Personal Relationship Selling Essay Example for Free

Personal Relationship Selling Essay Successful firms are dismissing the hard-sell, short-term orientation of personal selling in favor of a customer-oriented, long-term selling model referred to as relationship selling. A lot of businesses can establish distinctive positions in the marketplace for themselves, their goods, as well as their services. This capability is a potent strength in marketing. Indeed, an effective marketing stratagem is also known for its excellent positioning strategy. However that in itself is does not guarantee customer following because it is not so much what the company says regarding one’s goods/services/organization as much as it is what the clients declare about them. It is not what businesses say to their customers but rather what they accomplish with their clients that build their position in the industry. Differentiation, from the standpoint of the customer, is not an idea which is goods or services-related in so far as it is connected to how the company carries out its business activities. In this day and age where information is a valuable resource, it is no longer practical to merely produce an image. The distinction among perception and actuality has improved over time. Further, in a society where consumers are offered with a lot of choices, they can be unpredictable. Griffin and Herres (2002) relate that this just only implies that contemporary marketing is a fierce clash for the loyalty of the customer. Contemporary marketing now stress a unique connection with the client and communications of the market place. A Concept Definition A key role of modern marketing is that of a management mindset implemented throughout an organization rather than confined to a particular department. This perspective considers marketing as a guiding management principle or mind attitude which places the customer first, and it is commonly described as a marketing orientation. It is a comparatively more extensive outlook of the function of marketing than has been visualized in the past and it direly affects an extensive array of functions within the organization. This concept grew progressively over the last twenty years that puts forward the fundamental theory that it is more cost-effective for the business to focus its attention on continuance and improvement of present relationships with customer as compared to continually looking to catch the attention of new customers. Relationship selling has progressed since that time to make possible the effort of a business to classify, preserve, and construct a network of individual customers and to constantly reinforce the network by way of interactive, personalized, and value-added connections over an extended period of time. A primary force behind any strategy of relationship selling is that acquiring new clients through snatching them away from a rival business is more often than not costlier as compared to holding on to current clients (Rogers, 2001). Personal relationship selling is a concept that gives weight and credence to building up lasting win-win relationships with potential clients and current ones. It is a marketing (communications) approach that is aimed at establishing profitable relationships with loyal customers. Relationship selling views every customer as a valuable asset of the company to be nurtured and grown. It is intended to convert potential individuals into loyal clients, nothing more than that. But marketing is not all about advertising or promotion; it is more about creating loyal clients. Personal relationship selling has its foundations on the relationship between consumer contentment, consumer allegiance and profitability for the business. Brassington and Pettitt (2003) noted that it has been known in marketing literature that it is more than four times more economical to maintain a present client as compared to acquiring new clients. Others even maintain that considerable augment in revenue will be highly possibly achieved through improving client retention rate by even only a few percent. Therefore, businesses of today should instead center their attention on maintaining their current clients, working towards making them supporters and partners rather than focusing their efforts on acquiring new clients. The essence of proper customer loyalty is not measured by just the client making repeat buys; it is instead grabbing a allocation from the wallet of the consumer (the proportion of a consumer’s expenditure in a goods/service category for a firm’s brand) as near to one hundred percent if that is feasible (Griffin and Herres, 2002). Personal relationship selling is relationship marketing. It means perseverance to work for nil defection. It means considering first the welfare of the present consumers prior to the attempt to catch the attention of new ones. In the same manner, a brand that is flourishing does nothing other than creating a relationship between the consumer and the brand that is out of the ordinary. A review of the related literature on the subject would reveal that a considerable number of academics, consulting firms, and corporate leaders are continuously attempting to develop various tools and techniques to measure the impact of employee contentment, loyalty and maintenance of consumer contentment, loyalty and preservation. In fact, some also try to develop and prove hypotheses that will assist them in gauging the impact of both these measures on their bottom line. For the reason of the repercussions for productivity and expansion, Schmitt (2003) argues that consumer maintenance is possibly one of the most influential strategies that businesses can utilize in their struggle to achieve a strategic advantage and continue to exist nowadays in an ever mounting competitive environment. It is very important that businesses comprehend fully the concerns and the methods behind consumer and worker retention and the function that relationship selling can take part in putting together plans and strategies. Relationship Selling Vs. Transactional Approach Relationship selling is viewed as a paradigm shift from the transactional approach to marketing with a new focus on developing and maintaining mutually beneficial relationships. Historically, the transactive paradigm came into being as a result of mass production, wholesaling and the utilization of middlemen who were removed from the organization. The drive towards developing relationship selling has been largely fuelled by the proliferation of high-quality competing products and services that are available to customers. Personal relationship selling is the opposite of transaction marketing in which the ambition to retain customers does not exist in the latter. Conventional transaction is temporary and focused only on making a sale and further only aspires for what is known as the one-shot deal. Transaction selling centers on the sales presentation, or ‘pitch’, designed to secure an immediate sale. Little regard is given to the customers true needs, particularly over the long run. By contrast, relationship selling focuses on developing and enhancing a mutually beneficial bond between buyer and seller. The focus has changed from ‘making a sale’ in the short run to ‘getting and keeping the right customers’ over the long term (Brassington and Pettitt, 2003). Whereas market exchanges are casual short-term discrete (transactional) episodic encounters primarily motivated by self-interest, relational exchanges develop when people wish to develop long-term exclusive and supportive relationships on the basis of mutual knowledge that simplifies their trading environment. Whereas traditional marketing, operating through market exchanges, manages the preparation and promotion of an offering in order to consummate an exchange, relationship or interactive marketing also works to maintain the relationship between product-based exchange episodes. Rather than pursue a market relationship to bring a product and a consumer/buyer together, relationship marketing attempts to establish and cultivate a marketing relationship that enables cooperative problem-solving. Elements of Relationship Selling The literature is replete with discussions of what key elements are entailed of relationship selling. Relationships are built over time, and time is one of the most important elements of relationship selling. Information isnt only available in greater profusion than ever before, technology has also allowed it to be delivered with unprecedented speed. This is entirely consistent with pressure on the customer, and the amplified pressure on companies supplying them, for speed in development and delivery. Companies will, increasingly, have to anticipate what time performance customers consider attractive, even acceptable. If time is an issue with only segments, or fragments, of customers, companies will have to determine if investing resources in faster development, delivery, or service is economically worthwhile. A perceived scarcity of time can also make customers want shorter interactions with businesses. Consumers value time and are less and less willing to accept or tolerate excess in this area. This can also make customers worry about the differences between what they want and what they actually get in their relationship with the business. Often, speed, or the lack of same, is a strong supplier attrition or defection lever: waiting lines and waiting time, and their impact on service encounters and customer loyalty management, have become an entire area of psychological and business study. If customers feel they are short of time, concise communications is an important relationship proposition. However, this may be culturally dependent. In some cultures, the importance of a decision can be made quickly. It is also possible that customers will want to spend more time on purchases that they perceive as having high involvement or to which they attach great importance. Overall, the time aspect of a relationship is a complex issue, since the time invested in relationship selling (the time spent in relationship-related activities) can be seen as a benefit or a non-monetary cost, depending on the attitude of the customer. Building trust and commitment are also crucial elements of relationship marketing as they are needed for the maintenance of the relationship, encouraging a long-term view as opposed to a short-term one, and also allow for certain risks to be taken because of the belief that other parties in the relationship will not take advantage of the situation. Having a long-term view and nurturing the relationship by providing and showing commitment allows for the development of deeper levels of relationships (Sobel, 2003). The commitment and trust elements are conceptualized as existing when there is reliability, confidence and integrity. This requires delivering on promises (what was stated in the packaging or advertisements, for instance) and building financial, social and structural bonds between the business organization and its customers. Choice is largely driven by a customers relationships with a product or service, and with the companies that offer them. Its about experience, and levels of trust and commitment, through contact with suppliers. Because, in most industries, choices are so readily available, customers are increasingly less hesitant to change suppliers. When replacement is perceived as more positive than negative, theyll move on. Industries such as banking and managed care have seen this occur (Bradley, 2003). The relationship itself becomes the focus of marketing efforts rather than the product. In addition to the marketing mix variables, customer care/customer service initiatives and interactive marketing are central to relationship selling. Credibility is the key to the whole market-positioning process. With so many new products and new technologies on the market, customers are intimidated by the decision-making process. Many customers dont even understand the technologies used in new products. Technology-based products are links in a chain: they are attractive because they are linked to the future. But when people are buying a piece of the future, they need to be reassured that their money goes somewhere that is worth their money. They want to buy from a supplier with credibility. Benefits of Relationship Selling To the extent that relationship selling contributes to goods differentiation and generates obstacles to switching to another brand, it can make available a competitive advantage for the producer or the vendor. Building a long-term relationship with buyers provides more opportunities for the seller to sell new and additional solutions. The vendor in lasting relationships may realize profitability rates that are higher though a reduction of discretionary expense such as selling, general, and administrative costs. Besides financial rewards, the relationship may make available to the vendor admission to new markets and increased competence to enhance innovation (Sobel, 2003). Buyers benefit from being able to tie together the skill and the strength of the vendor to their benefit. Specific advantages to buyers include enhanced quality and process presentation, unremitting cost diminutions, enhanced support relationships, and contract predictability. The benefits of long-term relationships with customers are obvious. As mentioned earlier, it costs more than four times more economical to maintain a present client as compared to acquiring a new one. Repeat business is a hallmark of relationship selling. Another outgrowth of happy customers is referrals. A company can have as much customers as it wants, but it has the responsibility of taking care of tem individually. Most new customers are referred by old customers who are content with the company’s goods or services. Referral sales are a leading indicator of a company’s emotional bank account with customers. Honeycutt, Ford and Simintiras (2003) assert that a small decrease in customer defection leads to a large increase in sales and profits Defected customers can cause other customers to leave, while loyal customers are more profitable and require less handholding. Disappointed customers cause negative word of mouth, while loyal customers are company and brand advocates. Relationships also increase the value of the customer. All of these are reasons to believe that relationship marketing is more effective than transaction marketing. The concept of lifetime customer value is used to describe the estimation of how much a customer contributes to the companys profit over the years he or she buys from the company. The ultimate purpose of relationship marketing should be to maximize this lifetime value for every customer. Process of Managing Relationship Selling The relationship selling management process is the process that captures orders for delivered goods and services and that facilitates strong customer loyalty (Griffin and Herres, 2002). Identifying primary consumers or consumer groups that the business aims at as significant to its company mission is an important step that has to be carried out. Agreements with regards to goods and/or services spelling out the intensity of presentation are instituted together with these primary consumer groups. Performance measurements are carried out to examine the service levels given to consumers in addition to consumer profitability. For a company to be committed to relationship selling, it must become everyones responsibility. Customer loyalty is in job descriptions, training programs, reward and recognition, and action. Relationship selling begins with the contact with a customer and culminates with the receipt of an order. If the relationship selling management is effective, it will result in an ongoing series of orders from customers who are delighted to do business with the company. Bradley (2003) relates that the activities involved in managing relationship selling include sales force management, customer data management, cal center management, on-line product catalogs, product configuration, order/proposal configuration and order management. Relationship selling also includes the flow of work, material and information. The flow of information begins with customer contact. The information that must be managed includes order status, production status, process planning, maintenance information and schedules. Firms need to have a clear-cut, well-defined approach to managing their relationship selling. Typically, the process entails selecting the portfolio of customers to serve, developing a corresponding portfolio of relationship selling strategies, monitoring the health of customer relationships over time and linking relationship selling management efforts to economic reward – that is, customer profitability. How well a firm manages the relationship selling activity will determine the degree to which it is able to quantify the costs and benefits associated with relationship selling, which, in turn, will influence its decision about which customers to continue to serve. Rogers (2001) also shares that other key strategy elements in relationship selling include those of personalizing the relationships to each and every sole consumer, supplementing primary services with added advantages, services with respect to pricing in order to persuade customers to be loyal, and treating employees well in order that that they carry out their duties better for the customers as well. Future Directions The growing adoption of a relationship selling system is evidence that businesses are to a greater extent attempting to place the consumers interest at the heart of their trade as part of their overall business strategy. For many organizations, a focus on customer relationship strategies may be premature until sales management practices are properly aligned with the intended strategic orientation (Brassington and Pettitt, 2003). Reliance on sales quotas that focus performance on short-term behaviors may be in direct conflict with long-term relationship objectives. Strategic realignment of the selling effort toward long-term customer relationships calls for a reexamination of common sales management tools such as sales quotas, compensation methods, and evaluation methods and measures to assure they are consistent with relational selling objectives of the firm. But there is little doubt that the manner in which salespeople establish and maintain relationships is a sophisticated part of their job. The salesperson who is honest, accountable, and cares about the customer’s business adds value to the relationship. Salespeople should recognize that the quality of the partnership they create is at least as important as the product they sell, and to this end, they must adapt to the buying needs of customers whenever possible. While sales and marketing functions constantly adapt to modernization, old techniques are not always abandoned (Honeycutt, Ford and Simintiras, 2003). Selling has thrived because it has diversified along with the markets it serves. As technology has created a vast array of products and options, global markets, and niche markets, it has also fragmented and expanded the salespersons role. To continue to exist in lively market places, businesses obviously have to to set up strategies that can endure the unstable changes in the environment of the market. They have to erect well-built fundamentals that won’t be propelled away in the rage of the storm that is competitiveness. And they simply cannot carry that out through centering their attention on promotions and advertising alone. To a certain extent, they have to have a firm grasp of the market structure that they are targeting. After that they should improve and maintain good relationships with key stakeholders in the market that are directly affected by their actions. Said relationships are more vital than inexpensive tag prices, flamboyant advertising, or even superior technology. Customers and others influence changes in products and services through their participation in the relationship selling process. Transformations in the market environment can rapidly and surprisingly adjust the prices and technologies, save for well-built relationships that can stand the tests of time. These developments should challenge the marketing communications manager because it includes knowledge management, marketing automation, customer care, call centers, and sales force automation. This is obviously much more than promotional advertising design.