact Business Prospects,” ArticlesBase, April 28, 2008, http://www.articlesbase.com/communication-articles/how-to-contact-business-prospects-398144.html (accessed August 2, 2009). This will set your message apart from the average, impersonal “junk” e-mail that people get regularly.
Approaching through Online Social Networks
In some cases you will be able to leverage your online social network to approach a prospect. For instance, if you are a Web site designer and you attend a Webinar on increasing Internet traffic to business’s homepages, the other Webinar participants are potential prospects, and you might decide to contact them and ask to be added to their LinkedIn networks. If you are not familiar with using LinkedIn, you might find it helpful to review the videos in Chapter 3.
How to Make Your Approach on a Social Network
Learn how social networking can help you make an effective sales approach.
Companies are also increasingly using social networks as a budget-friendly way to allow prospects to approach them.Leslie Hamp, “5 Steps to Effective Business Social Networking,” Social Networking News, July 9, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009).
Power Selling: Lessons in Selling from Successful Brands
Social Networking Transformation
For PJA Advertising & Marketing, entry into the social networking world has transformed the way the company interacts with customers on every level. Phil Johnson, one of PJA’s senior managers, says, “Now our social media activities involve almost everyone who works here and touch almost every aspect of agency life.” Early on, the company’s vice president of business development used LinkedIn to connect with PJA’s prospects and current customers, and today PJA uses LinkedIn in combination with Twitter, Facebook, and links through YouTube and Flickr to approach new customers and direct potential prospects to the company’s Web site. The upshot? According to Johnson, it’s working. The benefit of using social networks to reach prospects is that you can have greater transparency, he says. PJA might contact a prospect via LinkedIn and direct him to a YouTube video, which might then include a link to the company’s Web page or Twitter account, so in the end the prospect gets a view of the agency from a number of sources. “Today, when we walk into a capability meeting, the people we’re talking to already have had a lot of exposure to our thinking and our personality,” says Johnson.Phil Johnson, “Tweeting Your Way to New Prospects,” Advertising Age, July 6, 2009, adage.com/smallagency/post?article_id=137730 (accessed May 16, 2010).
Do Make a Comment When You Add a Prospect as a New Friend
According to marketing specialist Leslie Hamp, even something as simple as “I noticed we were on the Webinar together, and I’d like to add you as my friend,” will work.Leslie Hamp, “5 Steps to Effective Business Social Networking,” Social Networking News, July 9, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009). The point is that you want to give your approach a personal touch. If you just go out and friend all your prospects without making the effort to engage with them, they might not accept your friend request in the first place, and even if they do accept, they may wonder who you are and how you found them. Or worse, they may soon forget about you altogether. You can think of the networking tool as a facilitator, something that gives you the opportunity to connect, but it is still up to you to do the work of socially interacting and leveraging your connections.
Do Aim for Quality over Quantity
There are so many new and interesting social media programs available that it can be tempting to join multiple sites; but if you are a member of more than two or three social networks at one time, you will probably find your efforts spread too thin. You can get the most out of your social networking by focusing on regular contributions to the few networks of which you are a member, rather than by trying to maintain your profile and connections on a number of sites.Leslie Hamp, “5 Steps to Effective Business Social Networking,” Social Networking News, July 9, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009).
Do Contribute to the Community
In social networking situations, just as in face-to-face interactions, you want to build a good rapport by earning the trust and respect of your customers and colleagues. This means considering ways you can participate in and contribute to the online community, rather than simply using the social networking sites to promote yourself or your product. As virtual office administrator Sue Canfield says, “Social networking needs to be about building relationships—not primarily about self-promotion.”Sue Canfield, “Social Networking Can Work for Your Business,” Chief Virtual Officer, May 12, 2009, chiefvirtualofficer.com/blog/2009/05/12/social-networking-can-work-for-your-business/ (accessed May 16, 2010). For instance, if you decide to start participating in a news-related social networking site like Digg.com (where people post links to and comments about news stories), start rating and commenting on other users’ postings before you begin bookmarking your content there.Sudarmaji Lamiran, “How to Quickly and Easily Leverage Social Media to Build a Big List,” Social Networking News, July 13, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009).
Don’t Let Your Language Get Sloppy
As with e-mail approaches, pay attention to your language. Use a higher level of formality when you contact business prospects than you would use when you send social networking messages to your friends; avoid slang (like “u” for “you” or “btw” for “by the way”).Leslie Hamp, “5 Steps to Effective Business Social Networking,” Social Networking News, July 9, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009).
Don’t Make a Sales Pitch
Even though a social-network approach looks different from an in-person or over-the-phone approach, the purpose is the same—establishing rapport, building trust, and helping your customer discover needs and opportunities—so avoid making your sales pitch during your initial contact. For instance, returning to the example of the Web site design specialist, assume you added ten of your fellow Webinar participants to your social network. Maybe your company has made a short YouTube video that offers advice on incorporating blogging capabilities into business Web sites, so you send a message and link to your ten new contacts: “I thought you might be interested in this video.” In the video’s description on YouTube, you can post a link to your company Web site or blog where you make a direct sales pitch. This way you are offering your prospects valuable information without coming across as pushy. If a prospect is interested in pursuing your services, he has the resources to follow up on his own.Leslie Hamp, “5 Steps to Effective Business Social Networking,” Social Networking News, July 9, 2009, socialnetworkingnewstoday.com/ (accessed August 2, 2009).
Approaching Your Prospect through Social Networking: Dos and Don’ts
Use the Following Tips to Make Social Networking More Effective for Your Sales Approach
• Do use social networks, especially those that focus on the professional community, as a way to connect with prospects and customers.
• Do make a comment when you add a prospect or customer as a friend or connection.
• Do focus on quality of connections rather than quantity.
• Do contribute to the community.
• Do use professional social networking features such as Questions and Answers on LinkedIn.
Avoid the Following When Using Social Networking as a Tool to Make a Sales Approach
• Don’t let your language get sloppy; always use proper spelling and grammar.
• Don’t make a sales pitch. Use social networks to get in touch and make connections; you can follow up to set up a meeting or phone call to explore your prospect’s needs.
• Don’t post personal photos, videos, articles, or comments to a professional social networking site such as LinkedIn.
• Don’t post any inappropriate language, photos, or videos on your personal social networking pages such as Facebook. It’s a good idea to remove any inappropriate information as employers, prospects, and customers can see your personal brand 24/7.
Approaching Your B2B Contact in Person
Some managers and buyers are extremely busy, and when you try to reach them by phone, you will only interact with a secretary, so your first contact with your actual customer might be at a trade show or industry event. When John Koss, sales vice president and partial owner of Koss Corp., wants to approach buyers from his megaretail clients, he heads to the Consumer Electronics Show (CES) in Las Vegas. Koss Corp. sells headphones and audio equipment to stores around the country, including big names like Wal-Mart, Target, and Sears. Before heading to CES, Koss schedules appointments with some buyers and hopes that others—like Wal-Mart’s buyers, who refuse to make appointments—will stop by his booth. He makes a number of sales approaches at the trade show and then spends the next few months traveling to interested buyers’ corporate headquarters, where he gives his sales presentations.Susan Greco, “Marketing: Selling the Superstores,” Inc., July, 1995, www.inc.com/magazine/19950701/2331.html (accessed May 16, 2010). Koss’s strategy is an example of one typical B2B sales approach situation.
In other situations, if you are selling to smaller businesses at the local level, you might make your approach in person at the customer’s place of business. Why make an in-person approach rather than placing a phone call? While visiting in person takes more time and effort, it’s more personal: it is often easier to build rapport with your customer during a face-to-face interaction. There are just a few things to keep in mind when making an in-person or telephone approach in B2B sales.
Do Use a Strong, Attention-Grabbing Opener
You want to get your prospect to like you in the first minute of your sales approach, and you want to give him a reason to keep listening to what you have to say. Be up front: introduce yourself and explain the purpose of your call (including the general benefit statement you have prepared) early on. Then, as in any sales call, ask permission to continue.Tom Reilly, Value-Added Selling: How to Sell More Profitably, Confidently, and Professionally by Competing on Value, Not Price, 2nd ed. (New York: McGraw-Hill, 2002), 138. Your opening might sound something like this:
You: Hello, Aaron. My name is Janeka Jones from iFX, a provider of e-commerce solutions.
Aaron: Hello.
You: We met at the South by Southwest conference in Austin last week. You mentioned that an area of growth for your business is personalized apparel. The personalized jerseys you offer on your Web site are really unique. In fact, I ordered one this weekend, which gave me an idea about how we can help you reduce your order processing time. Is this a good time to talk about your business?
Aaron: I’m running off to a meeting in a few minutes, but I always like talking about my business.
Aaron: I’m always looking for ways to get the product to my customers faster, but I really can’t afford any additional order processing costs.
You: I can understand that. My idea can actually help you reduce your overall operating costs and improve your processing time. Since you are on your way to a meeting, would it work for you if I stop by on Tuesday morning so we can talk more?
Aaron: Let’s see. Tuesday morning at 10:30 looks like it works for me.
Do Take Your Lead from the Prospect or Customer
Of course you want to be personable and establish a good relationship with your customer, but buyers often say that it irritates them when salespeople try to engage in too much small talk, especially when it comes across as forced or artificial. When deciding how to balance small talk with business, it’s important to take your lead from your customer. In the example where Janeka Jones from iFx approaches a prospect, for instance, it wouldn’t be a good idea to make a lot of small talk during your approach because the customer let her know that he was short on time.
Some customers are more people oriented, so getting to know you as a person will be an important part of the sales process for them. Other customers are very task oriented and will prefer to get down to business right away. They may opt for a more formal, businesslike approach and will only be interested in socializing after a transaction or meeting is completed.Tom Reilly, Value-Added Selling: How to Sell More Profitably, Confidently, and Professionally by Competing on Value, Not Price, 2nd ed. (New York: McGraw-Hill, 2002), 140. Start your call with a direct approach, and then pause and give your customer a chance to respond. You can read his reaction to gauge the most appropriate communication style to use. Does he seem anxious to get down to business, or is he open to conversing for a bit first? The bottom line is that you don’t want him to feel like you are wasting his time.Edward Delgaizo and Seleste Lunsford, Secrets of Top Performing Salespeople (New York: McGraw-Hill, 2003), 51. Susan Greco, writer for Inc. magazine, tells the story of a meeting at the Consumer Electronics Show between a salesperson and a buyer for Lowe’s home store. The buyer started the meeting off by saying that she didn’t have much time and just wanted a quick overview of the company, but the seller, who was naturally chatty and personable, missed these cues. He talked at some length and gave the buyer a thorough tour of all the displays at his product booth. Meanwhile, the buyer looked at her watch (another cue the seller missed) before the seller concluded by saying “We really want your business.” The response from the buyer was sarcastic and a little cold: “You do?”Susan Greco, “Marketing: Selling the Superstores,” Inc., July, 1995, www.inc.com/magazine/19950701/2331.html (accessed May 16, 2010). Instances like this are why it is critical to listen to your customer: both his verbal and nonverbal communications. Your attempts to establish rapport can backfire if you don’t pay attention to his signals.
Don’t Use Opening Lines That Send the Wrong Message
Avoid insincere openers or openers that convey a lack of confidence in yourself or your product. Here are a few examples of opening lines to avoid:
• “Would you be interested in saving money?”
An opening line like this immediately puts people on guard. (Oh no, another phony salesperson trying to get my attention with an obvious ploy.)
• “You’re probably a busy person, so I promise I’m not about to waste your time.”
Of course, buyers don’t want you to waste their time, but if you mention time wasting up front, you are suggesting that you are someone who could waste your customer’s time. This opening conveys a lack of confidence, and it sets a negative tone for the sales call.
• “I just happened to be in the area visiting another customer, so I thought I’d drop by.”
This tells your customer that he isn’t a priority—just someone you were able to fit in between other, more important sales visits.
• “I heard that you’ve been having trouble in your customer service department [or in some other area] lately.”
This opening will also put your customer on guard. (Who’s been talking about our problems? How did she find out?)Tom Reilly, Value-Added Selling: How to Sell More Profitably, Confidently, and Professionally by Competing on Value, Not Price, 2nd ed. (New York: McGraw-Hill, 2002), 138.
Approaching Your B2B Prospect in Person
Use the Following Tips to Make Your In-Person Sales Approach More Effective
• Do use a strong, attention-grabbing opener.
• Do take your lead from the prospect or customer.
• Do use a personal, sincere approach.
Avoid the Following When Approaching a Prospect in Person
• Don’t use opening lines that send the wrong message; keep in mind the six Cs of the sales approach.
• Don’t be insincere.
Approaching a B2C Contact in Person
In B2C sales situations, there is sometimes a greater temptation to focus immediately on selling and to forget about rapport building. In most B2C situations the salesperson hasn’t invested time in researching the prospect, and he might figure that this is a one-time sale. However, relationship selling is as valuable in the retail environment as it is in the B2B sales environment. Salespeople who treat their customers as people before they treat them as sales prospects are the ones who get good customer referrals and repeat buyers. If you have a restaurant or a coffee shop where you’re a regular customer, you might already know how this principle works. Aren’t you more inclined to order coffee at a place where people greet you, know your name, and get your drink order right—even if another coffee shop opens up closer to your home or your office? Here are a few dos and don’ts when it comes to earning your customer’s trust and building rapport.
Do Talk to Your Customer
Everyone wants to be recognized. Have you ever walked into a retail store, looked around, and left, without an employee ever talking to you? How does an experience like that affect your buying decision? You might agree with sales consultant Donna Seigel who says “Frankly, when [the salespeople ignore me], I’m not inclined to ever go into that store again.”Donna Siegel, “Relationship Selling: Getting Your Customers Coming Back for More,” SalesMBA, www.salesmba.com/articles1/ssrl03.htm (accessed July 30, 2009). Engaging your customer might mean the difference between making or losing a sale. Even if you don’t know the person, you can make small talk: compliment the customer (sincerely of course) or discuss the weather, local news or events, or sports.Donna Siegel, “Relationship Selling: Getting Your Customers Coming Back for More,” SalesMBA, www.salesmba.com/articles1/ssrl03.htm (accessed July 30, 2009).
Do Treat Your Customer Like a Guest
Make your customer feel welcomed and comfortable when she comes into your business. Earl Taylor, longtime employee at Dale Carnegie & Associates, says, “The specific words you say are different, of course, but the motivation and attitude should be that you are truly grateful for the opportunity to interact with this individual and have the opportunity to be of service.”Geoffrey James, interview by Earl Taylor, “Building Rapport in Retail,” BNET, May 12, 2007, blogs.bnet.com/salesmachine/?p=20 (accessed May 16, 2010). Making the customer feel at home means not only interacting with him but also going out of your way to help him. Maybe the customer comes into your computer store looking for printer ink. Rather than leaving him to fend for himself, walk him to the aisle where you keep your printers (don’t just point him in the right direction). Once you take him to the aisle, ask if you can help him find the right ink type for his printer.
Don’t Ask “Can I Help You?”
“No, thanks. I’m just looking” is the customer’s automatic response to this question, so the question itself actually comes across as a polite way of giving your customer the brush off:Geoffrey James, interview by Earl Taylor, “Building Rapport in Retail,” BNET, May 12, 2007, blogs.bnet.com/salesmachine/?p=20 (accessed May 16, 2010). “I won’t bother you, and I don’t expect you to bother me.” Instead, ask a question that will get your customer talking. An open-ended question like “What brings you into International Jewelers today?” will be a more effective way of engaging someone.
B2C Approach: What’s Important to the Customer?
When a customer enters a high-end car dealership, all the elements of the approach should be used to engage the customer, as in the example below:
You: It is a great car, and it gets over thirty miles per gallon in the city.
Customer: It is really nice, but I’m not sure a hybrid is what I need. I just came in to learn a little more about it.
You: That’s a good idea. I’ll be happy to give you a lesson in hybrids to determine if one is right for you. You should also consider a test drive so you can see exactly how it handles on the road.
Don’t Put Any Pressure on Your Customer
What is the number one fear customers have about talking to salespeople? You might have guessed it: pressure. In fact, some customers will go out of their way to avoid salespeople for this reason. Let your customers know that they don’t have to worry about pressure when they buy from you. As in all selling situations, take your cue from the customer by listening and asking questions to uncover her needs first. Don’t start the conversation off with a question like “What’ll it take to get you into a Lexus today?” That’s essentially putting your sales presentation before your approach. Finally, keep in mind that asking your customer’s permission will also help take the pressure off: “We have a number of new sports utility vehicles. Can I ask you some questions about the specific characteristics you’re looking for?”
Don’t Prejudge a Customer
You’ve probably seen the scene in Pretty Woman where Julia Robert’s character walks into a high-end clothing boutique on Rodeo Drive and the saleswomen turn up their noses at her because she doesn’t fit the right customer image. You probably felt a little triumphant, especially if you’ve ever been slighted by a salesperson, when her character returns the following day to spend a few thousand dollars at several stores, embarrassing the salespeople who treated her so poorly. The moral of the story for a salesperson? Never make assumptions about a customer based on the way he looks, speaks, or dresses. Treat all your customers with respect and care.Edward Delgaizo and Seleste Lunsford, Secrets of Top Performing Salespeople (New York: McGraw-Hill, 2003), 51.
Power Point: Lessons in Selling from the Customer’s Point of View
The Approach That Customers Like
Customers can’t seem to stop saying good things about WholesaleCars2U in Rocklin, California. The dealership has been recognized for relationship selling and its low-pressure sales approach. As one customer said, “No pressure to buy.…They treat you with respect and care. It’s refreshing to know that it wasn’t just about the ‘bottom line.’” WholesaleCars’ customer care wins them repeat business and many referrals. Another customer says, “We will not buy a used car from another dealer again. Trust is something we felt immediately.”WholeSaleCars2U.net, “Testimonials,” www.wholesalecars2u.net/Testimonials.aspx?wsid=87. (accessed August 2, 2009).
Approaching Your B2C Prospect in Person
Use the Following Tips to Make Your In-Person Sales Approach More Effective
• Do talk to your customer.
• Do treat your customer like a guest.
Avoid the Following When Approaching a B2C Prospect in Person
• Don’t ask, “Can I help you?”
• Don’t put pressure on your customer.
• Don’t prejudge any customers.
Turning a Contact into a Sales Call
You might be thinking at this point, “Fine. Now I know how to establish rapport, but how do I turn the call into a sale?” The transition from the approach into the sales presentation will vary, depending on the selling situation. In a B2B sale, your approach might lead to a face-to-face meeting, which might be an information-gathering session where you learn about the customer’s needs in greater detail, and you might not actually make your sales approach for several months. On the other hand, in some B2C sales, the salesperson might be able to launch into her presentation in less than a minute after meeting the customer. There is no formula that applies; the important thing is to understand the environment in which you are working. Sometimes it makes sense to move directly into a sales presentation, and sometimes it doesn’t. As salesman and CEO Pat Cavanaugh says, “You don’t have to shoot every time you have the ball.”Susan Greco, “The Nonstop, 24-7 CEO Salesman,” Inc., August 1, 2000, www.inc.com/magazine/20000801/19766.html (accessed July 31, 2009).
Key Takeaways
• In all sales calls, make sure to listen to your customer and ask for her permission before continuing with your approach.
• Use your elevator pitch to engage your prospect and secure the opportunity to make the complete sales presentation.
• When making a sales approach over the phone
• Do give your name and the purpose of your call in the first twenty seconds;
• Do remember to ask, “Is this a good time?”;
• Don’t launch into long explanations. Keep it brief and businesslike.
• When making a sales approach by e-mail
• Do draft a number of e-mail templates from which to choose,
• Do make sure the e-mail is well written and businesslike,
• Do make the e-mail as personal as you can.
• When approaching through online social networks
• Do make sure to comment when you add a prospect to your network,
• Do contribute to the social network of which you are a member,
• Do avoid slang in your communications.
• When approaching a B2B contact in person
• Do use a strong opening line that gets the customer’s attention,
• Do follow the customer’s lead when it comes to small talk,
• Do be careful that your opening line doesn’t send the wrong message.
• When approaching a B2C contact in person
• Do make conversation with your customer;
• Don’t just ask, “Can I help you?”;
• Do avoid putting any pressure on your customer.
Exercise \(1\)
1. Take the listening quiz by clicking on the following link: http://www.proprofs.com/quiz-school/story.php?title=test-your-current-listening-skills_1. How did you score? What areas do you feel you need improvement? How will this help you in selling?
2. Listen to some business elevator pitches with this video: www.blinkx.com/video/elevator-pitch-piece-of-cake/SmKk9ZSYrHee-91t7dDalA. What are the elements you thought were important in the elevator pitch? What elements did you think were not important in the pitch? Why do businesses have elevator pitches? To whom do they deliver the pitches?
3. Review the following video and identify at least three things the salesperson is doing incorrectly on this sales call. What do you recommend he do to change the outcome of the call?
(click to see video) | textbooks/biz/Marketing/The_Power_of_Selling/09%3A_The_Approach-_The_Power_of_Connecting/9.03%3A_How_to_Start_Off_on_the_Right_Foot.txt |
Learning Objectives
• Describe the different types of sales approaches.
There’s more than one way to start a sales approach. The method you use will depend on the specific selling situation, the specific customer, and on you. If you want the approach to feel natural, the best way to do this is to be yourself. The following examples offer some approach options, but of course the specific approach you use will be a reflection of your style and may include a combination of these approaches.
The Question Approach
When you are making small talk with an acquaintance and you want to show him that you are interested in getting to know him, what do you do? You ask questions, right? A question approach is also an effective way to open a sales call because it shows the prospect that you are interested in listening to him, it begins a dialogue, and it helps you get the information you need to move the sale along.Charles D. Brennan, Sales Questions That Close the Sale (New York: AMACOM, 1994), 49. As sales consultant Michel Neray points out, asking questions that reveal something of what you know about the target company can also help establish your credibility. Ask questions that lead, questions that confirm, and questions that will allow you to test your hypothesis about the challenges your customer might be facing. Then, listen to what your customer has to say.Michel Neray, “How to Establish Credibility,” MarketingProfs, February 15, 2005, http://www.marketingprofs.com/5/neray3.asp?part=2 (accessed August 2, 2009).
Here’s an example.
You: Hi, my name is James Dotson, and I’m with Infinity Document Reproduction Services. I noticed that your office is currently using the 2004 model of company Techmax copy and fax machines, and I wanted to ask you a few questions about your satisfaction with the machines’ performance. Would that be all right?
Customer: We don’t really have any problems with our current equipment right now, but we’re always looking for something better, so sure.
Notice that the first question simply asks for permission. This is a question you should ask no matter what sales approach you are using. Once you establish permission, you could ask a closed question (one with a yes or no answer) like “Are you happy with your current copy machines?” but then you risk ending the conversation quickly if your prospect says “yes.” You could ask an open-ended question like “How well do your copiers work?” but this is broad question, and there’s a good chance that you will get a vague answer. Instead, it’s better to ask a leading question that demonstrates you know something about the problems your customer might be facing with her current products.
You: On average, how many paper jams would you say you have to deal with each week?
Customer: Paper jams, now there’s an area we could definitely use some help with. It seems like we have paper jams quite frequently—about two or three a week.
You: So your copiers are jamming about every other day?
Customer: At least.
You: And how long does it take you to get a machine back on line once it jams?
Customer: It depends on who is at the copy machine. If it’s someone like me, I have to call someone to help. But it’s usually only a few minutes for someone with experience. Sometimes, if a new employee has tried fixing the machine it can take longer, or we have to wait until the end of the day when we’re less busy.
You: Paper jams are usually a problem, and they cause downtime, not to mention frustration. That’s why Infinity just developed a new model called Jam-Free. It’s guaranteed to experience fewer paper jams than any other copiers on the market today, and it has been designed with simple interiors that allow you to get them back on line easily in the unlikely event that they do jam, so your new employees should have no trouble using them. Do you think this is something that would help your office run more efficiently?
A line of questioning like this builds credibility because it demonstrates that you (a) have done your research and understand your customer’s problems, (b) are interested in finding a solution specific to your customer’s situation, and (c) are competent and won’t waste your customer’s time.Jeff Thull, “How to Establish Sales Credibility: It’s Not the Stories You Tell, It’s the Questions You Ask,” MarketingProfs, February 6, 2007, http://www.marketingprofs.com/7/thull15.asp (accessed May 16, 2010).
This line of questioning works well when you have done your research, but what about sales situations where the customer approaches you? In these instances, you won’t have specific research to go on, but you can still start the conversation by asking some directed, diagnostic questions to help build credibility.Freese, Secrets of Question Based Selling (Naperville, IL: Sourcebooks, Inc., 2003), 122 For example, say you work in a store that sells high-end speakers and sound systems.
You: Welcome to Alpha Audio. Have you been into our store before?
Customer: Yes, I was here a couple of months ago but I haven’t been back in a while.
You: Well, we’ve just recently redesigned our store to make room for some new product lines. It might take a little while to find your way around and see all the new portable and home audio products. Would you like me to give you a quick overview of the new layout?
Customer: Yes, that would be great.
By asking questions, you are establishing trust by showing your customer that that you are not just some pushy salesperson—and by asking directed questions, you are securing permission to follow up and dig more deeply into what your customer is looking for.
You: All right. First of all, are you looking for speakers that will work in a large space, or will you be using your speakers in a smaller area, like your living room?
Customer: I’ll be using them in my family room, which is a small area.
You: OK. We have a few models that have an excellent sound quality in smaller spaces. I can show you where those are located. Can I ask you another question?
Customer: Sure
You: What type of amplifier will you be using with your speakers?
As you begin to ask diagnostic questions, you are building credibility and trust by demonstrating that you are genuinely interested in learning what your customer needs and that you can be a valuable resource in the sale; you are finding out the information you need to know to establish a collaborative selling relationship; and you are opening a dialogue on which to build the relationship.Freese, Secrets of Question Based Selling (Naperville, IL: Sourcebooks, Inc., 2003), 124–25.
The Product Approach
When John Koss of Koss Corp. approaches prospects at the Consumer Electronics Show, he has his product booth, complete with visual displays and over forty headphone models, to catch their attention. Koss takes advantage of the noisy, chaotic showroom floor to showcase his noise cancellation headphones: a large banner over his booth announces, “Welcome to the Quiet Zone,” and he invites buyers to sit down, try the headphones on, and experience the instant silence.Susan Greco, “Marketing: Selling the Superstores,” Inc., July, 1995, www.inc.com/magazine/19950701/2331.html (accessed May 16, 2010). Opening the sales call with a product demonstration can be an effective method of capturing a customer’s attention. For instance, a textiles vendor might bring fabric samples to a sales call. After introducing herself and the purpose of her call, she might hand a sample to the buyer and say, “I think you might like this new fabric. It’s especially popular for women’s scarves this season. Can you tell whether or not it’s silk?”Barton A. Weitz, Stephen Byron Castleberry, and John F. Tanner, Selling: Building Partnerships, 5th ed. (New York: McGraw-Hill, 2003), 245. The product approach is especially appealing to people who are visual or hands-on learners because it allows them to look and touch.
The Referral Approach
You already know that establishing trust is a critical part of relationship selling. What’s one way to instantly earn a new customer’s trust? Mention someone your prospect already knows with whom you have an existing customer relationship: trust already exists between you and your referral source and between your referral source and your prospect, so the referral allows you to use that mutual relationship as a bridge to build trust with your prospect. As John Carroll, CEO of Unlimited Performance, says, “Tapping into strong, existing relationships” accelerates your ability to build new customer relationships.John Carroll, “Referrals: The Sale’s Professional’s Best Friend,” Unlimited Performance, Inc., 1999, www.uperform.com/articles/art-referrals.htm (accessed May 16, 2010). A referral approachMichael McGaulley, “Sales Hot Buttons for Capturing the Prospect’s Attention Early in Your First Phone Contact,” How-to-Sell-Your-Better-Mousetrap, 2009, ezinearticles.com/?Sales-Hot-Buttons-For-Capturing-the-Prospects-Attention-Early-in-Your-First-Phone-Contact&id=4477676 (accessed August 2, 2009). might go something like this:
You: My firm recently finished a project for Calloway Industries, and Ms. Calloway suggested that I contact you. She thought your company might be interested in learning about our consulting services. Maybe she already mentioned us to you?
Customer: Yes, as a matter of fact, I just spoke with Elaine Calloway. She speaks very highly of you and your company, and she’s hard to impress. Based on that, I’d like to hear what you think about what you can bring to my business.
When using the referral approach, just be sure that you ask your referral source before mentioning her name to your prospect. Also, it’s always a good idea to thank your customer when she gives you a good referral. Send her a personal note to let her know how much you appreciate her support. Chapter 5 includes information about how to write a business thank-you note.
The Customer Benefit Approach
If you are in a sales situation where you have carefully researched your prospect and you already have a good sense of his needs before your first meeting, you might open your sales call with a customer benefit approach. The benefit approach goes beyond the general benefit statement to focus on a specific product benefit. This opening is only effective if the benefit you describe is of real interest to your prospect:Barton A. Weitz, Stephen Byron Castleberry, and John F. Tanner, Selling: Building Partnerships, 5th ed. (New York: McGraw-Hill, 2003), 245.
You: Mr. Ling, our awnings can cut your energy costs by at least 20 percent. The savings are often even higher for businesses like yours that get a lot of direct sunlight because of a south-facing storefront.
Mr. Ling: Yes, sunlight is a problem for us as it fades the merchandise we display in our front window. Do you have something that can really reduce the impact of the sun on our front windows?
By quickly identifying the benefits of your product, you are letting your customer know what he has to gain from doing business with you. This will not only capture his interest, but it will also establish credibility because it shows that you have taken the trouble to prepare and learn about his specific concerns.
The Survey Approach
The survey approach is one that works best in sales that require a complex solution or in sales where the solution is often specifically tailored to customer needs, and the approach ranges in levels of formality depending on the selling situation. For instance, if you go to an upscale spa to have a facial, you might be given a brief, informal survey about your specific skin-care needs before you discuss service packages with the aesthetician. Or if you are in the market for a new home, the real estate agent will most likely ask you questions about your preferences and lifestyle before she even begins to show you listings: “How many bedrooms are you looking for?” “Which neighborhood do you want to live in?” “Is outdoor space important to you?” “How many cars do you have?”
On the other hand, in B2B situations or in otherwise more complex B2C sales, the survey process might be more formalized. If you want to purchase an insurance plan, the agent may guide you through a detailed, computer-based survey to find out about your medical or driving history, your family members, your vehicles, or other details that are very specific to you as an individual customer. In another B2B situation (e.g., your firm needs to purchase an integrated software suite with diverse capabilities like timekeeping, payroll, and benefits), the salesperson might give you a detailed questionnaire that will identify your specific needs and ask you to complete it before scheduling a sales presentation.
The survey approach has the advantage of being a nonthreatening way to establish your initial contact with the prospect, as you are only asking for information and not discussing services or costs. It allows you to gather information and create a sales presentation that will address the customer’s specific needs and be prepared with the appropriate information or ask other people in the company to attend the sales call. In addition, the survey helps your customer feel like she is receiving special treatment because you are using the information you gather to tailor-make a solution that matches her needs.Gerald L. Manning and Barry L. Reece, Selling Today: Creating Customer Value, 9th ed. (Upper Saddle River, NJ: Prentice Hall, 2004), 218.
The Agenda Approach
You already know the goals of your sales call and the points you will address before going into a meeting, so why not share this information with your customer? The agenda approach, in which you lead off the sales call by giving your customer an overview of your meeting agenda, is particularly appealing to busy executives because it gets straight down to business and lets your customer know you won’t be wasting her time. Here is an example of something you might say:
You: I usually cover three things in my first meeting with a customer. First, I like to find out about the specific event you are planning and what you are looking for in a catering service, next I bring out several products for customers to sample, and finally, if you decide you are interested in our services, I schedule a follow-up meeting where we will go over your customized menu and discuss the service contract. This first meeting should only take fifteen minutes of your time.
Customer: Great. Let’s get started.
The agenda approach outlines your meeting objectives and lets the customer know how long the meeting will last. If you know your customer is someone who likes to get right down to business, leading off with an agenda approach is often a good idea.
The Premium Approach
Free is always appealing. The premium approach, in which you offer your prospects free product samples or other giveaway items, helps build enthusiasm about your brand or products, attracting customers who might not otherwise express interest. Once you’ve gotten your prospect’s attention with the giveaway, he will be more inclined to listen to a sales presentation or at least give you a moment of his time. The premium approach is common in retail situations such as cosmetics, wine retail, or specialty food stores where sampling a product can often influence a customer’s decision to buy. In other cases, like trade shows, sales representatives might give out inexpensive promotional items or samples as a way to initiate contact with prospects.
For instance, if you were working at a booksellers’ convention, your publishing house might be giving away bookmarks or even free copies of a new best-selling novel. You could use the premium as a way to talk to someone who comes to your booth using the following approach:
You: Our house publishes some of the best-selling mystery authors on the market. You might be interested in taking this copy of the number one best seller, One Moment in Time by Jacque Rolique.
Customer: I would really like a copy of the book. I’ve been meaning to read it. Thank you.
You: I’m Sasha Conti from New World Publishing. What’s your name?
Customer: My name is Ramsey Jackson from Books and Nooks. We have fifty-five stores in the Northeast along with an e-commerce Web site.
You: It’s a pleasure to meet you, Ramsey. Thank you for stopping by our booth. I’m familiar with Books and Nooks, and it’s a really special store. Would you also like to see a booklist featuring our newest releases? We have so many new titles that haven’t even hit the shelves yet. With this list, you can see what’s new and bring the hottest titles to your customers sooner. What kinds of titles are important to your customers?
The premium approach gives you the opportunity to engage your prospect, learn about her business, and find out how you can help her meet her customers’ needs.
The Combination Approach
Effective relationship selling is adaptive. Even if you prepare a script beforehand, you won’t follow it word for word; instead, you will modify it based on the feedback you get from the customer during your interaction. Real-world, adaptive selling rarely fits neatly into textbook models. Often, an experienced salesperson will shift fluidly from one type of sales approach to another. For instance, he might start off by offering a product demonstration and mentioning a customer benefit almost simultaneously:
Salesperson: Here. Try lifting this ultralight graphite bicycle frame. How much would you guess it weighs?
Customer: Wow! That’s amazing. Really light. I’d guess it only weighs about four pounds?
Salesperson: Close. It’s actually even less than that: only 2.9 pounds. Technocycle specializes in engineering cutting-edge bicycle components like that frame you’re holding. Our products fit the needs of the serious cyclists like your customers because using Technocycles’s components ensures that you will always be offering the best, most competitive technology on the market.
So what approach should you use in your selling situation? Plan one that best showcases your company or product, that fits your style, and that matches what you know about your prospect. But when you make that first contact with the prospect, let flexibility be your guide. Be prepared to start with a referral and move straight into a question or customer benefit or to scrap your prepared approach altogether in favor of something else.
Key Takeaways
• The question approach involves leading off with questions to learn about your prospect and engage him in dialogue.
• In a product approach, the salesperson opens the call with a product demonstration or display.
• The referral approach is an effective way to quickly establish trust with a prospect because it involves starting the call off by mentioning a mutual connection who has referred you to the prospect and who is willing to vouch for you.
• The customer benefit approach requires research beforehand so that you can open your call by mentioning an important, customer-specific benefit of your products or services.
• Sales that involve very specific solutions to customer problems sometimes begin with a survey approach.
• The agenda approach is a straightforward approach that gets right down to business. It appeals to highly organized people because it involves outlining the meeting agenda at the start of the sales call.
• A premium approach is one in which the salesperson offers product samples or giveaway items to attract a prospect and establish goodwill.
Exercise \(1\)
1. You work for a games and toys manufacturer, and you are preparing to meet with a prospect for whom you have been given a referral by one of your longtime customers. Your referral source has told you that the prospect, a buyer for Toys “R” Us, is very task oriented and time-driven and appreciates working with others who do things efficiently. Given this information, which approach (or combination of approaches) will you use in your sales approach?
2. Write a script for a sales approach that combines the referral and question methods. Assume you are a salesperson from an artisan bakery and you are approaching the manager of an upscale restaurant who may be looking for a new bread supplier. Share your script during a role-play in class.
3. Write a script for a sales approach that uses the product approach. Assume you are a salesperson for an upscale jewelry retailer and you are approaching a couple who is looking for an engagement ring. Share your script during a role-play in class.
4. Identify two situations in which you might use the premium approach. Why would that approach be effective in these situations?
5. Visit a retail store that sells big-ticket products such as electronics, appliances, fine jewelry, or cars. What type of approach did the salesperson use? Was it effective? Why or why not? Which approach, if any, do you think would have been more effective? | textbooks/biz/Marketing/The_Power_of_Selling/09%3A_The_Approach-_The_Power_of_Connecting/9.04%3A_Choosing_the_Best_Approach_for_the_Situation.txt |
Learning Objectives
• Identify how to overcome barriers to success in getting an appointment.
When Milton Hershey first opened his candy store in Philadelphia, he had to shut down after six years because he never made enough sales to get the business off the ground. After closing in Philadelphia, he moved to Chicago, then to New Orleans, then to New York, each time failing and starting over again. In fact, it took ten years of rejection and failure before Hershey’s business succeeded. You already know how the story ended for Hershey (now a \$5 billion company), but now you also know that the Hershey Chocolate Company wasn’t an overnight success; the business only took off thanks to one salesman’s persistence in the face of failure.Evan Carmichael, “His Secret Recipe: How Hershey Achieved Success,” video, EvanCarmichael.com, www.evancarmichael.com/Famous-Entrepreneurs/603/His-Secret-Recipe-How-Hershey-Achieved-Success.html (accessed August 1, 2009).
Rejection is a reality that all sales professionals have to deal with occasionally, no matter how experienced or skilled they are; it comes with the territory. Prospects will sometimes hang up on you or refuse to see you, and others will listen to your sales approach and then tell you that they aren’t interested in what you have to offer. However, if you approach your sales call with confidence and refuse to take rejection personally, then the possibility of rejection doesn’t have to be a barrier to your success. Do you believe in the value of the solution you are selling? Are you doing your best to ensure that your customer gets what he needs and wants? Then you have every reason to be confident.Wendy Weiss, “Why Are We All so Afraid?” Sales Information, 2004, www.sales.net63.net/1138.php (accessed August 1, 2009). Recognize that it is the fear of failure, more than anything else, that creates a barrier between a salesperson and a successful sale.
Overcoming Your Reluctance
Successful selling is all about mastering your attitude, and this is especially true when it comes to facing rejection. Sales coach and author Phil Glosserman puts it this way: “The only person who can reject you as a salesperson is yourself.”Phil Glosserman, “The Fear of Rejection,” video, Selling Power, http://www.sellingpower.com/content/video/?date=7/9/2009 (accessed March 16, 2010). There are all kinds of reasons why a prospect might give you a “no thanks” response, very few of which have to do with you personally. Your prospect might simply be unwilling or unable to make a purchase at the moment, he might be facing pressures at work that prevent him from giving you his full attention, or he might just be having a bad day. Instead of focusing on the way you feel (“What if he turns me down?”), Glosserman suggests focusing on the way your prospect feels (“How can I help him get what he wants out of this interaction?”). If you imagine how your customer feels before and during your interaction, you will often find that you forget to feel anxious.Phil Glosserman, “The Fear of Rejection,” video, Selling Power, http://www.sellingpower.com/content/video/?date=7/9/2009 (accessed March 16, 2010).
In addition to mastering your attitude, here are a few empowering and practical things you can do to help build confidence (and get a higher rate of yes responses) going into a sales approach:
• Be intentional about the language you use when you approach your prospect; don’t use apologetic language or language that conveys uncertainty. For instance, rather than saying “If you decide to make an appointment,” try a phrasing that conveys greater certainty: “When you make an appointment…” or “After we’ve set up your appointment.…”Laura Laaman, “Assumptions, Sales Practice Help Fight Fear of Rejection,” Pittsburgh Business Times, February 18, 2005, http://www.bizjournals.com/pittsburgh/stories/2005/02/21/smallb2.html (accessed August 3, 2009).
• Before going in to your sales call, practice with some role-plays. Even if it feels artificial at first, keep at it, and take the task seriously. If you practice various selling scenarios enough times with a role-playing partner, you will learn what a confident approach sounds like, and you will feel more prepared to handle the real situation.Laura Laaman, “Assumptions, Sales Practice Help Fight Fear of Rejection,” Pittsburgh Business Times, February 18, 2005, http://www.bizjournals.com/pittsburgh/stories/2005/02/21/smallb2.html (accessed August 3, 2009).
• Don’t procrastinate. “The longer you procrastinate about something, the larger it becomes in your mind,”BNET Reference Publications, “Facing the Fear of Rejection—Emotional Problem that Can be Devastating to the Success of Sales Representatives,” BNET, findarticles.com/p/articles/mi_m1272/is_n2623_v125/ai_19313504 (accessed August 3, 2009). so don’t put off a sales call because of nerves. Facing your fears is the best way to overcome them.
• Make difficult calls when you have the most energy. This is usually the start of the business day.“Tips for Successful Cold Calling,” AllBusiness, www.AllBusiness.com/sales/selling-techniques-telesales/1355-1.html (accessed August 3, 2009). Morning sales calls can also be a good time to reach busy prospects before the business day gets into full swing.
• Before going into the call, visualize a successful outcome. Phil Glosserman says to “imagine what you want to feel” during the sales call; think of a situation in your life that made you feel that way and put yourself into that frame of mind.Phil Glosserman, “The Fear of Rejection,” video, Selling Power, http://www.sellingpower.com/content/video/?date=7/9/2009 (accessed March 16, 2010).
Getting Past the Gatekeepers
So what do you do if you’ve prepared your opening statement and done your research, but when you make your phone call, it isn’t your prospect who picks up the phone; instead, it’s her assistant, who wants to know who you are, why you are calling, and why you think your prospect should want to talk to you anyway? This is a likely scenario in B2B sales when your prospects are busy executives who don’t have the time to handle every call that comes through their office. If you want to see your prospect, you may have to go through the gatekeeper first. His title might be secretary, assistant, administrative assistant, or executive assistant,Lori Richardson, “Dealing with Gatekeepers,” Sales Coach Blog, AllBusiness, April 19, 2005, www.AllBusiness.com/sales/selling-techniques/3873127-1.html (accessed August 3, 2009). but his role will be the same: keeping unwanted distractions from interrupting his boss’s busy schedule. Salespeople often think of gatekeepers as road blocks—something standing in the way of getting to see the prospect—but if a salesperson treats gatekeepers as obstacles to be overcome, not only is he unlikely to get past them, but he is also missing out on the opportunity to collaborate with people who can be valuable assets to his sale.Michael A. Boylan, The Power to Get In (New York: St. Martin’s Griffin, 1998), 125. Gatekeepers are human beings (not obstacles) whose jobs are important to the successful running of their organizations. Think of them as part of the selling relationship and treat them with the courtesy and respect with which you would treat your prospect. Lori Richardson, an experienced salesperson and sales trainer, says, “I like to think of a gatekeeper as someone to get to know—a potential new coach into connecting me with my ultimate contact beyond the virtual gate.”Lori Richardson, “Dealing with Gatekeepers,” Sales Coach Blog, AllBusiness, April 19, 2005, www.AllBusiness.com/sales/selling-techniques/3873127-1.html (accessed August 3, 2009). Gatekeepers are an integral part of the selling relationship for a number of reasons:
• They often have valuable knowledge about the internal workings of an organization, including where the power centers are and how decisions get made.
• They are familiar with their boss’s schedule (sometimes even more than their boss is).
• They have a significant say in who gets in to see their boss and in how communications get passed on.
• They can determine how outsiders are represented to their boss. They often influence the first impression because they might tell your prospect about you before you actually make contact with the prospect.Michael A. Boylan, The Power to Get In (New York: St. Martin’s Griffin, 1998), 124.
Put yourself in the gatekeeper’s shoes for a minute. You have been answering the phone all day, responding to people who don’t often treat you with much respect, and you get another call:
Salesperson: Hello, this is Camille Martin. Is Maria Gonzalez in her office right now?
Assistant: Yes, she’s here, but she’s busy at the moment. Can I ask what you’re calling about?
Salesperson: I’d like to schedule a meeting to see her. When would be a good time to call back?
Assistant: I’m sorry, but Ms. Gonzalez doesn’t take unsolicited calls.
Notice that the caller didn’t give the name of her organization or the purpose of her call, even when the gatekeeper asked for more information. She was abrupt with the gatekeeper, so the gatekeeper was abrupt in return. When talking to gatekeepers, give them the information they ask for when they want it.Michael A. Boylan, The Power to Get In (New York: St. Martin’s Griffin, 1998), 126. Remember that it’s the gatekeeper’s job to find out whether your call is worth his boss’s time, so if you tell him the purpose of your call, you are helping him to see that your call may be valuable.
Learn the gatekeeper’s name and be friendly. Business writer Susan Ward suggests starting off the conversation by asking “I wonder if you could help me?” as a way to show respect and demonstrate that you see the gatekeeper as part of your selling relationship.Susan Ward, “Cold Calling Tips,” About.com, http://sbinfocanada.about.com/cs/marketing/a/coldcall.htm (accessed May 16, 2010). If you do this, you won’t need to get past the gatekeeper; he can often tell you everything you need to know—the name of the right person to talk to or the best time to contact your prospect—or even schedule a meeting for you before you ever interact with your prospect. Finally, when the gatekeeper does give you helpful information, remember to thank her. For extra helpful gatekeepers, you might even consider sending a note or small thank-you gift.
Now review the approach shown above using a referral as a way to work with the gatekeeper as an ally, rather than view her as a barrier:
You: Good morning. My name is Camille Martin and I’m calling from Preston and Preston; we’re a full-service digital photography studio here in Cleveland. I’m following up on a conversation that Jason Kendrick, our company’s CEO had with Maria Gonzalez. I understand she is looking for a partner in the digital photography area. May I speak with her?
Assistant: Let me check and see if she is available. Can you give me your name and company again?
You: Thank you. I appreciate your help. I’m Camille Martin from Preston and Preston What’s your name?
Key Takeaways
• Attitude, especially fear of rejection, can be a barrier to success in approaching your prospect.
• Some ways to build confidence and overcome your reluctance include focusing on using language that conveys certainty during the approach, practicing the approach through role-play, making calls at the time of day when you have the most energy, and visualizing a successful outcome.
• In B2B sales you may need to get past gatekeepers before you meet your prospect.
• Gatekeepers can be your allies if you treat them as part of the selling relationship.
Exercise \(1\)
1. Think of a time when you succeeded at something you had been reluctant to do. What techniques did you use to help you achieve your goal?
2. Imagine that you are a sales rep for a logistics company and you want to get an appointment with the COO of a hardware manufacturer. You’ve heard that he can be very difficult to deal with, so you are concerned about calling on him, but he is a large prospect for you. Identify three things that you would do to overcome your reluctance and make the call.
3. Put yourself in the shoes of an executive assistant at a large corporation. It has been a busy morning, and just after lunchtime a salesperson calls and asks to see your boss. Name three things the salesperson could do or say that would make you more willing to help him.
4. Assume you are a sales rep for a firm that sells accounting software that can reduce invoice processing time by 15 percent. You want to get a meeting with the chief financial officer of a prospective company, but you need to go through the secretary to get to the CFO. Which approach would you use with this gatekeeper? Which approach would you use with the CFO? Why would you use each of these approaches? | textbooks/biz/Marketing/The_Power_of_Selling/09%3A_The_Approach-_The_Power_of_Connecting/9.05%3A_Overcoming_Barriers_to_Success.txt |
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