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Chapter 3
Linking Strategies and the Sales
Role in the Era of Customer
Relationship Management
McGraw-Hill/Irwin
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• Understand and outline the key components and goals
of CRM
• Explain the importance of market orientation and how a
market orientation is fostered within the firm
• Identify the key steps in developing and implementing
strategies
• Describe the role of personal selling in marketing
strategy
• Outline the stages in developing strategic partnership
relationships between organizations
• Discuss the actions salespeople can take to ensure a
long-term buyer-seller relationship
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CRM is…
• a comprehensive business model for
increasing revenues and profits by
focusing on customers.
• both an overarching business philosophy
and a process tool to facilitate a truly
customer-driven enterprise.
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CRM is…
“…a journey of strategic, process, organizational
and technical change whereby a company seeks
to better manage its enterprise around customer
behaviors. This entails acquiring knowledge
about customers and deploying this information
at each touchpoint to attain increased revenue
and operational efficiencies.”
PriceWaterhouse Coopers
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Customer Orientation
• Continues to move toward being customercentric.
• Builds upon…
– The marketing concept which overarches all
business strategy
– Use of the marketing mix as a “tool kit” for marketing
strategy creation
– Consumers information fueling strategic decisions
about products
– Aligning all business processes and functions to
maximize the firm’s success.
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Customer-Centric Cultures Include…
• Adopting a partnership business model with
mutually shared risks and rewards
• Defining selling as customer business
consultation
• Formalizing customer analysis processes and
agreements
• Being proactive in educating customers about
value chain and cost reduction opportunities
• Focusing on continuous improvement principles
stressing customer satisfaction
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Marketing Evolution
MASS MARKETING
Evolved in the early 1900s and
dominated marketing management
for decades
TARGET MARKETING
In the ‘60s, many firms began to
apply the principles of segmentation
to different customer groups.
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Marketing Evolution
CUSTOMER MARKETING
In 1980, the focus shifted towards
developing customer relationships.
ONE-TO-ONE MARKETING
Technology allows firms to customize
offerings to individual users.
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Objectives of CRM
• Customer Retention - retain loyal and
profitable customers and channels
• Customer Acquisition - acquire customer
based on known characteristics which
drive growth and increase margins
• Customer Profitability - increase individual
customer margins by offering the right
product at the right time
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Advantages of CRM
• Reduces advertising costs
• Increases awareness of customer needs
• Tracks the effectiveness of promotional
campaigns
• Allows competition for customers based on
service, not prices
• Prevents overspending on low-value clients and
under spending on high-value ones
• Speeds the time it takes to develop and market
a product
• Improves use of the customer channel
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10 Critical Questions in CRM
Customers
1. Who are our customers?
2. What do our customers want and expect?
3. What is the value potential of our customers?
The Relationship
4. What kind of relationship do we want to build?
5. How do we foster exchange?
6. How do we work together and share control?
Managerial Decision Making
7. Who are we?
8. How do we organize to move value closer to our customers?
9. How do we measure and manage our performance?
10.How do we increase our capacity for change?
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The Importance of Market Orientation
Successful salespeople think beyond “selling”
• Market-driven companies do better market
sensing
• Market-drive companies develop stronger
relationships with customers and channels
• Internal partnering is a critical component
of market orientation
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Process of Strategy Development
• The mission statement answers the most
basic questions about an organization’s
reason for being.
• Firms should define their mission in terms
of broad human needs to be satisfied.
• This approach makes it easier to identify
attractive market opportunities.
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Process of Strategy Development
Goals – flow from the firm’s mission
statement and represent specific targets
the firm intends to hit.
Objectives – more specific than goals and
should always be:
– Specific
– Measurable
– Realistically attainable
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SBU Strategy
Business-level strategy involves how the business
will compete in its industry to achieve a
sustainable competitive advantage (SCA)
An SCA focuses on distinctive competencies
Porter’s Three Generic Strategies:
• Low Cost
• Differentiation
• Niche
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Personal Selling’s Role in
Marketing Strategy
Market exchanges - one-shot transactions
occurring between a buyer and seller with
limited thought of future consideration
Roles of salespeople in market exchanges
• Create new value
• Adapt
• “Make the market”
• Exit
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Personal Selling’s Role in
Marketing Strategy
Functional relationships create a climate
of cooperation, with open and honest
communication.
• Functional relationships engender a high
level of personal trust in well managed
business activities.
• One danger is what happens when one
party is the relationship leaves.
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Personal Selling’s Role in
Marketing Strategy
Strategic Partnerships are long-term relationships where
both parties make significant investments.
• This relationship requires direct communication with
production, production designers, and others.
• Salespeople serve two roles-- relationship manager and
general manager.
• Strategic partnerships work best with clients large
enough to make investments worthwhile.
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Stages in Relationship
Development
Stage I – Exploration
• Determine value, build trust, set
expectations, monitor
Stage II – Expansion
• Generate repeat sales, full-line selling,
cross-selling
Stage III – Commitment
• Build loyalty, become a preferred supplier,
engage in
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Role of Personal Selling in IMC
An Integrated Marketing Communications (IMC) strategy effectively
integrates personal selling, advertising and other communications options
Advantages of Selling in IMC
• Face-to-face contact
• More persuasive
• More demonstrative
• Customization opportunities
Disadvantages of Selling in IMC
• Limited ability to duplicate
• More costly
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Customer Satisfaction and
Feedback
Maintaining customer loyalty is one outcome of customer
orientation.
Loyal customers. . .
1. Tend to concentrate on their purchases.
2. Provide positive word-of-mouth and customer referrals.
3. May be willing to pay premium prices for the value they receive.
Satisfaction measures need to be supplemented with
examinations of customer behavior, such as annual
retention rate, frequency of purchases and percentage
of the customer’s total purchases captured by the firm.
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Key Terms
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marketing concept
marketing mix
marketing communication mix
(promotion mix)
market orientation
customer orientation
customer-centric
formalization
customer relationship
management (CRM)
touchpoints
mass marketing
target marketing
customer marketing
one-to-one marketing
customer value
customer loyalty
lifetime value of a customer
firing a customer
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•data warehouse
•data mining
•return on customer investment
•strategic direction
•mission statement
•goals
•objectives
•strategic business units
•sustainable competitive
advantage
•distinctive competencies
•generic strategies
•market opportunity
•marketing program
•market exchanges
•functional relationships
•strategic partnerships
•trust
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•customer delight
•upgrading
•full-line selling
•cross-selling
•preferred supplier
•total quality management
(TQM)
•integrated marketing
communication
•pull strategy
•push strategy
•just-in-time reorder and
delivery
•category management
•supply chain alliances
•efficient consumer
response (ECR)
•selling team
•top-to-top selling
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
Mark W. Johnston
Rollins College
McGraw-Hill/Irwin
Greg W. Marshall
Rollins College
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