June 23, 2010

Maximizing Customer Value Is about Much More than the Product

Research by Dr. William L. Cron 

How can companies pull ahead of the competition? By attaining levels of customer value that exceed that of competitors.  How to do that? By designing an effective sales force strategy that puts customers first according to relationship categories, developing the capabilities to serve those relationship categories, and maintaining a strong sales support system. The more complex the customers’ needs, the more important this becomes to a company’s success. 

“Often, value to customers is not contained solely within the product itself.  It can be more about the people and capabilities the company brings to bear on the customer’s requirements,” explains Dr. William L. Cron, professor of marketing in the Neeley School of Business at TCU in Fort Worth. “A customer may not fully understand the problem he wants to solve, or know the full extent of it, so a lot of the real value comes from communication and collaboration with the sales force,” he says. 

Dr. Cron and Dr. David W. Cravens, also a Neeley professor of marketing, contributed a chapter called “Sales Force Strategy” to the 2010 Wiley International Encyclopedia of Marketing, to be published later in 2010, aimed at business executives as well as marketing academics. Both professors are well-known in the marketing field, having more than 100 publications between them, including textbooks and journal articles. 

Sales force strategy involves making decisions about how a company’s sales personnel channel their time and energies to achieve value for customers, within a framework of the company’s goals and culture. 

The first step in developing a sales force strategy is customer prioritization, for the sake of sales efficiency.  That means categorizing customers into segments with similar characteristics, needs and marketing responses. 

This involves determining which of the three levels of customer relationship — transactional, consultative, or enterprise — is most appropriate for the company to pursue. The levels require different amounts of sales effort. A firm may focus on one or more relationship levels. 

“The company must make this decision, or the marketplace will make it for them. It’s a necessary choice in developing a driven, targeted sales strategy,” says Dr. Cron. 

Transactional relationships are the least complex.  They occur when customers know what they want and are ready to buy. With consultative relationships, sales professionals and customers collaborate on determining and meeting customer needs. Enterprise relationships are close alliances between businesses, when a firm dedicates resources and capabilities to meeting the needs of another.  This is the most complex of the relationships. 

The second step to developing a sales force strategy is developing the capabilities to serve the relationships well. This involves intangible resources such as brand awareness, plus tangible resources such as number of sales offices and personnel, and human resources including the skills of the sales professionals. 

Developing and maintaining a strong sales support system is next.  This involves organizational structure and hiring, directing, motivating, evaluating, compensating, and rewarding the sales force to achieve optimum performance. 

“When transactions are complex, the sales team and the product almost become indistinguishable from each other,” Dr. Cron says, explaining that sales, service, and maintenance often blend together into a single package. 

This has led to sales professionals being actively involved in developing marketing strategies.  That’s a major change from the recent past, when their job was to implement marketing plans designed solely by top management.  

“The sales team creates value at the customer interface, which occurs much earlier in the process than when value comes only from the product. The company learns how to serve the customer by bringing the sales force into the planning stages,” says Dr. Cron “The sales team collaborates with the company’s product development experts to extend possible solutions to the customer.” 

Another major change from the past, he says, is that sales forces are now considered to have portfolios of capabilities.  These include generating new customers, retaining existing ones, building customer trust, and forging deeper customer relationships. Each capability can be evaluated and modified as needed, says Dr. Cron. Fortunately, consulting firms exist to help companies navigate the complexities of designing effective sales force strategies, he adds.

 

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