ICRM 2013

IIT Delhi

The Future in B2B is Personal Selling

Chandrasekar Iyer

Abstract
Marketers perceive aspects such as product pricing, product features et cetera as competitive advantages.
However, in an era with reduced barriers to information access and an increased ability to reverse engineer, it
is not easy for any organization to just leverage the first movers advantage for a long period of time. The time
to replicate a successful product or a solution is steadily reducing. This is leading to commoditization of
products and services in many industries. Few organizations are able to command the kind of margins that
they once used to. The paper aims to underscore the importance of personal selling and sales force management,
especially in the B2B sector. The paper shall primarily focus on why the first-movers advantage is very hard
to sustain, the concept of Value Creation Selling (VCS), the role of sales force in new product development,
and an innovative approach to sales force management. Peter Drucker asserts that The aim of marketing is to
make selling unnecessary. However, when the realities of doing business in a competitive market are taken
into account, the sales force becomes an important ingredient for success of an organization. Furthermore, the
author believes that after a decade, product/solution differentiation will be really difficult in the B2B segment.
Customer rapport and personal contacts will determine which organizations shall succeed in the market place.

Keywords
First-mover advantage: the benefit enjoyed by a firm as the consequence of its early entry into a new market.

VCS: Value Creation Selling.

VAP- Value Account Plan: A detailed plan that describes how the sellers solution would benefit the
customer.
B2B: Business-to-Business.
B2C: Business-to-Consumer.
Influencers: Influencers are those people who influence the final decision makers.
Customer champions: People from individual verticals having additional responsibility of assisting
sales with VAP.

Proposals Management

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Main Text
Why is first-movers advantage hard to sustain?
A first mover strategy will not be sustainable unless one or more of the following market
characteristics is present: (1) appropriable technology, (2) pre-emptible resources, (3) customer
switching costs, (4) network effects. To be successful, a first mover must exploit these characteristics
to defend against competition from follower firms. (Marvin Lieberman, Not known)
Let us discuss appropriable technology and pre-emptible resources in detail.
Appropriable technology:
Organizations aim to develop a proprietary product or solution to address customer requirements.
They then take advantage of the lack of competition to command a good premium on their products
and solutions. For example, organizations such as Xerox Corporation Limited and Pilkington Group
Limited were able to leverage their first mover advantage for a considerable amount of time. However,
in recent times, we can hardly think of any such examples. For example, in 1998, Goto.com, a small
startup (later Overture, now part of Yahoo!), created the pay per click search engine and advertising
system and gave a demo of the same at the TED conference. It was not until October 2000 that
Google offered its version of a pay per click advertising system AdWords -allowing advertisers
to create text ads for placement on the Google search engine (Steve Blank, 2010). Googles pay per
click is a much more successful tool than AdWords. Thanks to the internet and an easy access to
technology, a late entrant or a fast follower is easily able to come out with a product that is at least
as good as the first-movers product.
Pre-emptible resources:
In some markets, superior resources can be acquired preemptively by the initial entrant. These include
raw material inputs, geographic locations, and potentially, positions in consumers perceptual space
(Marvin Lieberman, Not known). In the early days, when there was a dearth of such resources, such
an early acquisition was surely a competitive advantage. However, in todays world it is not a real
competitive advantage in most cases. Let us take the example of acquisition of quality engineers in
India. In 1960s & 1970s, there was a dearth of quality tier-II engineering colleges. Consequently,
companies wanted to hire from IIT (Indian Institute of Technology). However, there has been a rise
in the number of good quality tier-II engineering colleges in India. The quality of output gap between
the IITs and top 20 engineering colleges in your survey has closed considerably within the past few
years. As a result the best students of top-ranked tier-II engineering institutes are as knowledgeable
and industry-ready as the average IIT graduate and sometimes even more so. This is a very promising
and welcome development of the past few years, says Govil, an alumnus of XLRI, Jamshedpur
who worked with GE and ITC prior to signing up with Wipro in 2009 (Dilip Thakore, 2013). Thus,
the difference in the quality of an average engineer from IIT (Indian Institute of Technology) and
that of an average engineer from tier-II college fails to confer a profound strategic advantage to the
first-mover.
Similar arguments can be extended to why customer switching costs and network effects do not
necessarily constitute a compelling competitive advantage. Thus, in general, an organization cannot
just leverage the first-movers advantage for a long period of time. Now, we shall look at why the
selling function is of utmost importance for any organization.
The increasing expectations from sales:
In the last decade, the challenges facing sales personnel have increased by leaps and bounds. Earlier,
the customer depended primarily on the sales personnel to get information about the companys
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products and services. However, with the advent of internet, this dependency has decreased
drastically. A large number of customers do a substantial amount of research about the sellers
products from the company website. So, many customers now approach the sales people just before
the purchase or after finalizing the product or solution requirements. Thanks to the internet, the
world is now an extremely connected place. Many customers write product feedbacks on the internet.
Other customers who read these product reviews trust them since the reviews are written by people
with similar needs. Thus, initially, it was sufficient for the sales force to have a superficial knowledge
of their products and solutions. However, now-a-days, in order to deal with a knowledgeable
customer, the sales force needs to possess a thorough knowledge of its products and solutions. The
sales has an additional responsibility of setting right any biases that the customer may have formed
about the sellers products and services while researching on the internet, or during the interactions
with fellow customers.
Furthermore, in the 1950s & 1960s there were few vendors to choose from. Hence, companies were
almost forced to go with these vendors. Thus, the sales force was more involved in booking orders
and ensuring that delivery happens on time (Ram Charan, 2008). However, post-liberalization, we
have many global players in almost all industries where profits can be made. Let us take the example
of the automobile industry. When Hyundai Motor Company entered the Indian Automobile
Market in 1996 the Hyundai brand was almost unknown throughout India. For more than a decade
till Hyundai arrived, Maruti Suzuki had a near monopoly over the passenger cars segment
because TELCO and M&M were solely utility and commercial vehicle manufacturers, while
Hindustan and Premier both built outdated and uncompetitive products (Wikipedia). In less than 2
decades, Hyundai has gained a substantial market share. In the overall passenger vehicle market,
Maruti Suzuki had a share of 39.12% in FY13; more than double that of Hyundais 14.27%. In the
first quarter ended June, both firms increased their market share to 40.38% and 15.67%, respectively
(Ketan Thakkar, 2013). As of today, the Indian consumer can choose from Maruti, Hyundai, Skoda,
and Ford- just to name a few. This exemplifies the number of options that customers have today. In
summary, sales people now have increased competition from many reputed global and local players.
Also, customers are looking for problem solvers or trusted advisers who can solve their problems.
The sales force is gearing up to this new challenge.
Sales Framework:
After analyzing many successful sales people, the author concludes that successful sales people are
those who are able to build trust with their customers. There may be other ways to win customers
trust. However, the author proposes VCS (Value Creation Selling) as one of the most innovative
ways to become the trusted advisors of your customers and increase your market share. The heart of
the new approach to selling is an intense focus on the prosperity of ones customers. Generally, sales
people tend to focus on having a profitable transaction with their customers. Hence, it is worthwhile
to note that this is a radically different approach to the traditional sales approach (Ram Charan, 2008).

The author vouches for the following action items as part of VCS:
1. Know your customer:
Sales people generally think that knowing the customers organization chart is tantamount to knowing
the customer. However, this is far from the truth. Now-a-days, organization charts are easily available
even on the internet. Thus, a company need not invest in the sales force in order to have such a
superficial knowledge. The sales person should know who the decision makers are, where the budget
is going to come from amongst other things. Also, the sales person should know the short-term and
long-term goals of the customer (Ram Charan, 2008). Short-term can be defined as say a period of 6
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months and long term can be defined as say a period of 3 to 5 years. For example, the short-term
goal of a company could be to improve its profitability and long-term goal could be to enter a new
market. However, it is not easy to obtain such crucial information. Based on the authors personal
experience, the author vouches that the sales force plays a major role in ferreting out this crucial
information. Typically, in B2B sector, the sales can get this kind of information after visiting the
customer for a sustained period of time. This rich mine of data shall surely help the sales force offer
a solution tailored to the customer needs. It would not be incorrect to say that without the sales force
or deployment of personal selling, it would be impossible to get such crucial information
2. Know the customers customer:
The ultimate objective of any company is to satisfy its customers. Thus, helping ones customer to
please its customer will surely increase the probability of making a successful sale (Ram Charan,
2008). Let us take an example of ABC Limited (name changed), which supplies IC (Integrated Circuits)
to Intel technology India Private Limited, which in turn supplies its assembled mother-board to
Dell. Intel may be interested in making a chip that is sleek with low energy consumption. Dell,
however, may be interested in providing very fast processing machines to its consumers. So, if
ABCs chip is sleek but not fast, then Dell may start looking out for Intels competitors such as AMD.
Thus, it is absolutely essential for the sales force to understand both Intels and Dells requirement
and make a chip that appeals to both.
3. Have a VAP (Value Account Plan) for each sale:
Translating the customers needs into a unique offering with well-defined business benefits is the
crucial difference between value creation selling and the traditional approach to selling. The benefits
could be qualitative such as improved brand image or quantitative such as cost reduction. As
explained earlier, the VAP must address the entire value chain i.e. the entire chain from the immediate
customer to the final consumer or the end-user. Let us look at a very interesting example of Thomson
Financial, one of the several players providing software for traders. Its software, like that of its
competitors, allowed traders to find and display market information almost instantaneously. The IT
purchasers could not find anything unique in Thomson Financials software. Hence they started
pitting Thomson Financial against their competitors, leading to a pure price war. Thomson Financial
realized that the only way to succeed is to sell its unique features to its customers. Consequently, the
sales people started closely monitoring the value chain. This prompted the sales people to differentiate
between the IT departments that were purchasers of its software product and the end-users: the
traders who use Thomsons software. Upon engaging closely with the traders, the sales people at
Thomson realized that the USP (Unique Selling Point) of Thomsons software was that it gave the
traders the ability to manipulate all the available information and juxtapose it to make better decisions.
This feature not only enhanced the efficiency of the traders but also enhanced their effectiveness
(Ram Charan, 2008). When the sales people started selling this feature of their software the sales
peaked. This example gives us a very important insight: Thomson did not invest tens of thousands
of dollars in Research and Development (R&D) to add new features to its product or develop a new
product. Rather, it used its sales force to understand the customers needs and effectively
communicate how its software addressed that need. This is the power of VAP.
4. Create multiple interfaces between the sellers & the customers organization:
Generally, sales people tend to focus on few key people or departments from the customers
organization. For example, sales people tend to focus extensively on the customers purchasing
department. However, such focus may do more harm than good. Now-a-days, buying decisions are
rarely made in isolation. An eclectic group- may be from purchase, engineering, marketing- makes
the final buying decision. Therefore, a sales person must interface with all possible decision makers
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and influencers. This kind of contact also helps to garner a larger share of the customers wallet. Let
us take the example of a consumer good packaging company. Though the purchase team may be
interested in the final price of the product, the marketing team may be interested in how the packaging
affects the use of the shelf space at the retailer, and the senior management may be interested in
sustainability and thus being green. Thus, a solution that is recyclable and uses a smaller shelf space
is more probable to a command a premium (Ram Charan, 2008).
Furthermore, it is important that the sales person establishes multiple contacts between his and the
customers organization (Ram Charan, 2008). This leads to an easy exchange of data between the
organizations. An engineer or a lawyer is much more comfortable talking to his counterpart. The
lawyer from the sellers organization should interact with the lawyer from the buyers organization
so that the niceties of a contract can be ironed-out long before the sale is finalized. This will lead to
shorter negotiation cycles. Also, the more the number of interactions, the more the customer opens
up with his pain points. This increased knowledge helps to build a stronger VAP.
Also, the sales team must take the lead and tap the expertise of people from different departments
such as engineering, production, manufacturing etc. to create a VAP for each sale- which clearly
explains how the customer will be benefitted from the sellers solution (Ram Charan, 2008).
5. Understand implicit cues:
It is very important to understand the customers implicit cues during the sales visits. For example,
if a customer repetitively asks a sales person whether he has sold this solution before, then it shows
that the customer is risk-averse: he will prefer a tried-and-tested solution. Here, it is important to
reiterate that the solution is a standard one. On the other hand, there are customers who want to
introduce a new product or solution in their offerings. It is important to offer the latest innovative
products to such customers. Thus, the sales person should look for such cues and reiterate what the
customer wants to hear during their conversations. This is something that comes only out of
experience and practice.
Role of sales in strengthening existing products and new product development:
The author contends that the customer is much more open to give a subjective feedback of the
product or solution after the sale. And there is no other function in an organization that can tap this
source of knowledge other than the sales. After using the product for some time, the customers
typically tell the sales people that Feature A would have helped the customers to do their tasks
more efficiently. This valuable feedback can then flow from the sales back into the product marketing
function, which takes care of incremental innovations and new product development. This is a very
economical and effective way to have an incremental product innovation or new product
development especially for SME (Small and Medium Enterprises), which generally do not have the
same financial muscle as an MNC (Multinational companies) (Centre for Entrepreneurship, SMEs
and Local Development).
The job, not the customer, is the fundamental unit of analysis, say Clayton M. Christensen, Scott
Cook, and Taddy Hall (Clayton M. Christensen, 2006). The author completely endorses this statement.
Customers want to hire a product to do a job, or, as legendary Harvard Business School marketing
professor Theodore Levitt put it, People dont want to buy a quarter-inch drill. They want a quarterinch hole! It is therefore absolutely important for an organization to know how their products are
being used by the customers. The sales person is the one who can observe how the customer is using
the companys products during his regular sales visits. Let us understand the importance of such
knowledge with an example. In the automation industry, power sockets are provided in the
automation panels for low power consuming units such as electric lamps. However, the laborers in
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the plant tend to use these sockets for high power consuming applications such as welding. This can
potentially damage the automation products housed in the cabinet, thereby tarnishing the brand
name of the automation vendor. This kind of brand erosion can be averted by the sales person.
During his regular sales visits, the sales person can notice such unforeseen usage and inform his
product engineering team to do necessary modifications so that the welding machine would not
work. Thus, the sales people not only play an important role in new product development but also
play an important role in strengthening the companys product and brand name.
A company that has successfully deployed personal selling:
Let us take the example of Eureka Forbes. Electrolux brought the Eureka brand to India in 1981
through Eureka Forbes, a joint venture with Forbes Gokal Limited (Umesh Kumar, Not known).
The company is considered a pioneer in direct selling. The company positioned its sales people as
Eurochamps, a friendly person from Eureka Forbes who is set out to solve the customers problems.
The Eurochamps forged excellent rapport with their customers- primarily housewives who were
tired of the traditional cleaning process. Each Eurochamp demonstrated the superiority of his or her
solution by giving live demonstrations at individual households. Through personal interactions,
the Eurochamps could understand the pain points or apprehensions of their customers. Customers
were worried that the Eurochamps were only interested in making the sale and may not support
them for post-sales issues. The Eurochamps sensed this apprehension and informed the same to
their management. The Eureka Forbes management took notice of this and subsequently, Eurochamps
started reinforcing the thought that A relationship does not end with a sale, It actually begins
(Umesh Kumar, Not known). It was only after such an assurance that the product sales started
picking up. True, Eureka Forbes had a good product. However, the author contends that it was the
sales acumen of the Eurochamps- to sense the customer apprehensions and tailor a branding strategy
to win the trust of the customer- that made the product such a huge success. Thus, Eureka Forbes is
a classical example of a company that used its sales people to build trust with its customers.
Sales Management:
Sales management as the term implies means management of sales. Often it is considered
synonymous with the management of personal sales. It involves an understanding of the effort that
goes into the management of the sales force and the various processes of sales. Sales management
initially was meant to be the direction of sales force personnel. Later the term took on a broader
significance apart from personal selling and the term sales management included managing of all
the sales related activities including below the line advertising, sales promotion, physical distribution,
pricing and product merchandising (Sales Management, IIM Lucknow).
There is already a lot of material available on sales management. Based on his personal experience,
the author shall propose very few very effective sales management strategies.
1. Link post-sale customer satisfaction with sales compensation:
Generally, sales compensation is tied to the revenue generated by the sales staff. Consequently, the
sales people are mostly interested in maximizing their sales. Few are concerned about the satisfaction
levels of the customers after the sale. This can really prove costly. In B2C sector, because of such
dissatisfaction, the sellers organization may lose only a handful of customers. However, in the B2B
sector, such dissatisfaction can prove really costly since a single customer buys a variety of products.
For example, Thermax Limited, a company well known for its boilers, needs a slew of industrial
products such as motors, drives, DCS, PLC etc. Dissatisfaction with the motor business unit of the
sellers organization can have a domino effect on the sales of drives, PLC etc. Thus, having a sales
target for post- sale customer satisfaction will force the sales force to address customer pain points
and thereby increase the chances of repeat orders.
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2. Enhance the application specific knowledge of the sales force:

Most sales trainings in the B2C as well as the B2B sector focus on how to sell the product. Thus, sales
people are taught the advantages of their products vis--vis the competitors products. However, in
order to succeed in todays cut-throat competition, it is also absolutely important to know why the
customer is buying the product and how the customer is going to use the product. Let us take a real
life example for this. Typically, B2B sales are governed by the technical specifications that come
along with the enquiry. Let us again consider the example of ABC Limited (name changed) that sells
its Analog to Digital convertors to Intel Technology India Pvt. Ltd. Let us assume that the specifications
call for a conversion resolution (the number of output levels a converter can quantize a signal to; the
higher the resolution the better) of 16 bits and that ABC Ltd can offer only 15 bit resolution. Lets
assume that XYZ Limited (name changed), which is a competitor of ABC Ltd, can offer a resolution
of 16 bits. If the sales person of ABC Ltd. does not know the application of his convertor, then XYZ
Ltd. surely has the upper hand in this case, and ABC Ltd. has to fight solely on price. Now, let us
assume that the sales person knows where and how his Analog to Digital convertor is going to be
used. Then, he can have many arguments to the customer such as: As per the final product design,
ABC Ltds converter is going to be connected in series with PQR Ltds converter, which can offer a
resolution of only 14 bits. Hence, the net resolution of the designed system is 14 bits. This kind of
argumentation is generally accepted and in fact appreciated by the customer. Thus, the onus of
training the sales people must lie with the sales managers, the marketing team and the engineering
team (in case of technology companies).
3. Empower the sales force by appointing customer champions:
As mentioned earlier, the sales person is the ideal candidate to take the lead in preparing the VAP
(Ram Charan, 2008). However, the author would go a step further and appoint customer champions
within each function. For example, a B2B technology company typically has many functions such as
engineering, manufacturing, marketing and sales. The author proposes that organizations appoint
one or two customer champions from each function who, apart from his normal reporting lines,
shall also report to the sales person. Lets us again consider the example of ABC Limited, one of the
standard vendors of Intel Technology India Private Limited. So, the sales person of ABC Limited,
who is responsible for Intel, shall have one customer champion from marketing, engineering and
production. The role of a customer champion is to help the sales person during the preparation of
VAP by garnering information within his function i.e. a customer champion from manufacturing
shall collect the customer benefits of the companys solution from his manufacturing colleagues.
Thus, in this approach the sales person need not engage with all the employees since he shall get the
necessary information from the respective customer champions. This additional time can then be
used for customer visits. Also, the incentives of the customer champions must be tied partially to the
feedback from the sales person and the overall sales achieved. This will force the customer champions
to take their roles seriously. The appointment of customer champions shall have one more benefit:
increased customer orientation in non-sales functions. Many organizations have function or vertical
specific goals. For example, a production team has a target to minimize inventory. However, with
the continuous interactions with the customer champions even the production engineers shall slowly
but surely develop a passion to provide more value to the customers.

Conclusion
In summary, the author concludes that though product innovations shall happen at a break-neck
speed, the benefits from those innovations shall be short lived. Only those companies that invest in
nurturing good personal contacts shall thrive in the market place. Furthermore, the author contends
that after a decade, personal selling and sales management will become one of the most important
competitive advantages in the B2B sector.
P.S: The view-points of the author are personal. The authors organization does not endorse them.
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References
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