Sales Excellence

The Importance of Relationship Management for B2B & B2C Sales Organizations

The Importance of Relationship Management for B2B & B2C Sales Organizations

relationship management

SALES EXCELLENCE / by Inna Hüessmanns

10. November, 2020

Strategic relationship management can help companies to obtain and sustain a significant competitive advantage – some features of its relationships that other firms cannot easily replicate.

One of the major reasons why many sales organizations do not perform well, lose their customers to competition or underperform in new business development is poor customer relationship management.

Many firms know that they are serving unprofitable customers or losing their customers to competition, but very few analyse their customer relationships on a case-by-case basis or make sufficient investments in their customer relationships on whose future they depend.

Many companies focus on developing and maintaining strong relationships with tactical customer employees, such as purchasing managers. While it is important to develop such relationships, the strategic customer relationship management approach should consider firmwide relationships – parallel linkages between functional and management areas of the company and its customers.

Successful customer relationships are crucial to the firm’s performance.

Without relationships neither companies nor their customers can continue to trade. The question which companies should answer is how to manage their customer relationships to retain competitive advantage and maintain business growth in times of COVID-19, digitalization, globalization and an uncertain business environment.

Any company has a variety of business relationships. A company’s relationship with its bank is different to that which it has with its customers. Relationships with large strategic customers will differ from those with small ones.

A good sales experience starts by getting the basics right.

Companies should examine how they are performing by asking the basic questions:

  • What are our critical business relationships?
  • Who are our strategic accounts?
  • What things are our sales people doing that could damage our critical customer relationships?
  • Do we have companywide relationships with our critical customers? Do we have a deep understanding of customers’ buying centers?

The development of successful customer relationships is vital for each company. To manage this process effectively, it is important to implement a strategic customer relationship management approach. This approach should start by identifying the strategically important relationships. The wider and deeper the company’s effectively managed customer relationships, the higher the customers’ emotional costs of switching to the firm’s competitors.

In other words, companies should begin to manage their customers as a portfolio of relationship assets.

Many companies understand that change is needed, but they do not understand how to bring about change. Sales effectiveness means performing sales activities better than competitors can perform them.

Strategic relationship management approach and a relationship management portfolio can help companies to obtain and sustain a significant competitive advantage – some features of its relationships that other firms cannot easily replicate.

Some companies have obtained a competitive advantage by developing distinctive relationships in the areas of the world that others have found difficult to penetrate. Companies must shift their focus from transactional to strategic relationship management approach to maximize customer lifetime value. The key distinction between a traditional and a strategic relationship management company is that one is organized to push products whereas the other is designed to serve customers. The traditional sales organization must be reconfigured as a strategic customer relationship management organization that puts building customer relationships ahead of pushing products and their technical features.

Organizations that have successfully implemented change management initiatives have something in common. They continuously and thoroughly assess their situations. Customers are continuously changing the way they buy and the ways in which they want to conduct business. Globalization has also lead to more complex customer relationships.

It is, therefore, necessary for companies to reexamine their sales organizations to find out what is happening there today and to be better equipped for the future.

The customer relationship management assessment tools and metrics developed by us assess the quality of company’s customer relationship management according to different criteria.

request a consultation

Share this article:

Is Your Sales Organization Becoming Obsolete?

Is Your Sales Organization Becoming Obsolete?

change

CHANGE / SALES EXCELLENCE / by Inna Hüessmanns

11. November, 2020

Changes in the marketplace can render sales organizations obsolete and make their resources and capabilities less valuable for customers.

Today, businesses operate in a global competitive environment where customers demand more value for less money, and where value propositions are short lived. The recent pace of technological innovations and disruptions increase market pressures on companies. In this environment, organizations’ ability to respond to market changes fast and effectively is crucial.

Since environmental change is continuous, companies must regularly examine their markets and their sales organizations and develop new skills and competencies. Changes in the marketplace can render sales organizations obsolete and make their valuable resources and capabilities less valuable for customers.

This obsolescence requires change. Companies’ task is to understand the root causes of obsolescence and to manage change successfully.

In addition to the market driven necessity to change, in each phase of the organizational growth companies need different sales capabilities, strategies and structures.

Like products, companies have different life cycles. What works in the start-up stages of the business may not work in the mature stages of big companies. As companies and their sales organizations grow and evolve, they must develop new capabilities and structures. In the start-up phase, many companies focus on new business development. As a result of this focus, other competencies are often ignored and the seeds for future problems can be planted.

As companies grow, their sales increase. During these success stages, companies can be blind sighted by their success. Signs of obsolescence can be neglected and no attention can be given to long-term growth strategies or internationalization strategies. In many cases, short-term planning and thinking dominate and new future problems can be born. The international expansion stages will require new sales structures and the set-up of international sales organizations. This also requires change. To cope with all these challenges, companies and their sales organizations must become agile and adaptive to change in every stage of their life cycle.

However, experience indicates that many change initiatives fail.

Companies’ ability to continuously evaluate their business from the customers’ perspective, realign resources and build new capabilities is crucial for any sales management change program. But sales change management  involves more than a customer and a market orientation. Any change initiative begins with the company’s culture. Companies must involve their frontline sales employees in their change management programs und communicate to their salespeople why change is necessary.

Change programs can have a negative impact on salespeople job satisfaction and job performance. When organizations involve their salespeople in their change initiatives at the beginning, they encourage salespeople to contribute and adjust their work approaches during the change initiatives. Sales employees should understand why change is necessary and be trained accordingly to cope with change.

During the change programs, salespeople operate in stress environments. They must understand how change will increase the effectiveness of the sales organization and lead to job security. On the other hand, if the salespeople learn that markets and customer requirements are changing but their organizations remain bureaucratic and don’t implement any change or adjust their processes and strategies accordingly, then the salespeople can become dissatisfied and less committed to their organizations.

Additionally, to be successful with change initiatives, sales organizations must not only redesign their structures, incentives, and sales strategies. Companies need to develop a learning sales organization.

A market orientation is the fundament of the agile and learning sales organization. Sales change management programs must systematically realign sales resources, competencies, and capabilities to serve customers effectively. Customer satisfaction is one of the key outcomes of a learning sales organization.

Sales organizations who are able to utilize the market information and continuously learn and adapt to change faster than their competitors will develop significant competitive advantages.

request a consultation

Share this article: