Chapter 13 Building Partnering Relationships

The Value Of Customers  Maintaining strong relationships with the customer is important (Existing accounts contribute a large portion of sales)  Selling to satisfied customers not only costs less than acquiring new customers but also is easier   Customers are worth more in terms of revenue than some salespeople recognize

CVS – Customer lifetime value

– combined total of all future sales (typically discounted back into current dollars).

Value of Customers  Consultative customer-oriented sales approach – shown to improve customer retention & profitability  Another study – finds average company loses 20-50% of its customer base every year, and the rate is increasing!

Relationships and Selling  Relationship marketing – many definitions  For selling, it means creating the type of relationship that best suits a customer’s need  Behavioral loyalty – purchasing same product from same vendor over time (habit)  Attitudinal loyalty – emotional attachment to a product

Market exchanges  Solo exchange – one time purchase Example: car trouble out of town  Functional relationships – long term relationship characterized by behavioral loyalty – (habit or routine)

Partnerships  Relational Partnerships – close personal bond involved – know small details can be worked out  Strategic Partnerships – both make significant investments to improve profitability

Managing Relationships  Some companies want a market exchange, some want a functional relationship, and others want a strategic partnership.

 Size, access & image, & access to innovation help drive partnerships3

Choosing Right Relationships 

Size

– example: Keyser Group & McDonalds – worked for decades -P.348  OR J.C. Penney and Martha Stewart 

Access and Image

– SRI (software company)– can provide access to very specific markets – P. 350 

Access to Innovation

– Lead users face & resolve needs months/years ahead of others -HEB & (RFID)

Phases of Relationship Development  Awareness  Exploration  Expansion  Commitment  Dissolution 

Note: Research shows the middle three stages are the most important!

Characteristics of Successful Partnerships  Mutual trust  Dependability  Competence  Customer Orientation  Honesty  Likability  Open Communication & Common Goals

Successful Partnerships  Commitment to Mutual Gain  Organizational Support – Structure & Culture – Training – Rewards

Selling Yourself Vignette  Deeper relationship – Student Ambassadors!