Building relationships, creating value

As mentioned, building relationships and creating value with the customer is in the center of the model to connote a customer-centric organization, and the idea of a customer mindset is at the heart of this circle. Fundamentally, the onus is on the salesperson to ensure that each sales call results in a meaningful, relationship-building exchange that creates value. When problems occur—and they are bound to occur—in things like shipping, billing, out-of-stocks, after-sale service, or anything else, the salesperson must stand ready (and must be personally empowered) to work with the buyer to solve the problem. On the buyer’s side, sales organizations must calculate how much time, money, and other resources should be invested in a particular customer versus the anticipated return on that investment. This ratio, often called the return on customer investment, is central to our discussion of value creation in chapter 3. More broadly, the customer’s long-term value to the sales organization is referred to as the lifetime value of a customer.

Earlier we described value as the net bundle of benefits the customer derives from the product you are selling. A more direct way to explain value is as a “give–get” ratio. What does each party “get out of a sale” compared to what they invest? This investment might be money, time, labor, production, or any other resources used up in moving the sale forward. For many years, organizations gave little consideration to using value creation to build relationships with customers. Instead, they were content to simply conduct business as a series of discrete transactions. This approach to selling has come to be called transactional selling.

Exhibit 1.2 portrays a convenient way of distinguishing between transactional approaches to selling and those more focused on developing long-term relationships.³ The relationship-oriented approaches are referred to as consultative selling and enterprise selling. The basis of the approach is segmenting the sales effort by the type and amount of value different customers seek to derive from the sales process.

Source: Neil Rackham and John DeVincentis, Rethinking the Sales Force: Redefining Selling to Create and Capture Customer Value (New York: McGraw-Hill, 1999), pp. 25–27. Reprinted by permission of the McGraw-Hill Companies.

Basically, transactional selling works to strip costs and get to the lowest possible sales price. In contrast, relationship selling works to add value through all possible means. Value-added selling changes much of the sales process. Exhibit 1.3 illustrates the major differences in how a salesperson’s time is best invested in the two types of selling. Relationship selling requires the salesperson to spend more time developing an understanding of the buyer’s needs, which results in a more “front-loaded” selling process. Information, analysis, and communication become much more important to success with the customer. In contrast, in transactional selling focused on price, much more time and energy must be put into closing the sale.⁴

Exhibit 1.3 Time Investment in each Stage of the Sale: Transactional Versus Value-added Selling

It is important to consider the idea that part of improving profitability when selling based on value is being able to better align the consumer's perceptions with the value proposition of the selling company. The earlier on in the process that these kinds of efforts can be executed the better for the sales organization. In this regard being able to understand the customer's business model, processes, key performance indicators and perceptions of value are critical to being able to better align the customer's perceptions of value with the value proposition of the organization selling to them.⁶

Shifting to value-added selling is not easy. In fact, a survey by global consulting firm Sales Performance International indicates it is the challenge most often faced by sales professionals around the world. ‘Global Connection’ presents the results of this survey and insights on how to foster value-added selling.

Shifting to the buyer's side, the way in which the buyer categorizes the purchase affects the buyer's relationship orientation toward the seller. In the event that the buyer considers the purchase not essential to the organization, the relationship orientation exhibited by the buyer towards the seller is expected to be less favorable or more of an arms-length approach. This dynamic could have a negative effect on the seller's possibilities of adapting their sales process to the buyer's buying process as they attempt to develop the relationship with the buyer. In contrast, should the buyer consider the purchase as a bottleneck or a strategic purchase, it is more likely that the buyer would exhibit towards the seller a more favorable relationship orientation. Bottom line: it's not enough that salespeople simply learn the technique associated with value added selling, but they also need to understand when it can't be as easily implemented because of the perception that the buyers has of their product or service.⁷

Understanding Sellers and Buyers

In the Model for Contemporary Selling, the first of three elements in a band that rings the center circle focuses on fundamentals of sellers and buyers. Before we can go much farther in our learning about selling, it’s essential to know something about sales jobs—what activities do salespeople perform, what factors make great salespeople so successful, what types of sales jobs exist, and why a career in selling can be highly satisfying and rewarding. At the same time, you need to know something about the person that sits on the other side of the proverbial desk—your buyer. This is a book about professional selling in a business environment, and organizational buying centers and the roles of the various participants in the buying process can be complex. Firms buy for many different reasons and they go through a series of decision-making stages before placing an order. The more complex the buying situation, the more likely the selling firm will utilize a team-selling approach with the client.

In chapter 2 you will learn a great deal about professional sellers and buyers and why and how things must line up between them in order to build a strong relationship that creates value for both parties over the long run.

Ethics

The second element in the band that rings the center circle in the Model for Contemporary Selling is ethics. Ethics are moral principles and standards that guide behavior. According to a Sales & Marketing Management magazine/Equation Research survey, 83 percent of 220 respondents said they train their salespeople to sell their companies’ ethics and integrity along with their products and services. Nearly 70 percent said they believe their clients consider a company’s ethical reputation when deciding whether to make a purchase. And, while 48 percent said their companies haven’t changed their emphasis on ethics and values recently, another 48 percent said they recently have placed somewhat more or much more emphasis on ethics.⁸

The values of a society affect contemporary selling and sales management in a variety of ways. They set the standards for ethical behavior. Ethics is more than simply a matter of complying with laws and regulations. A particular action may be legal but not ethical. For instance, when a salesperson makes extreme, unsubstantiated statements such as “Our product runs rings around Brand X,” he or she may be engaging in legal puffery to make a sale, but many salespeople (and their customers) view such little white lies as unethical.

Two sets of ethical issues are of particular concern in contemporary selling and sales management. The first set arises from the interactions between salespeople and their customers. These issues involve the sales manager only indirectly because the manager cannot always directly observe or control the actions of every salesperson. But sales managers have a responsibility to establish standards of ethical behavior, communicate them clearly, and enforce them vigorously. Managers must be diligent in understanding unethical practices by their salespeople when dealing with customers.

The second set of ethical issues relates to the sales manager’s dealings with the salespeople. Issues include fairness and equal treatment of all social groups in hiring and promotion, respect for the individual in supervisory practices and training programs, and fairness and integrity in the design of sales territories, assignment of quotas, determination of compensation and incentive rewards, and evaluation of performance.

Chapter 4 provides insight into a wide variety of ethics topics related to the salesperson–buyer and salesperson–sales manager relationships. In addition, within each chapter you will be challenged by an Ethical Dilemma related to topics in that chapter, along with questions to consider. In fact, here’s the first one now!

Technology

The third and final element in the band that rings the center circle of the Model for Contemporary Selling is technology. Think of information as the engine that drives a salesperson’s success in building relationships and creating value for customers. Technology plays a major role in using information to manage customer relationships. The term “customer relationship management” has come to signify a technology-driven organizationwide strategic focus on the customer. CRM began primarily as a software package designed to collect and mine data and has evolved into an overarching organizational philosophy of doing business. Chapter 5 provides insights on the use on CRM, and also on various sales technologies—including the use of social media—that must be mastered by salespeople today in order to be successful. In addition, in Chapter 5 you will gain an understanding of how and why data analytics is an important aspect of contemporary selling.

Selling Process

In the Model for Contemporary Selling, the second circle outside the core represents the various process elements of contemporary selling: prospecting and sales call planning, communicating the sales message, negotiating for win-win solutions, closing and follow-up, and salesperson self-management. These five selling processes are represented by chapters 6–10, which comprise Part Two of the book. The following sections provide an overview of these important topics.

Prospecting and Sales Call Planning. In any business, today’s customers weren’t always customers. Chances are they started out as prospects—a set of potential customers you or your firm identified as very likely future customers. Building a business involves being on the lookout for great prospects, for it is a pipeline of prospects that ensures a growing, thriving customer base. Salespeople sometimes look at identifying and developing prospects as a “necessary evil” in selling—that’s an unfortunate (and unproductive) attitude to take. Nowadays, CRM systems, social media, the Internet, and other technology-driven tools have the capability to provide a wealth of information to salespeople about potential customers if the systems are properly implemented and utilized.

Chapter 6 provides insights on how to systematically and successfully go about identifying and developing prospects, and then details how to prepare in advance for the first sales call once you have qualified a prospect as a high potential future customer.

Communicating the Sales Message. Selling involves persuasive communication. When you persuade, you hope to convince someone to do something. In transactional selling, the focus tends to be on communicating a hard sell message. This is because by definition in transactional selling there is no real relationship. With a hard sell approach, buyers and sellers are likely to be adversarial, little trust exists between them, and they are not working for long-term or win-win solutions.

The hard sell has been replaced by a communication approach of mutual problem solving. In contemporary selling, communication is handled by multiple means—from traditional email and phone to texting and social media. The salesperson acts as a consultant or problem solver for buyers and sells value-added solutions, popularized by the term solution selling, in which the salesperson’s primary role is to move the buyer toward visualization of a solution to his or her problem (need).⁹ Today, almost all of us seem to be selling “solutions,” as opposed to “products,” whether our wares are cell phones, financial services, computer software, or just about any other product or service (even college courses in selling) that solves a problem or fulfills some buyer’s need. Chapter 7 explores the issue of communicating effectively when selling solutions, solving buyer problems, and managing long-term relationships.

Negotiating for Win-Win Solutions. Even when buyers have been doing business with you for a very long time, they will develop objections to various aspects of your proposed solution. An objection is simply a concern that some part of your product offering (solution) does not fully meet the buyer’s need. The objection may be over price, delivery, terms of agreement, timing, or myriad other potential elements of a deal. Even though typical buyer–seller interactions in a relationship selling environment are far from adversarial, negotiation still must take place. Chapter 8 includes details on planning for, recognizing, and handling common objections from buyers and strategies for negotiating win-win solutions.

Closing and Follow-Up. The rapport, trust, and mutual respect inherent in a long-term buyer–seller relationship can take some of the pressure off the “close” portion of the sales process. In theory, this is because the seller and buyer have been openly communicating throughout the process about mutual goals they would like to see fulfilled within the context of their relationship. Because the key value added is not price but rather other aspects of the product or service, the negotiation should not get hung up on price as an objection. Thus closing becomes a natural part of the communication process. (Note that in many transaction selling models, the closing step is feared by many salespeople—as well as buyers—because of its awkwardness and win-lose connotation.)

A big part of this process of maintaining loyal customers over the long run is follow-up, which includes service after the sale. Effective follow-up is one way that salespeople and their firms can improve customer perceptions of service quality, customer satisfaction, and customer retention and loyalty. These issues are central to successful selling, and they will be discussed in detail at various points throughout the book. Many salespeople try to “underpromise and overdeliver,” a catchphrase that reminds salespeople to try to deliver more than they promised in order to pleasantly surprise the buyer. Managing customer expectations is an important part of developing successful long-term relationships. Customer delight, or exceeding customer expectations to a surprising degree, is a powerful way to gain customer loyalty. Overpromising can get the initial sale and thus may work once in a transactional selling environment, but a dissatisfied customer not only will not buy again but also will tell many others to avoid that salesperson and his or her company and products.¹⁰

Chapter 9 provides a variety of ideas on how to move customers toward closure in contemporary selling and presents key issues in effective follow-up after the sale.

Salesperson Self-Management. In chapter 2 you will read about various characteristics of sales jobs that make them unique, challenging, and rewarding. One thing that makes selling an attractive career choice for many people is the autonomy, which means the degree of independence the salesperson can exercise in making his or her decisions in the day-to-day operation of the job. Salespeople today have tremendous autonomy to develop and execute their selling strategies. Chapter 10 presents a host of important salesperson self-management issues, including organizing the job, designing and routing the sales territory, classifying and prioritizing customer potential, using technology to improve efficiency, and exercising good time management skills.

Sales Management

In the Model for Contemporary Selling, the third circle outside the core is about managing salespeople: salesperson motivation; selecting and training salespeople; and compensating and evaluating salespeople. And, of course, the whole scope of these activities takes place in the context of the global stage. These managerial areas of focus comprise the first three chapters of Part Three of the book, chapters 11–13. The final chapter in Part Three, chapter 14, deals with the global selling environment and will be highlighted later in this chapter.

Salesperson Performance: Behavior, Motivation, and Role Perceptions. Psychologists classically view motivation as a general label referring to an individual’s choice to (a) initiate action on a certain task, (b) expend a certain amount of effort on that task, and (c) persist in expending the effort over a period of time.¹¹ Thus, for clarity let’s consider motivation as simply the amount of effort a salesperson chooses to expend on each activity or task associated with the job. This general view of motivation is based on expectancy theory, which holds that a salesperson’s estimate of the probability that expending effort on a task will lead to improved performance and rewards. The expectancy theory of motivation provides the framework for our discussion of motivating salespeople in chapter 11.

Recruiting, Selecting, and Training Salespeople. With the shift in focus from transactional to relationship approaches, the various skills and knowledge components required to successfully perform the sales role have shifted accordingly. Identifying these key success factors in contemporary selling is the first step selecting new salespeople (chapter 2 discusses sales success factors in more detail). Whereas in the past these success factors tended to be related to fairly traditional selling activities (prospecting, overcoming objections, closing, etc.), nowadays they have broadened substantially. A survey of 215 sales managers across a wide variety of industries identified the following seven success factors as the most important to sales managers interviewing prospective salespeople. Notice in particular how each supports a relationship selling approach:¹²

1. Listening skills
2. Follow-up skills
3. Ability to adapt sales style from situation to situation
4. Tenacity (sticking with a task)
5. Organizational skills
6. Oral communication skills
7. Ability to interact with people at all levels of customer’s organization.

Chapter 12 considers the overall process of selecting salespeople based on the skills and knowledge needed to succeed in today’s business selling environment. Although a salesperson’s ability to manage customer relationships generally improves with practice and experience, it is inefficient to expect a rep to gain skills solely through on-the-job experience. Good customers might be lost due to the mistakes of an unskilled salesperson. Consequently, many firms have a formal training and development program to give new recruits some knowledge and skills before they are expected to pull their own weight in calling on customers.

Training generally focuses on building specific skill and knowledge sets needed to succeed in the job. Development is more about providing a long-term road map or career track for a salesperson so he or she can realize professional goals. The rapid changes in technology, global competition, and customer needs in many industries have accelerated the need for effective training in sales organizations. Chapter 12 also discusses training and development of salespeople in detail. It explains that salespeople go through a variety of career stages (exploration, establishment, maintenance, and disengagement) and each stage brings a unique set of training and development needs.¹³

Compensating and Evaluating Salespeople. Professional salespeople are very results-oriented. They crave recognition and rewards for a job well done. Their motivation to expend effort on the various aspects of their job is largely a function of the rewards they expect for a given job performance. Compensation involves monetary rewards. Incentives include a variety of financial and nonfinancial rewards. Nonfinancial incentives include recognition programs, promotions to better territories or to management positions, or opportunities for personal development. Chapter 13 provides insight on these important issues, including ways to put together an effective sales force reward system.

One trend in contemporary selling is that today’s salespeople often work as part of a team assigned to manage a specific client relationship. Team-based selling requires that rewards must be created both for individual and team aspects of the sales job.¹⁴ For example, the entire selling process at Bristol-Myers Squibb (BMS) is team-driven. A Fortune 200 firm, BMS is one of the world’s leading makers of medicines and related healthcare products. BMS, based in New York City, had 2014 sales of over $15 billion and employed about 25,000 people. A key account manager serves as a team leader for a major retail account (Walgreens Drug Stores, for example). A category management specialist tracks sales and competitive trends and provides information to the team and the client for decision making about the product line. Also on the team are BMS merchandisers, who work with the various Walgreens regions and stores to ensure the BMS–Walgreens merchandising program is carried out; local BMS salespeople, who make presentations to pharmacists and front-end managers at Walgreens stores in their area; and members of the BMS product management group in New York, who work with the team and client on new-product development and promotion planning for their respective brands. As you might expect, compensation and incentives reward team performance, as well as individual performance.

Another aspect of the sales management process is evaluating the performance of salespeople. Team-based approaches to selling and managing customer relationships make it harder for sales managers to evaluate the impact of individual salesperson performance and determine appropriate rewards. Chapter 13 also provides insights into linking rewards to the new sales roles defined by relationship approaches to selling. It also discusses the best practices in evaluating today’s salespeople.

Internal Environment

The policies, resources, and talents of the sales organization make up a very important part of the internal environment. Salespeople and their managers may have some influence over organizational factors in the long run due to their participation in making policy and planning decisions. However, in the short run a firm’s selling initiatives must be designed to fit within organizational limitations. Components of the internal environment can be divided into six broad categories: (1) goals, objectives, and culture, (2) human resources, (3) financial resources, (4) production and supply-chain capabilities, (5) service capabilities, and (6) research and development (R&D) and technological capabilities. These are depicted in Exhibit 1.4.

Exhibit 1.4 Components of the Internal Environment

Goals, Objectives, Culture. Successful management of customer relationships begins with top management’s specification of a company mission and objectives that create a customer-centric organization. As the mission and objectives change, customer relationship initiatives must be adjusted accordingly. A well-defined mission, driven by top management’s values and beliefs, leads to the development of a strong corporate culture. Such cultures shape employees’ attitudes and actions and help determine the plans, policies, and procedures salespeople and their managers implement.

Periodically, Sales & Marketing Management magazine, a major trade publication covering the selling industry, publishes a special report on the 25 best sales forces. Global firms that appear regularly on the list include Baxter International (healthcare), Cisco Systems (information technology), Charles Schwab (financial services), and General Mills (consumer products), among others. A common thread among these and other top-performing sales organizations is a culture, embraced from top management all the way throughout the firm, that focuses on getting and staying close to customers. Their customer-centric culture is manifest in their missions, goals, and objectives.

We have already mentioned the central role of ethics and legal considerations in selling today. The tone and expectations set by upper management and the overall culture of the firm drive ethical behavior in sales organizations.

Human Resources. Modern sales organizations are highly complex and dynamic enterprises, as are their customers’ firms. The sheer number of people in many sales organizations and their broad scope of global coverage, together with the complexity and diversity of key success factors needed in selling, create challenges. Because it takes time to recruit highly qualified people for sales positions and then to train them, it is often difficult to expand a sales force rapidly to take advantage of new products or growing global markets. Sometimes, however, a firm can compensate for a lack of knowledgeable employees by hiring outside agencies or specialists on a fee-for-service or commission basis. For example, many companies use independent distributors when entering new markets, particularly markets outside their home country, because using such preexisting sales forces speeds up the process of market entry.

Financial Resources. An organization’s financial strength influences many aspects of its customer relationship initiatives. A tight budget can constrain the firm’s ability to develop new value-adding products as well as the size of its promotional budget and sales force. Companies sometimes must take drastic measures, such as merging with a larger firm or one outside their home country, to obtain the financial resources necessary to realize their full potential in the global marketplace. For example, Procter & Gamble’s acquisition of Gillette in the highly competitive consumer health products field several years ago gave P&G quick entry into the lucrative razor blade market, while benefiting Gillette through P&G’s strong supply chain expertise outside the U.S.

Production and Supply-Chain Capabilities. An organization’s production capacity, the technology and equipment available in its plants, and even the location of its production facilities can influence the selling initiative. A company may be prevented from expanding its product line or moving into new areas of the globe because it does not have the capacity to serve increased demand or because transportation costs make the product’s price uncompetitive.

Walmart, though U.S.-based, is achieving most of its growth through outside-U.S. expansion. Vendors doing business with Walmart are expected to fulfill orders within 24 hours and to deliver the goods to the Walmart warehouses within a two-hour assigned appointment window. Suppliers who don’t meet this requirement pay Walmart for every dollar of lost margin. It is no wonder Walmart’s vendors are willing to invest the capital to tie their information and supply-chain systems directly to Walmart’s system so the whole ordering and fullfillment process can be handled at maximum efficiency and speed. Because of Walmart’s massive size, being a preferred vendor for the firm can often push the supplying organization to a whole new level of global scope, benefiting it with other customers as well.

As an example of supply-chain efficiency on the e-commerce side, founder Jeff Bezos at Amazon developed a network of global distribution centers long before Amazon’s sales volume could financially support the warehouse capacity, principally because he wanted to ensure seamless distribution and service after the sale and avoid inventory stockouts.

Service Capabilities. We have already mentioned the importance of delivering high service quality in the follow-up stage after the sale. Actually, a sales organization’s ability to provide a consistently high level of service is an important source of value-added throughout the whole process of contemporary selling. This will be discussed further in chapter 3. For now, be assured that firms committed to providing great service typically enjoy a strong competitive advantage in the global marketplace and make it difficult both for (a) other firms to compete for the same customers and (b) customers to switch to competitors even if they offer price advantages.¹⁵

R&D and Technological Capabilities. An organization’s technological and engineering expertise is a major factor in determining whether it will be an industry leader or follower in developing value-adding products and delivering high-quality service. Excellence in engineering and design can also be a major promotional appeal in a firm’s marketing and sales programs, as customers are attracted to innovators and industry leaders. When companies are investing heavily in technology, salespeople can communicate the R&D and technological sophistication to customers as important value-adding aspects of the company and its products. This capability helps avoid the trap of overrelying on price to get the sale.

External Environment

By definition, factors in the external global environment are beyond the direct control of salespeople and managers. Companies do try to influence external conditions through political lobbying, public relations campaigns, and the like. But for the most part, the salesperson and sales manager must adapt customer relationship initiatives to fit the existing environment in the countries in which they operate. Exhibit 1.5 groups the components of the external environment in five broad categories: (1) economic, (2) legal and political, (3) technological, (4) social and cultural, and (5) natural.

Economic Environment. People and organizations cannot buy goods and services unless they have the money. The total potential demand for a product within a given country depends on that country’s economic conditions—the amount of growth, the unemployment rate, the level of inflation, and the gross domestic product (GDP). Sales managers must consider these factors when analyzing market opportunities and developing sales forecasts. Keep in mind that global economic conditions also influence many firms’ ability to earn a profit. Companies of all kinds were impacted by the credit crunch created by the general financial and economic crisis that began in the late 2000s, making it difficult to secure capital for investment in growth of products and markets. Then too, currency exchange rates can make trade more or less favorable for a sales organization depending on the direction of the flow of products and money.

Exhibit 1.5 Components of the External Environment

A second aspect of the economic environment is the existing distribution structure in an industry within areas of a firm’s global reach. This includes the number, types, and availability of wholesalers, retailers, and other intermediaries a firm might use to distribute its product. Much of a firm’s selling effort may be directed to persuading such intermediaries to stock and provide sales and marketing support for the company’s products.

A third economic factor is the amount of competition in the firm’s industry, both the number of competing firms and the relative strength of each in the marketplace. Ideally, a company’s customer relationship initiative should be designed to gain a differential advantage over competitors. For example, rather than trying to compete with the lower prices of non-U.S.-based competitors (such as Komatsu) Caterpillar has succeeded in the heavy construction equipment business by providing superior product quality and excellent service, while charging prices as much as 10 to 20 percent higher than its competitors. A great way to thwart competitive threats is to focus the sales message on value-adding aspects of the product or service rather than price, the topic of chapter 3.

Salespeople go head to head with competitors on a daily basis, so they are often the first to observe changes in competitive strategy and activity in the various markets around the world in which the salespeople are based. One critical issue is getting information from the sales force back to the company so that the firm can act on those observations. CRM systems, discussed in chapter 5, provide an infrastructure for managing such competitive information (and many other types of customer information).

Legal and Political Environment. Laws and political action affect all organizations, and for those doing business globally this aspect of the environment can be daunting due to idiosyncrasies from country to country. In selling, common legal issues include antitrust, truth in advertising, restriction of telemarketing and spam, product liability, issuance of credit, transportation of materials, and product claims, among many others. In addition, differing political administrations at all levels of governments can bring changes to the marketplace and sales arena. Sales organizations must always be mindful of laws relevant to doing business in each country and must take laws and political action into account when developing plans and strategies there. Also, it is very important that salespeople be trained on the impact of the law on their role.

As discussed earlier in this chapter, ethics is different from the law. Something unethical may not be technically illegal, but it should still be avoided. Perceptions and norms for what is and isn’t ethical can vary by country and culture. Many reasons exist for practicing highly ethical behavior in contemporary selling and sales management. The ethical environment is the focus of chapter 4.

Technological Environment. An earlier section under “Internal Environment” discussed the impact of a sales organization’s own technological capabilities. Here, we focus on the overall impact of macrolevel technology trends on selling. One obvious impact is the opportunity for new-product development. Technological advances occur faster all the time, and new products account for an increasing percentage of total sales in many industries. For example, historically at 3M, more than half of the current sales volume is generated by products that did not exist five years ago. And, of course, at Apple, a few short years back all of their sales came from computers and related items. We certainly know how much that's changed today!

Most analysts believe new products and services will become even more important to the success of many firms. Rapid development of new products affects many selling activities. New selling plans and messages must be developed to appeal to customers in various regions of the world, salespeople must be retrained to update technical knowledge, in some cases new salespeople must be hired to augment the sales effort, and new reward and performance evaluation systems must be established that match the new sales roles.

Improvements in transportation, communications, and information management across global markets are changing the way customers are targeted, sales territories are defined, salespeople are deployed, and salesperson performance is evaluated in many companies. New communication technologies, together with the escalating cost of a traditional field sales call, are changing how the selling function is carried out. Much selling today on the global stage is accomplished by a combination of face-to-face communication and various electronic forms of communication. Consequently, the nature of many sales jobs and the concurrent role of the sales manager in supervising the salespeople have changed dramatically in recent years.

Social and Cultural Environment. The values of a society affect contemporary selling and sales management in a variety of ways. Firms develop new products in response to trends in customer tastes and preferences. For example, in the United States, the well-documented demographic trends of aging society, greater influx of minorities as a percentage of total population, two-income households, greater mobility, and ever-increasing desire for more leisure time and more convenience-oriented products all have greatly affected selling. Likewise, in China and India many sales organizations are finding an increasing openness to doing business with global partners, and to a large degree the level of success outside sales organizations will achieve in those markets hinges on their ability to adapt their business models to the needs of those cultures.

The attacks of 9/11 in New York City provide a vivid example of social-cultural impact on a global stage. Societal values shifted quickly and sharply toward family, home, safety, and comfort after the attacks. People became more cautious of travel and security measures were greatly increased all over the world and have not diminished since. Direct sellers especially saw a resultant change in shopping pattern and intensity. Direct sellers (like Avon, Amway, and Mary Kay) typically do business in customers’ own homes, where relationships among buyers and sellers are warm, friendly, and high in trust. Most direct sellers, as well as the direct selling industry as a whole, experienced a significant increase in global business after the 9/11 attacks as customers gravitated closer to home for many of their purchases.

Natural Environment. Nature influences demand for many products. Of course, natural disasters such as tsunamis, typhoons, and floods increase demand for building products and the like. The winter 2012 season brought historic warmth and nearly no snow to parts of Europe and record cold to other European regions, creating all sorts of challenges for any firms selling and distributing typical winter products across the affected areas. But unseasonable weather can either damage or enhance sales, depending on the type of product you are selling. Hurricanes and typhoons are massive and violent storms that wreak havoc wherever they hit, yet firms selling batteries and building materials see unprecedented sales spikes as a result. And when the massive volcanic eruption in Iceland took place a few years ago, sellers of travel saw transatlantic flying impacted for weeks. The devastating Japanese tsunami of 2011 severely impacted the selling and distribution process for several global automobile and consumer electronics manufacturers, resulting in shortages of products from Japan-based firms and a shift of market share to brands that are manufactured elsewhere.

The natural environment is an important consideration in the development of selling approaches. It is the source of all the raw materials and energy resources needed to make, package, promote, and distribute a product. Since the 1970s, firms in many industries—among them cement, steel, aluminum, wood, plastics, and synthetic fibers—have periodically encountered resource or energy shortages that have forced them to limit sales. You might think salespeople could simply take things pretty easy under such circumstances, letting customers come to them for badly needed goods. But the sales force often has to work harder during product shortages, and at such times well-developed customer relationships become even more crucial for the firm’s success.

During periods of shortage, a company may engage in demarketing part or all of its product line. In such cases, the sales force often helps administer rationing programs, which allocate scarce supplies according to each customer’s purchase history. Shortages are usually temporary, though. So sellers must be sensitive to their customers’ problems in order to retain them when the shortage is over. Salespeople must treat all customers fairly, minimize conflict, and work hard to maintain the customer relationship as well as the firm’s competitive position for the future.

Over recent years, oil prices have skyrocketed globally. Most outside salespeople depend on automobiles or commercial airlines to travel from customer to customer. Gasoline and jet fuel prices have upped the costs of travel substantially. As the trend toward higher energy costs continues, look for sales organizations to find more creative ways to build relationships and create value while simultaneously reducing physical travel by salespeople.

Growing social concern about the impact of products and production processes on the natural environment also has important implications for selling. For instance, countries in the European Union have passed legislation requiring manufacturers to take back—and either reuse or recycle—materials used in packaging and shipping their products. And in general, the movement toward sustainability—succinctly defined as firms doing well by doing good, across the multifaceted aspects of their operations—significantly impacts relationships with client firms as well as with the public at large. Some firms have made their sustainability initiative a central theme in their sales and marketing strategies. Unilever, for example, is well regarded by its customers as a leading proponent of sustainability on a global scale.

One final important aspect of the natural environment is how an organization’s environmental orientation can have quite a positive impact internally on increasing job satisfaction. Salespeople that share a firm’s values of a “green work environment” are more likely to suggest ideas about how to strengthen the company’s image, perform in their sales role more effectively, and find greater satisfaction in their work because of their affinity with the firm’s value system. Hence, there’s an added internal benefit for organizations related to strengthening the environmental orientation of the firm and seeking out salespeople who share values that align with this environmental orientation. Finding individuals who share this value is increasingly easy as many people—and particularly the new generation of salespeople—place great importance on environmentally friendly, sustainable practices.¹⁶

Upland company

The role plays involve a fictional consumer products company called the Upland Company. Upland sells a variety of health and beauty aids through supermarkets, drugstores, mass-merchandise stores like Target and Walmart, and similar retail environments. Example products include shampoo, hairspray, deodorant, and skin lotion. The sales force follows a relationship approach to selling and calls on headquarter buying offices for retail chains as well as some larger independent stores. Competition in this industry is fierce, and salespeople must find ways to add value beyond just low price.

Upland is organized into 45 sales districts in the United States and Canada. Sales outside North America are handled by various international subsidiaries. Each district has a district manager and four to seven account managers (salespeople) who have geographically defined territories. Each district manager reports to one of four regional managers; regional managers report directly to the VP of sales.

Each district manager also has direct selling responsibility for a few large or particularly complex accounts. Districts have two-digit numbers with a third number representing the territory number tacked onto the end. The district of interest in our role plays is District 10, managed by veteran Upland sales manager Rhonda Reed. The next section provides a profile of each person currently working in District 10.

Tips on preparing role plays

Role-play exercises are fun and provide a great learning opportunity. The following tips will prove useful as you get the hang of doing them. Most importantly, it is unlikely that anyone in your class is a professional actor, so don’t worry about how well you come across as a thespian. Simply follow the instructions for the role play, prepare the script, rehearse as needed, and then enjoy acting out your part and receiving feedback.