Professional Selling in Business to Business Marketing

This article will focus on the professional selling practices in business to business marketing. Many organizations have identified that managing relationships is an important technique in business-to-business markets. They utilize different business-to-business relationship marketing programs in an effort to increase their bottom line. As a result, key account management (KAM) has become an important aspect of many organizations' marketing strategies.

Keywords Business to Business Marketing; Contractual Exchanges; Customer Loyalty Programs; Customer Relationship Management; Key Account Management; Marketing Strategy; Relationship Marketing; Relational Exchanges; Transactional Exchanges

Marketing > Professional Selling in Business to Business Marketing

Overview

Many organizations have identified that managing relationships is an important technique in business-to-business markets. These organizations have invested much time, money and effort into making these relationships work. They utilize different business-to-business relationship marketing programs in an effort to increase their bottom line. As a result, key account management (KAM) has become an important aspect of many organizations' marketing strategies. Kotler (1994) believes that business-to-business marketing is different from customer markets in a variety of ways such as there are usually fewer and larger buyers in a central geographical territory; a derived and fluctuating demand; participation by many in the buying process; professional buyers and closer relationships, which eliminates the need for a middleman and technological links to complete internal and external transactions.

It is important for organizations to develop positive relationships between business customers and business suppliers, and there are many advantages to this type of relationship. An organization's customer base can provide the best opportunities for growth and long term profit opportunities, especially in light of growing competition and market globalization. Filiatrault and Lapierre (1997) reported that customer retention has more impact on profits than economies of scale, and it costs five to six times more to win a new customer than to keep a current one.

"Relationship marketing is based on the premise that important accounts need focused and continuous attention" (Kotler, 1994). Relationship marketing occurs when organizations realize that they have to continuously work at having a positive, mutually beneficial relationship with their customers. When one thinks of the concept in this context, it supports the marketing belief that marketing is about exchanges (Hunt, 1983). Gundlach and Murphy (1993) identified three types of exchanges that support this concept. The three types of exchanges are transactional, contractual and relational exchanges. Transactional exchanges focus on single short-term situations and each transaction yields a profit. Contractual exchange is intermediate formal agreements, which can include a single contract or a series of contractual exchanges that include open ended contracts. Relational exchanges occur over an extended period of time, are linked together or an ongoing process, and produce long term profits. Webster (1992) has found that many organizations use relationship marketing as a marketing strategy when the transaction depends more on negotiation as opposed to market-based processes. As a result, the market has experienced a shift to a focus on relationship marketing as opposed to transactional marketing.

Relationship marketing has grown over the past ten years (Sheth & Parvatyar, 2000) based on the belief that the efforts will yield substantial profits. However, there is no data to support this belief and research is mixed. There needs to be more studies conducted in order to validate these claims. Two of the main issues that will be need to be reviewed focus on the actual payoff when an organization uses different relationship marketing programs to build different types of relational bonds and norms in order to generate varying levels of return (Berry, 1995) and the types and levels of returns an organization receives from a relationship marketing program based on factors such as participant influence (Reinartz & Kumar, 2000). "Researchers in service and consumer markets have linked relationship marketing activities to intermediate outcomes (i.e. sales growth, higher customer share, lower price sensitivity) that should enhance a firm's profit" (Palmatier, Gopalakrishna, & Houston, 2006). However, the overall findings in both B2B and consumer markets is that relationship marketing efforts have a direct effect on a customer's value to the firm by increasing the length, breadth, and depth of the buying relationship and generating positive word of mouth (Verhoef, 2003).

Several criterions are utilized to describe relationship marketing efforts and they include customer bonds formed, exchange control mechanisms used, benefits offered, functions served, and content area supported. The criterion use different perspectives in order to identify the viable categories for grouping relationship building activities. Most of the categories include financial, social and structural factors and imply that customer-seller relationships are similar within each category, but may vary by level of effectiveness among the categories. Many researchers have used Berry's (1995) model of explaining financial, social, and structural relationship marketing programs. According to his model:

• Financial Relationship Marketing Programs include discounts, free products or other financial benefits that reward customer loyalty. However, organizations must be unique in their offerings so that competitors may not easily duplicate their campaign. Otherwise, there will be no benefit.
• Social Relationship Marketing Programs include meals, special treatment, entertainment, and personalized information. Research has shown that social bonds are not easy to duplicate. Therefore, there is a strong possibility of customer relationships being strong and they will ignore enticing offerings from competitors due to loyalty and satisfaction with a product.
• Structural Relationship Marketing Programs increase productivity and/or efficiency for customers through investments that customers would probably not make themselves (i.e. customized order processing system, tailored packaging). These programs tend to offer unique benefits and require substantial setup efforts. Therefore, the customers may be reluctant to change vendors given the benefits from the relationship.

In addition to relationship marketing, other factors such as the customer, salesperson, and selling firm may influence the exchange performance in B2B customer interactions. Customer commitment to a selling firm is based on the customer's willingness to maintain a relationship with the firm and consider the partnership valuable. The customer's perception and interaction frequency are key factors in determining how long the relationship will last. "A customer's sales growth can lead to increased selling firm sales" (Palmatier, Gopalakrishna, & Houston, 2006, p. 480). It has been found that a salesperson's ability and motivation are important factors to successful sales and profit outcomes. A motivated sales staff has the ability to find and close opportunities for new relationships, which equates to increased profits. If the customer is satisfied with the sales staff's performance, it can lead to a long and prosperous relationship.

Finally, there are opportunities for a selling firm to utilize indirect and direct efforts to develop and secure customer relationships that will yield a significant profit. Palmatier, Gopalakrishna, and Houston (2006) identified different techniques to measure how effective the direct and indirect efforts were in securing successful relationships.

• Direct efforts — The use of customer relationship management (CRM) is assessed, which would require a strategic approach to creating shareholder value by developing relationships with key customers and customer segments through the use of data and information technology. Access to the customer database will allow organizations to target their efforts more effectively.
• Indirect efforts — Average tenure of sales force at the organization is reviewed because tenure results in stronger customer relationships, fewer customer defections, and more customer specific knowledge which can minimize customer turnover and enhance profits.

Application

Key Account Management

Many organizations have seen the advantages of having a key account management strategy for marketing their products and services. "Key account management (KAM) involves targeting the largest and most important customers and providing them with special treatment in the areas of marketing, administration, and service" (Arnett, Macy & Wilcox, 2005, p. 1). Organizations have found a niche where they can provide a holistic approach to satisfying the needs of their client base. They have positioned themselves so that they can satisfy their customers from the beginning of the process to the end. KAM has become popular as a result of customers placing demands on suppliers (Moon & Armstrong, 1994) and organizations realizing the importance of relationship marketing and its emphasis on customers (Morgan & Hunt, 1994).

One of the most important factors in a successful KAM strategy is the core selling team. The core selling team is a group of individuals who have been assigned to a particular customer and are responsible for developing a sales campaign for that client. Most of the research on selling teams focuses on personal selling and sales management. However, the relationship between core selling teams and key customers can be viewed from many perspectives. Two of those perspectives are:

1. The relationship marketing perspective.

This perspective focuses on the characteristics of the core selling team-buyer relationship. This viewpoint highlights how a successful relationship is based on when each of the partners increase their commitment to the relationship (Morgan & Hunt, 1994).

2. The competitive advantage perspective.

This perspective focuses on the marketing advantages that manifest as a result of the core selling team-buyer partnership. This viewpoint suggests that organizations are able to offer more value and lower costs than rivals as a result of successful partnerships (Day, 1995).

Core selling teams can have a tremendous influence on improving the relationship with key customers. Core selling teams have the ability to effect a buyer's perception of the organization. The influences can be seen directly and indirectly in the partnership (Arnett, Macy & Wilcox, 2005).

Direct Influences

• Enhance the organization's capability to acquire and process market-related information
• Allow organizations to engage in more extensive problem-solving approaches with the buyer
• Facilitate integrative negotiation processes
• Promote increased coordination between sellers and buyers
• Increase the firm's ability to practice joint adaptation with buyers

Indirect Influences

• Provide access to the learning and knowledge embedded in the routines of the supplier

• Allow the adaptation of the supplier's processes, systems, structures, and market offerings to fit the needs of the buyer
• Increase the investment in resources by the supplier

Viewpoint

Trade Fairs in Key Account Management

Trade fairs are an important aspect in the marketing process. However, many exhibitors tend to focus on transactional exchanges. As a result, they do not take the opportunity to pursue relationships that may lead to key accounts. Many exhibitors have different reasons for pursuing relationships at trade fairs. Some may go in order to achieve immediate sales, whereas others may attend in order to build relationships and improve the company's image. Blythe (2001) defined selling and non-selling activities as selling — lead generation, closing sales, finding new customers qualifying leads and prospecting, and non-selling — meeting existing customers, interacting with existing distributors, enhancing the company image, and taking orders.

There are marketing professionals who do not believe that the non-selling initiatives yield favorable results at a trade fair. However, these efforts are usually the ones that assist in promoting key account management (KAM) partnerships. Exhibitors must began to understand that trade fairs provide opportunities for long term relationships and partnerships with key accounts. Although there may not be an immediate sale to justify the cost for the fair, there is potential to start to develop a relationship that may provide revenue that is ten times the expense of the trade fair.

Millman & Wilson (1994) developed the KAM/PPF model that could assist exhibitors in evaluating how their efforts at a trade fair could open the doors to future business. This model can be applied to large and small organizations as they determine what strategies need to be in place at each stage of the KAM relationship. Key personnel must decide what needs to be communicated to potential customers at each stage. In the beginning, the organization may focus on sending written public relations literature about the company to potential clients. However, in the later stages, the focus may be on direct conversations between key players in the process.

Table 1: KAM Development Stages & Strategies

Conclusion

Managing relationships is an important aspect in business markets, especially among business-to-business organizations. Business-to-business marketing is considered to be one the fastest growing sectors. Many professional service firms have engaged in the process, and have found the benefits can be very profitable. Filiatrault and Lapierre (1997) developed a four phase model of the relationship management process that will assist organizations in the business-to-business relationship. The four phases are before the project, at the beginning of the project, during the project, and after the project. Each phase is characterized by the following activities:

• Before the project. Evaluate quality and precision of the answer to the bid; evaluate past experience and distinctive technical competence and ability to work with people; use referrals; and improve linking capabilities.
• At the beginning of the project. Seek customer participation early; clearly define needs; assign project responsibility to only one person for both the client and the consultant; define steering committee formalities and procedures, modification, and follow-up procedures; and approve procedures to train customer.
• During the project. Assign sufficient authority to project manager; replace incompetent project manager quickly; manage steering committee tightly; closely control schedule and costs; give and receive feedback; encourage customer participation; discourage over participation; ensure quick and efficient recovery of errors; and formalize termination procedure.
• After the project. Ensure customer satisfaction and nurture relationship through guarantees, follow up visits, training of technicians and operators, and maintenance contracts; conduct surveys; and facilitate the transfer of responsibilities of project manager to operations manager within the firm by more thorough start-up procedures and extended presence of specialists and technicians (Filiatrault & Lapierre, 1977, p. 216).

Key account management (KAM) is one of the most important developments to occur in marketing strategy. By creating KAM strategies, organizations can position themselves to have a competitive advantage as well as increase their revenue and profitability. In addition, research has shown that KAM can benefit suppliers by increasing profitability, providing greater effectiveness, developing stronger relationships with key accounts, attaining goals, improving customer responsiveness and customer satisfaction, reducing conflict, and creating better business planning (Arnett, Macy, & Wilcox, 2005).

KAM strategies have changed over the years. In the 1950s, the accounts were managed by national account managers who utilized a transaction based approach. In the 1960s and 1970s, there was a shift to highlighting the need to have long term relationships. National account teams managed the key accounts in the 1960s and there was a transition to selling center teams in the 1970s. During the 1980s and 1990s, there was a shift towards having formal partnerships. The management of the key accounts was guided by category management teams in the 1980s. Core selling teams/enterprise teams took over in the 1990s and that is the stage that the field is currently pursuing. However, horizontal venture teams are expected to manage key accounts in the future, as organizations develop formal alliances with their suppliers.

Trade fairs can be used to promote the establishment of key account relationships. At trade fairs, key account managers have the opportunity to establish the first contact at the pre-KAM or early KAM stage and build partnerships and develop a common culture at the mid-KAM and partnership KAM stages (Blythe, 2002). Many attend trade fairs as a public relations tool. Some believe that by exhibiting at the trade fairs, organizations are showcasing what the company is capable of doing. As a result, the organization solidifies its position in the market as well as credibility. Attendance at a trade fair may show the market that an organization is doing well and not in trouble. In essence, attendance is a way to improve and maintain the organization's reputation and image.

In the past, many exhibitors may not be sure of the reasons why they are attending a trade fair or how to evaluate if attendance and participation was a successful initiative. Although many have attended in order to make new contacts and interact with existing customers, some have viewed attendance as an opportunity to manage conflict with established partnerships. Visitors and exhibitors have the opportunity to develop a mutually agreeable arrangement as to how the two will interact with one another. A partnership is formed and the guidelines for the working relationship are confirmed through dialogue.

Terms & Concepts

Business to Business Marketing: Business that sells products or provides services to other businesses.

Contractual Exchanges: Intermediate formal agreements, which can include a single contract or a series of contractual exchanges that include open ended contracts.

Customer Loyalty Programs: Incentive programs that reward customers.

Customer Relationship Management: The methodologies and tools that help businesses manage customer relationships in an organized way.

Key Account Management: Involves targeting the largest and most important customers and providing them with special treatment in the areas of marketing, administration, and service.

Marketing Strategy: The marketing strategy is shaped by your overall business goals. It includes a definition of your business, a description of your products or services, a profile of your target users or clients, and defines your company's role in relationship to the competition. The marketing strategy is essentially a document that you use to judge the appropriateness and effectiveness of your specific marketing plans.

Relational Exchanges: Occurs over an extended period of time, are linked together or an ongoing process, and produce long term profits.

Relationship Marketing: The strategy of establishing a relationship with the customer which continues well beyond the first purchase.

Transactional Exchanges: Focus on single short-term situations and each transaction yields a profit.

Bibliography

Agnihotri, R., Kothandaraman, P., Kashyap, R., & Singh, R. (2012). Bringing "social" into sales: the impact of salespeople's social media use on service behaviors and value creation. Journal of Personal Selling & Sales Management, 32, 333-348. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=78110795&site=ehost-live

Arnett, D., Macy, B., & Wilcox, J. (2005). The role of core selling teams in supplier-buyer relationships. Journal of Personal Selling & Sales Management, 25, 27-42. Retrieved June 6, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=17200366&site=ehost-live

Berry, L. (1995). Relationship marketing of service-growing interest, emerging perspectives. Journal of Academic Marketing Science, 23, 236-245.

Blythe, J. (2002). Using trade fairs in key account management. Industrial Marketing Management, 31, 627-635.

Borg, S., & Johnston, W.J. (2013). The IPS-EQ model: Interpersonal skills and emotional intelligence in a sales process. Journal of Personal Selling & Sales Management, 33, 39-52. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=84461728&site=ehost-live

Day, G. (1995). Advantageous alliances. Journal of the Academy of Marketing Science, 23, 297-300.

Filiatrault, P., & Lapierre, J. (1997). Managing Business-to-Business marketing relationships in consulting engineering firms. Industrial Marketing Management, 26, 213-222. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=12495756&site=ehost-live

Gundlach, G. T., & Murphy, P. E. (1993). Ethical and legal foundations of relational marketing exchanges. Journal of Marketing, 57, 35-46. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9402090911&site=ehost-live

Hunt, S. D. (1983). General theories and the fundamental explanada of marketing. Journal of Marketing, 47, 9-17. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5004947&site=ehost-live

Kotler, P. (1994). Marketing management: Analysis, planning, implementation and control, (8th ed.). Englewood Cliffs, NJ: Prentice Hall.

Millman, A., & Wilson, K. (1994). From key account selling to key account management. Journal of Marketing Practice: Applied Marketing Science, 1, 9-21.

Moon, M., & Armstrong, G. (1994). Selling teams: A conceptual framework and research agenda. Journal of Personal Selling & Sales Management, 17, 31-41.

Morgan, R., & Hunt, S. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58, 20-38.

Onyemah, V., Pesquera, M., & Ali, A. (2013). What entrepreneurs get wrong. Harvard Business Review, 91, 74-79. Retrieved November 15, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=87039867&site=ehost-live

Palmatier, R., Gopalakrishna, S., & Houston, M. (2006). Returns on Business-to-Business relationship marketing investments: Strategies for leveraging profits. Marketing Science, 25, 477-493. Retrieved June 6, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22883062&site=ehost-live

Reinartz, W., & Kumar, V. (2000). On the profitability of long-life customers in a noncontractual setting: An empirical investigation and implications for marketing. Journal of Marketing, 64, 17-35.

Sheth, J., & Parvatiyar, A. (2000). Handbook of relationship marketing. Thousand Oaks, CA: Sage Publications.

Webster, F. (1992). The changing role of marketing in the corporation. Journal of Marketing, 56, 1-17. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9302070971&site=ehost-live

Suggested Reading

Gulati, R., Bristow, D., & Dou, W. (2004). The impact of personality variables, prior experience, and training on sales agents' internet utilization and performance. Journal of Business-to-Business Marketing, 11(1/2), 153-179. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=13021067&site=ehost-live

P.M., P. (2002). B2B brand group shakeup. Catalog Age, 19, 12-14. Retrieved June 4, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=7208533&site=ehost-live

Piercy, N., & Lane, N. (2006). The underlying vulnerabilities in key account management strategies. European Management Journal, 24(2/3), 151-162. Retrieved June 7, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21266895&site=ehost-live