SALES FORCE

MANAGEMENT
MKT 205
Joseph F. Hair (Jr.), Rolph E. Anderson, Rajiv Mehta, Barry J. Babin (2020) Sales Force
Management, Wiley.

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 CHAPTER 2:

CUSTOMER RELATIONSHIP MANAGEMENT

AND BUILDING PARTNERSHIPS

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Relationship Orientations and CRM
Businesses develop customer relationships in four different ways:

4.
One-to-One
Marketing

3. Relationship 1.
Niche Orientation Mass
Marketing and CRM Marketing

2.
Differentiated
Marketing

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Production versus Marketing Orientation
Among the many business philosophies, two contrasting ones are:
1. Production orientation, and creating product better then competitor- Apple
2. Market orientation- Amazon- customer desire- late delivery/ nobody at home

1. 2.
Orientation
Production Orientation Marketing Orientation

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CRM and Repeat Business
CRM is based on the premise of serving customers over an extended period, thus generating
repeat business through multiple buyer-seller relationship interactions (i.e., transactions or
exchanges) between firms.

3 Levels of Buyer-Seller
Relationship Interactions

Low Medium High

Transactional Selling Relationship Selling Strategic Partnerships

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Mechanisms That Govern Exchanges

• Transactional exchanges are controlled by market forces.

• Relational exchanges are governed by contracts.

• It includes arrangements for sharing information and tasks between
the buying and selling firm, but falls short of spelling out specific
obligations for each party. Maxis, HELP, TNB

• Strategic partnerships are governed by a mechanism known as

relational governance. Franchise /twining ; Joint Venture

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CRM, Customer Loyalty, and Lifetime Value

Sources of sales revenues are:

1. New customers, and
2. Current customers.

• Finding new customers is expensive due to high search

costs

• Selling to existing buyers is less costly, but it is crucial to

build customer loyalty.

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CRM, Customer Loyalty, and Lifetime Value
Customer Loyalty: a function of two components
• 1. Customer share
• 2. Customer commitment
• Customer share refers to the proportion of resources that a customer spends with one
among a set of competing suppliers. High customer share is an important component of
true loyalty because it’s based on actual behavior.

• Customer commitment is the bond between a customer and a sales firm that builds up
over time as a customer continues to have rewarding sales exchanges with a supplier.

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Computing the Value of a Customer

• Hotels, casinos and credit-card firms use CRM processes

to develop long-term customer relationships by offering
rewards programs include.

• An important way to ascertain if selling to existing buyers

is advantageous, sales managers can actually quantify
Customer Lifetime Value.

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Computing the Value of a Customer

p
CLVi =  (Rt −Ct )
t =1

Where:
• CLV = Customer lifetime value,
• R = Revenue gained from the customer in a time period, and
• C = Cost of the sales and service effort directed at the customer.

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Computing the Value of a Customer

• CLV can also be computed for firms that take a

transactional view by using the following formula:

C LV 1 = (R1 − C 1 )
Where:
• CLV = Customer lifetime value,
• R = Revenue generated by this particular sale (R), and
• C = Costs associated with selling to and serving this customer.

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Risk of Relationship selling
Although relational selling and strategic partnerships have advantages, there are many
disadvantages, including:

➢ Increased dependency on a major buyer

➢ Loss of flexibility to capitalize on future business opportunities with new customers
➢ Company complacency about current customer(s) and becoming less creative

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CRM and Selling

• But what exactly is value?

• Value is often narrowly used as a synonym for low price.

• Value is an individual’s selective perception of the worth of

some product, activity, object, or idea.

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The Salesperson and Managing Customers

• Some ways a salesperson can create value by:

1. Gathering important data about the customer and the market

2. Identifying the types of data needed to give the customer better
service
3. Managing the relationship between the firm and the customers to
whom the salesperson is assigned

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Product Portfolios
• A product portfolio contains a set of products that a salesperson is responsible for
selling.
• Narrowing down the range of products for a salesperson to sell based on product
knowledge will allow customers to be better served.

Customer Portfolios
• Customer portfolios are sets of customers that have common traits, e.g., assigning
salespeople based on medical specialties such as pediatrics or cardiology.
CRM and Production
• There are two types of CRM systems:
• 1. Analytical
• 2. Operational

Analytical CRM focuses on aggregating customer information electronically, thus enabling

the company to better identify target markets and opportunities for cross-selling.
Operational CRM is more focused on using information to improve internal efficiencies,
such as scheduling logistical and production operations.
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CRM and Production Systems
There are two types of CRM systems.

1. 2.
Types Of
Analytical Operational
CRM Systems
Systems Systems

Analytical CRM focuses on aggregating Operational CRM is more focused on using information to
customer information electronically, thus improve internal efficiencies, such as scheduling logistical
enabling the company to better identify and production operations.
target markets and opportunities for
cross-selling
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Marketing Automation and CRM Programs

• Recent advances in marketing automation and data CRM data

analysis systems.

• AI refers to cognitive-like functions such as problem solving and

learning that are performed by computer systems.

• Machine Learning is a closely related term that can be defined

as the ability for computer systems to take actions without
being specifically programed to perform that action.

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Marketing Automation and CRM Programs

AI and machine learning—part of marketing automation—is transforming CRM as

follows:
1. Better data integrity – machine learning processes are taking the place of manual data entry
2. Better data ingestion – software is now able to capture and code all communication with
individual customers, which subsequently enhances salesperson effectiveness.
3. Account-specific recommendations provided – the output suggests to salespeople what
actions to take with a specific customer and why to take those actions resulting in a more
trusted relationship.

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Marketing Automation and CRM Programs
Technological components that are deployed in a CRM include:

1. CRM 2.
Sales Force Automation Technological Components CRM Hardware

3.
CRM Software

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Sales Force Automation
• Sales Force Automation (SFA) refers to an integrated
system of computer software and hardware that
performs routine sales functions.

• An integrated SFA system ties together some or all of

the following functions:
1. Generate expense reports
2. Using presentation software
3. Scheduling sales calls
4. Managing territories
5. Generating proposals

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An integrated SFA system ties together some or all of the following functions:
1. Expense reports
2. Presentation software
3. Sales call scheduling (contact management)
4. Call (touchpoint) logging
5. Territory management
6. Proposal generation
7. Order entry
8. Data entry
9. Team selling materials
10. Access to Sales Data, including social media
11. Sales Analytics, Tracking and Forecasting
12. Email and Text Drafts, and
13. Lead Prioritization

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 Technology and CRM Programs
The most important CRM hardware components include:

4.
Data
Mining

3. 1.
CRM
Data PDAs, laptops,
Hardware
Warehouse and servers

2.
Database
Marketing

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Technology and CRM Programs
4.
• Multivariate statistical tools that can be Automatic
used quantitatively analyze sales data Interaction
Detection
include, but are not limited to:
1. Cluster analysis
2. Discriminant analysis CRM
3. 1.
3. Multiple regression, and Software
Multiple Cluster
Statistical
4. Automatic interaction detection Regression Analysis
Tools

• Note: Multivariate data analysis concepts

are not covered, but you can take advanced 2.
courses on these topics. Discriminant
Analysis

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Technology and CRM Programs
CRM software is central to CRM technology and applications.

4.
Advanced
analytics

1.
3. CRM Software
Flexible sales
Easy data Applications and
effectiveness processes
access Considerations

2.
Easy
coaching

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CRM Successes and Failures

• Despite CRM’s popularity, its adoption is no guarantee of

success.

• CRM is not for firms using a transactional approach.

• CRM is also not for firms whose customers won’t realize

added value from the benefits provided by the CRM process.

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THANK YOU
Tutorial:
1. What is Customer Relationship Management (or CRM)?

2. What is the nature of CRM?

3. What are the tenets of CRM?

3. How can CRM be applied to sales force management? and

4. How can CRM be used to build close, long-term customer

relationships?
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