Download Figure 13-1 Personal Selling process

11
Retail Sales
1. How much influence does a
retail sales clerk have on your
purchase decision?
2. What products do sales people
have the most influence?
3. What type of sales approach
works the best?
Discussion Slide
© 2007 by Prentice Hall
11-1
11
Personal Selling,
Database Marketing,
and Customer Relationship
Management
Chapter Overview
•Personal selling
–Retail sales
–Business-to-business sales
•Database marketing
•Data warehousing
•Direct marketing
•Permission marketing
•Frequency programs
•Customer relationship management
© 2007 by Prentice Hall
11-2
Personal Selling
• Word of mouth communications
• Good experience  tell average of 6
• Bad experience  tell average of 11
• IMC relies heavily on personal selling.
• “Last three feet” of marketing
• Personal selling categories
• Retail sales
• Business-to-business sales
© 2007 by Prentice Hall
11-3
Retail Sales
• Selling in retail outlets
• Single transaction sales
• Order takers
• Selling services
• Repeat transactions
• Telemarketing
• Inbound telemarketing
• Outbound telemarketing
• Text messaging
© 2007 by Prentice Hall
11-4
FIGURE
11.1
Consumer Buying Process
Retail Selling
• Problem recognition
• Information search
• Evaluation of
alternatives
• Purchase decision
• Post-purchase
evaluation
© 2007 by Prentice Hall
11-5
The Manufacturer’s Dilemma
• Purchase decisions – 50% in store
• Retail sales personnel influence
purchase decision.
• To enhance manufacturer brand within
retail stores, manufacturers
• Provide training for retail salespeople
• Advertise extensively
• Offer contests and incentives at retail level
• Missionary salespeople
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11-6
Cross-Selling
• During initial purchase
• During inbound telemarketing
• Successful cross-selling
•
•
•
•
•
Quality customer data
Integrated information technology
Software and decision models
Selling culture
Hiring and training of right staff
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11-7
Business-to-Business
Personal Selling
• Field sales
• Order-getters
• In-house sales
• Technology-based programs
• Telemarketing
• Internet
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11-8
Four Attributes of Great Salespeople
Jack Carroll
• Integrity – being honest with
customers
• Diligence – working hard
• Resiliency – ability to bounce back
and not take “no” personally
• Intelligence
Source: Jack Carroll, “The Four Attributes of Great Salespeople,” SalesLinks
Bulletin, Mentor Associates Sales Training.
(Http://www.saleslinks.com/sideline/sep-dec98/102698.htm)
© 2007 by Prentice Hall
11-9
FIGURE
11.2
Types of Selling Relationships
© 2007 by Prentice Hall
11-10
Steps in Developing a Strategic Partnership
1.
2.
3.
4.
5.
Awareness
Trial purchase
Expansion of purchases
Commitment
Partnership
Source: Based on James C. Anderson, “Relationships in Business Markets: Exchange Episodes,
Value Creation, and their Empirical Assessment,” Journal of Academy of Marketing Science, Vol.
23 (19960, pp. 346-350.
© 2007 by Prentice Hall
11-11
How to Build Trust in a Strategic
Partnership by Thomas Wood-Young
• Communicate frequently.
• Return all phone calls immediately.
• Handle complaints promptly with empathy and
honesty.
• Offer great customer service.
• Understand your customer.
• Become a valuable resource.
• Create solutions that add value for your customers.
• Partner with customers.
• Create a customer, not a sale!
Source: Thomas Wood-Young, “Building Trust Results in Customer Loyalty,” Sales Doctors Magazine
(Http://www.salesdoctors.com/diagnosis/3trust2.htm)
© 2007 by Prentice Hall
11-12
FIGURE
11.3
B-to-B Personal Selling Process
•
•
•
•
•
Identifying prospects
Qualifying prospects
Knowledge acquisition
Sales presentation
Follow-up
© 2007 by Prentice Hall
11-13
FIGURE
11.4
Methods of Prospecting





Customer leads
Databases
Trade shows
Advertising
inquiries
Internet inquiries





Sales promotion
Vendor leads
Channel leads
Networking
Cold calls
© 2007 by Prentice Hall
11-14
FIGURE
11.5
Questions for Qualifying Prospects
• What is the sales volume potential?
• Is the prospect dissatisfied with its current
vendor?
• Does the prospect use single or multiple
sourcing?
• Is the prospect a good fit with current
customers?
• Does the prospect fit with the firm’s IMC
plan?
• How difficult will it be to get past the
gatekeeper(s)?
© 2007 by Prentice Hall
11-15
FIGURE
11.6
Knowledge Acquisition
•
•
•
•
•
•
•
•
Identify current vendor(s).
Identify prospect’s customers.
Assess customer needs.
Determine the roles of price, service, and
product attributes in the purchase decision.
Determine roles of trade and sales promotions in
purchase decisions.
Determine critical customer benefits or product
attributes.
Identify risk factors in switching vendors.
Identify the buyer’s personality type.
© 2007 by Prentice Hall
11-16
Buyer Personality Types
• Intrinsic value buyers
• Extrinsic value buyers
• Strategic value buyers
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11-17
Sales Presentations
• Types of sales presentations
•
•
•
•
Stimulus-response
Need-satisfaction
Problem-solution
Mission-sharing
• Determinants of sales approach
•
•
•
•
Buyer-seller relationship
Product being sold
Buyer personality
Buying situation
© 2007 by Prentice Hall
11-18
Sales Presentations
and
Buyer-Seller Relationships
Strategic partnership
Mission-sharing
Problem-solution
Need-satisfaction
EDI relationship
Trust relationship
Contractual agreement
Repeat transactions
Stimulus-response
Occasional transactions
Single transactions
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11-19
Follow-Up
• Customer satisfaction
• Repeat business and loyalty
• Salespeople and follow-up
• No incentive to follow up
• Create environment
• Provide incentive
© 2007 by Prentice Hall
11-20
FIGURE
11.7
Trends in Personal Selling
• Decline in the number of salespeople
• Expansion of selling channels
• Long-term relationships and strategic
partnering
• Team selling
• Database customer segmentation
© 2007 by Prentice Hall
11-21
Database Marketing
Database Programs
Database
Direct Marketing
© 2007 by Prentice Hall
11-22
FIGURE
11.8
Steps in Developing a Database
•
•
•
•
•
•
Determine objectives.
Collect data.
Build a data warehouse.
Mine data for information.
Develop marketing programs.
Evaluate marketing programs and
data warehouse.
© 2007 by Prentice Hall
11-23
Determining Objectives
•
•
•
•
•
Who will use the information?
What kinds of data are available?
When will data be collected and used?
Where will the data be located or stored?
Why do we need certain data and not other
types?
• How will the data be used?
© 2007 by Prentice Hall
11-24
Sources of Data
•
•
•
•
•
Internal customer data.
Survey data of customers.
Channel members.
Commercial data sources.
Government data sources.
© 2007 by Prentice Hall
11-25
FIGURE
11. 9
Internal Data Information
•
•
•
•
•
Where are the customers located?
What have they purchased?
How often have they purchased?
How did they initially make contact?
How do they order or purchase (in person, Web, mail, phone,
etc.)?
• What is known about their families, occupations, payment
histories, interests, attitudes, etc.?
• In B-to-B situations, who are the influencers, users, deciders,
and purchasers?
• In B-to-B, is it a corporate office or branch office?
© 2007 by Prentice Hall
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The Data Warehouse
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•
•
•
Internal data
External data
Geocoding information
Based on how the organization will
use the database
• Data put into warehouse must be
relevant to objectives.
© 2007 by Prentice Hall
11-27
Trade Area Draw Analysis
Sample CACI Report for a Proposed Store Site
Percentile
25%
50%
75%
90%
99%
# of Customers
492
985
1,477
1,772
1,949
Distance
0.99
2.32
4.28
8.48
27.92
# of Households Penetration Rate
1,992
14,803
45,390
97,382
3,064,490
24.7%
6.7%
3.3%
1.8%
0.1%
Based on a customer profile presented to CACI, 50% of the firm’s target
customers live within 2.32 miles of the proposed retail site. Of the
14,803 customers who live within 2.32 miles, only 985 (or 6.7%) are
customers of this firm.
© 2007 by Prentice Hall
11-28
Data Mining
• Building profiles of customer groups
• Preparing models that predict future
purchase behavior
• Examples
•
•
•
•
First Horizon – profiles best prospects
American Eagle – price markdowns
Goody’s – shopper baskets
Staples – profiles of best customers
© 2007 by Prentice Hall
11-29
Executives from
Unica, a maker of
marketing automation
software, discuss the
importance and use of
data mining and
management.
Click picture to view video.
© 2007 by Prentice Hall
11-30
Developing Marketing Programs
• Advertising, sales promotion, and
other marketing materials.
• Sales support.
• Direct marketing efforts.
• Target specific customers.
• Service support staff.
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11-31
Direct Marketing
• Direct Marketing Association
• Prospecting 60%
• Customer retention  40%
• Dell Computers
• Catalog
• TV and radio ads
• FSI ads
© 2007 by Prentice Hall
11-32
FIGURE
11.10
Methods of Direct Marketing
77%
Direct mail to customers
73%
Direct mail to prospects
16%
Statement stuffers
24%
Catalogs
Direct response-promotions
21%
10%
Direct response-radio
Direct response-TV
8%
29%
Direct response-Internet
22%
Search engine marketing
17%
Search engine optimization
55%
E-mail to customers
E-mail to prospects
46%
16%
Inbound telemarketing
Outbound telemarketing
24%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% of Companies Using Particular DM Methodology
© 2007 by Prentice Hall
11-33
Direct Mail
• High usage B-to-B market.
• Success depends on quality of
database.
• Message must appeal to target group.
• Digital direct-to-press.
• Major problem is clutter.
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11-34
Catalogs
•
•
•
•
•
Low-pressure sales tactics
Saved for a longer period of time
Passed along to others
Important in business-to-business
Key is the use of enhanced database
and targeting of catalogs
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11-35
Number of Catalogs Received per Month
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
None
One
Two
Three
Four-Five
Six-Ten
Eleven
plus
Number of Catalogs
Catalog Purchasers
Catalog Non-Purchasers
Source: Direct Marketing Association (Http://www.the-dma.org)
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11-36
Total Annual Expenditures from Catalogs
25%
Mean = $637
Median = $300
20%
15%
10%
5%
0%
$100 or less
$101-$299
$300-$499
$500-$999
$1,000 plus
Source: Direct Marketing Association (Http://www.the-dma.org)
© 2007 by Prentice Hall
11-37
Direct Marketing
(cont.)
• Mass media
• Broadcast (television, radio)
• Print (magazines, newspapers)
• Alternative media
• Package insert programs (PIPs)
• Ride-a-longs
• Card pack
• Internet
• E-mail
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11-38
Steps in Developing a
Permissions Marketing Program
Obtain permission from the customer.
Offer the consumer a curriculum over time.
Reinforce the incentive to continue the
relationship.
Increase the level of permission.
Leverage the permission to benefit both
parties.
Source: Seth Godin, “Permission Marketing: The Way to Make Advertising Work
Again, Direct Marketing, (May 1999), Vol. 62, No. 1, pp. 41-43.
© 2007 by Prentice Hall
11-39
FIGURE
11.11
Reasons Consumers Opt into an E-mail Frequency
Program
Sweepstakes or
chance to win
41%
Found site randomly
37%
E-mail required to
access content
38%
Already customer
40%
Friend recommended
24%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Percent of Respondents
© 2007 by Prentice Hall
11-40
FIGURE
11.12
Reasons Customers Remain Loyal to a Permissions
Relationship
Interesting content
36%
Account status updates
35%
Contests and
sweepstakes
34%
Price bargains
34%
Entertaining
27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percent of Respondents
© 2007 by Prentice Hall
11-41
Successful
Permission Marketing Programs
Mutual relationship
Participant empowerment
Company reciprocity
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11-42
Frequent Shopper Programs
70% of U.S. households participate in a
frequent-shopper program.
 59% of participating households belong to
two or more programs.
 82% use their frequent shopper card each
time they shop.
 Primary reason for joining is to receive
discounts.
 60% say the reason they shop at a
particular grocery store is because the store
has a frequent shopper program.
Source: A.C. Nielson, Santella & Associate
© 2007 by Prentice Hall
11-43
FIGURE
11.13
Frequency Program Objectives
•
•
•
•
•
•
Maintain sales, margins, or profits.
Increase loyalty of existing customers.
Induce cross-selling to existing customers.
Differentiate a parity brand.
Preempt the entry of a new brand.
Preempt or match a competitor’s frequency
program.
Source: Grahame R. Dowling and Mark Uncles, “Do Customer Loyalty Programs
Really Work?” Sloan Management Review, (Summer 1997), Vol. 38, No. 4, pp. 71-82.
© 2007 by Prentice Hall
11-44
Reasons Retailers Develop
Loyalty Programs
Reason for program
Promotes consumer loyalty
Increases “best shopper” sales
Gain consumer information
Maintain market share
Enhance image
Respond to competition
Indication %
90%
65%
65%
42%
29%
10%
Source: A.C. Nielson, Santella & Associate
© 2007 by Prentice Hall
11-45
Principles in Building
Frequency Programs
Design the program to enhance the
value of the product.
Calculate the full cost of the
program.
Design a program that maximizes
the customer’s motivation to make
the next purchase.
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11-46
Customer Relationship Management
Foundation
• Database technology
• Interactivity through Web sites, call centers,
and other means of contacting customers
• Mass customization technology
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11-47
Customer Relationship Management
Steps to Develop
• Identify the company’s customers.
• Differentiate customers in terms of
needs and value.
• Lifetime value
• Share of customer
• Interact with customers.
• Improve cost efficiency
• Enhance effectiveness of interaction.
• Customize goods or services.
© 2007 by Prentice Hall
11-48
Lifetime Value of a Customer
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•
•
•
•
•
Purchases per year
Average expenditure
Average life span
Value of expenditures =
Cost of acquisition
Cost of servicing account
30
$140
6.5 yrs.
$ 27,300
$ 380
$ 16,380
• 60 percent of revenue
• Value of customers referred
$ 7,500
• Lifetime value of customer
$ 18,040
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11-49
Share of a Customer
• Customer spends an average of
$24,000 per year with Company A.
• The customer purchases from two
other vendors a total of $36,000 for
the same materials or product.
• Total expenditures by the customer is
$60,000.
• Company A has 40% share of the
customer.
© 2007 by Prentice Hall
11-50
Customer Relationship Management
Reasons for Failure
• Implemented before a solid customer
strategy is created.
• Rolling out a CRM program before
changing the organization to match the
CRM program.
• Becoming technology driven rather than
customer driven.
• Customers feel like they are being stalked
instead of being wooed.
© 2007 by Prentice Hall
11-51