Sales and Key Account Management Flashcards
The role of sales (Piercy and Lane)
”Clearly, the tables have turned on negotiating power, and the advantage of information asymmetry is now the buyer’s.” –> Affects importance of sales person’s knowledge
The individual ”economic decision maker” is being relaced by ” committees or multiple layers of approval all equally important to the decision to move ahead. This is partly why the length of the average sales cycle keeps increasing.”
Companies reporting a sales cycle of seven months or more has increased from 18 % to almost 25 %. Also sales cycles under three months has decreased from 51 % in 2005 to 42 % in 2006.
“Sales executives understand that the new selling context has real implications for how they hire, train, manage, coach, and retain salespeople. Sales reps must now be able to dive deep, answering specific technical questions, and fly high, providing purchase-justification arguments, solid business cases, and assessments of overall performance impact.
They must provide more nuanced application knowledge and be able to “unhook” some of what buyers believe they know without alienating them.”
Effective selling (Liu et al)
Align selling practices to the situation and the buyer, but also the exchange relationship
Influence tactics
Emotional - indicates that buyers are not rational. Personal interests, aspirations and social satisfaction are influencing their buying decisions
Inspirational appeal
Ingratiation
Rational - aims at buyers value system
Recommendations
Information exchange
Coercive - damage goodwill and trust
Threats (stick)
Promises (carrot)
Take-aways from Effective selling (Liu et al.)
Do’s:
- High trust –> Emotional tactics
- High switching costs –> Coercive tactics
- High trust and high switching costs –> Rational tactics
Don’ts:
- High switching costs –> Emotional tactics are ineffective
- Low trust –> Inspirational appeals affect sales negatively
- Threats are not effective
- High switching costs and low trust –> Recommendations have negative effect
Describe:
Lawrence, J. M., Scheer, L. K., Crecelius, A. T. and Lam, S. K. (2021). Salesperson dual agency in price negotiations. Journal of Marketing, Vol. 85(2), pp. 89-109.
This PDF file explores the concept of salesperson dual agency in price negotiations in business-to-business (B2B) firms. The research conducted by Justin M Lawrence, Lisa K. Scheer, Andrew T. Crecelius, and Son K. Lam examines the role of salesperson advocacy for both the customer and the seller in achieving favorable outcomes in pricing negotiations. The study identifies key boundary conditions that enable the synergy between customer advocacy and seller advocacy. The research also provides insights into the theorized mechanisms discovered in experiments with B2B buyers. Overall, the PDF offers valuable insights on agency theory, customer advocacy, negotiations, and salesforce management in the B2B context.
Dual agency
Customer advocacy:
Look out for customer interests
Act as a customer representative
Work to do what is best for the customer
Advocate the customer’s perspective
Seller advocacy:
Explain the seller’s perspective
Present the seller’s viewpoint
Negotiate with the seller’s interest in mind
Key take-aways from Dual agency (Lawerence et al)
High level of both customer advocacy and seller advocacy lead to best outcomes
- Give sales people greater autonomy –> Reduce role stress and increase profits
- Track discount requests, approvals and sales in the CRM system
- Develop monitoring mechanisms (multiple ties) to ensure seller interest
- Solely focus on seller-advocacy is detrimental to profits
Key Account Selling
Traditional selling emphasizes maximizing revenues.
Key account selling is multi-faceted, emphasizing:
- Closer long term relationships
- Partnerships to reduce overall costs or advance performance for the customer
Consists of a Key Account Manager and a team composed of Sales, Marketing, Finance, Logistics, Engineering and other Functional Areas.
Key Account Managers may work on several accounts, or on ONE account, and will report to a senior executive.
Traditional selling vs Key account Selling
Describe:
Gupta, A., Kumar, A., Grewal, R. and Lilien, G. L. (2019). Within-seller and buyer–seller network structures and key account profitability. Journal of Marketing, Vol. 83(1), pp. 108-132.
This PDF file focuses on the relationship between within-seller and buyer-seller network structures and their impact on key account profitability. It explores the challenges faced by key account management (KAM) selling teams in gathering and exchanging information with buyers to uncover their needs. The article emphasizes the importance of functional ties in buyer-seller networks, which enhance profitability under various conditions. It suggests that the richness of information about buyer needs, facilitated by similar function ties, may be more important than simply the amount of interaction facilitated by density. The theoretical and managerial implications of the study’s findings are also discussed.
Explain the model
The conceptual framework presented in the PDF file explores the relationship between within-seller and buyer-seller network structures and their impact on key account profitability. The framework consists of several key components and hypotheses:
- Within-Seller Network (Information Utilization):
- H1: The greater the richness of information utilization within the seller firm network, the stronger the positive association with key account profitability.
- H3: The greater the coordination of information utilization within the seller firm network, the weaker the negative association with key account profitability.
- H4a,b: The greater the richness of information utilization within the seller firm network, the weaker the negative association with key account profitability for low and high levels of centralization, respectively.
- H5: The greater the richness of information utilization within the seller firm network, the stronger the positive association with key account profitability.
- Buyer-Seller Network (Information Exchange):
- H2: The greater the richness of information exchange in the buyer-seller interfirm network, the stronger the positive association with key account profitability.
- H6: The greater the capacity of information utilization in the buyer-seller interfirm network, the stronger the positive association with key account profitability.
- H7: The greater the richness of information exchange in the buyer-seller interfirm network, the stronger the positive association with key account profitability.
- H8: The greater the cross-functional ties in the within-seller firm network, the stronger the positive association between similar function ties in the buyer-seller interfirm network and key account profitability.
The framework suggests that the richness and coordination of information utilization within the seller firm network, as well as the richness and capacity of information exchange in the buyer-seller interfirm network, play crucial roles in determining key account profitability. Additionally, the presence of cross-functional ties within the seller firm network enhances the positive association between similar function ties in the buyer-seller interfirm network and key account profitability.
Actions (Gupta)
