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“Making Sales Technology Effective” g gy

Gary K Hunter and William D. Perreault, Jr K. D Perreault Jr.

Journal of Marketing 71, 1 (January 2007), pp. 16-34. 16 34.

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Continuum C ti

Traditional Arm’sArm’s-Length Exchange
Competitive p

Contemporary Conditions
Cooperative p

Nature of IO interface (Anderson & Narus 1990):

Distribution of relationship outcomes (Clopton 1984):

Distributive

Integrative

Temporal outlook (Dwyer, Schurr, & Oh, 1987; Ganesan, 1994):

ShortShort-term maximizing

LongLong-term optimizing

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Dimension
Salesperson’s Role (Moon & A (M Armstrong, 1994)

Traditional Conditions C diti
Gatekeeper / “Linking Pin”

Contemporary Conditions C diti
Manage key account / functional experts

Channel Power (Messinger & Narasimhan, 1995)

Manufacturer f

Retailer

Seller’s Competitive Orientation (Achrol & Kotler, 1999)

Horizontal

Vertical (network economy)

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Introduction

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1) Generating 2) Improving

revenues

sales force effectiveness

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SalespersonSalesperson-Independent (e.g. Online reverse auctions, Jap 2003)

SalespersonSalesperson-Dependent (this and other research)

Replaces or reduces sales force’s strategic significance by changing its value-added as valuea participant in firm’s go-to-market go-tostrategy

Alter sales force strategy (People, skills, processes, tactics tactics, architecture, size, etc.)

The strategic importance of driving the top line (Rust, Moorman, and Dickson 2002)
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refers to information technologies that can f f facilitate or enable the performance of sales tasks. tasks

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CRM
CRM as technology, includes IT’s that bridge w/ sales functions but also some that do not. not

Sales Technology

SFA

Sales-based CRM tools

Primarily efficiencyfocused sales technologies developed to automate sales tasks.

We W consider ST tools as the entire gamut of information technologies that id t l th ti t fi f ti t h l i th t salespeople use to perform their roles—not just the subset designed as sales-CRM or SFA tools.

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p B2B salesperson’s different uses of information technologies to build better relationships with business buyers.

Example: A P&G customer business development p p rep using scanner data to make marketing mix recommendations to a major grocery chain’s centralized buying center center.
Introduction
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Sales technology is complex, complex expensive, and its returns are ambiguous. Opportunities to build better relationships between organizations through sales technology are often unrealized. In sales organizations there’s a limited organizations, there s understanding concerning technology’s role towards improving relationship building efforts.

Introduction

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Propose, measure Propose measure, and test new sales tasks associated with forging buyer-seller relationships. p Investigate the role sales technology plays in facilitating f ili i or enabling salespeople to perform bli l l f those new tasks. Develop and test a behavioral process model using structural equation modeling.
Introduction
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Ubiquitous relationship

y paradox ( ) Roach’s p productivity p (circa 1980’s) - Some support (cf. Powell & Dent Micallef, SMJ, 1997) - Others contradict (cf. Sharda, Barr, & McDonnell, MS, 1998) Spectrum of frameworks (Hitt & Brynjolfson, MISQ, 1996)

Innovative debate over appropriate dependent variable

Typically use accounting measures like ROE, ROI, etc. Alternative example: T bi ’ q (Bh Alt ti l Torbin’s (Bharadwaj, Bh d j Bharadwaj, K d j Konsynski, ki MS, 1999) This stream of research usually employs traditional econometric modeling measuring relationship between firm spending and productivity (inputs/outputs)

“Black box” approach pp

Relevant literature

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Descriptive studies

Investigate aggregate usage of technologies (e.g., Widmier, Jackson, & McCabe, JPSSM, 2002)

Forward-looking studies that focus on new innovations

Helped prompt adoption by organizations (e g Collins & colleague JPSSM) (e.g., colleague,

Early classification schemes for sales automation Causes of sales automation failures
(e.g., Speier & Venkatesh, JM, 2002)

Helped lay foundation for conceptualization (e.g., Wedell & Hempeck, JPSSM, 1987)

Motivating sales and information technology adoption
(e.g., Venkatesh and Davis, Mgt. Sc, 2000)

Relevant literature

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How different uses of sales technology influence behaviors that may help reps build y p p stronger relationships with customers while simultaneously considering influences on administrative performance. d i i i f

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Relationship forging tasks activities that an individual in an Relationship-forging organization performs to help build relationships with external constituents. • I a more generall sense, relationship-forging tasks refer to activities conducted In l ti hi f i t k f t ti iti d t d
by boundary spanners to forge or merge their organizational boundaries with an external organization’s boundaries.

Sales technology refers to information technologies that can facilitate or enable the performance of sales tasks.
• Beyond sales automation (efficiency-focused applications) (efficiency focused • Related to CRM (IT product, but ST includes more than computer technologies) • Include new tasks enabled by technology (effectiveness-focused applications).

Introduction

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g y This research goes directly to the user to g assessments on get information technology’s value. Substantial research on factors that influence the level (and validity) of user evaluations and debate over the limitations of this approach. pp Goodhue’s task-technology fit theory and measurement is the most relevant to this research
Goodhue (DS, 1995) strongest link between information systems and performance will be due to a correspondence between tasks needs and information system/ technology functionality.

This Thi research diff h differentiates t k f ti t tasks from th t h l the technology and i d incorporates th t the human factor (including voluntary use).

Relevant literature

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Draws from six research streams:
relationship marketing,
Atuahene-Gima and Li 2002; Doney and Cannon 1997; Dwyer, Schurr, and Oh 1987; Ganesan 1994

buyer-seller relationships,
Cannon and Perreault, 1999

information technology productivity organizational learning, cognitive selling negotiations egot at o s

Hitt and Brynjolfson 1996; Bharadwaj, Bharadwaj, and Konsynski 1999 y j ; j, j, y Huber 1991; Sinkula 1994; Day 1994 Sujan, Sujan, and Bettman 1988; Szymanski 1988 Pruitt 1981; Clopton 1984; Jap 1999; 2003.
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Behavioral modeling approach

y y p Widely used to study other aspects of sales roles in interorganizational markets (c.f. Behrman & Perreault, JM, 1984, JBR 1982; Behrman, Bigoness, & Perreault, MS, 1981; Sujan, Weitz, and Kumar, JM, 1994; Singh, JM, 1998). which contrasts with the IT productivity literature that relies on secondary data which contrasts with the IT applications literature

Relies on primary data

Portfolio of sales technologies

Sales technology effects on tasks are empirically estimated
which contrasts with a user rating of the effect.
Relevant literature
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What key tasks does the salesperson perform that can be influenced by using information technology? i f ti t h l ?

What manageriallycontrollable factors motivate salespeople to use technology?

How much and how does the salesperson use technology?

What Wh t account t objectives & key aspects of salesperson performance could be influenced by one’s use of information technology, both directly and indirectly through sales tasks?
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Conceptualization & Measurement

What key tasks does the salesperson perform that can be influenced by using information technology? i f i h l ?

What manageriallycontrollable factors motivate salespeople to use technology?

How much and how does the salesperson use technology?

What Wh t account t objectives & key aspects of salesperson performance could be influenced by one’s use of information technology, both directly and indirectly through sales tasks?
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Conceptualization & Measurement

Extensive literature on salesperson performance (almost 100 years old)

• See Brown & Peterson (JMR, 1993) for meta-analysis meta analysis • Adapt measures form inventory proposed by Behrman & Perreault (JBR, 1982; JM, 1984) and widely used in the marketing and management literatures.

Relationship building Relationship-building performance with customers (external focus)

• refers to the extent to which the salesperson performs activities that cultivate a relationship that mutually benefits the selling and buying firms. • Ex: …relative to the average salesperson in similar selling situations… “working with buyers to develop a partnership that’s profitable to both firms.” 7-point , Likert, SDA to SA
• These can be viewed as new “working smart” tasks.

Administrative performance (internal focus)

• refers to the salesperson’s ability to complete required, non-selling related activities in a timely manner. t ey a e • Ex: …relative to the average salesperson in similar selling situations… “Addressing my administrative responsibilities in a timely manner.” 7-point Likert, SDA to SA
• Work experience • Work effort (“working harder”)

Covariates that predict performance (for completeness)

Conceptualization & Measurement

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What key tasks does the salesperson perform that can be influenced by using information technology? i f i h l ?

What manageriallycontrollable factors motivate salespeople to use technology?

How much and how does the salesperson use technology?

What Wh t account t objectives & key aspects of salesperson performance could be influenced by one’s use of information technology, both directly and indirectly through sales tasks?
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Conceptualization & Measurement

Share information across boundaries Sh i f ti b d i
• • • Eisnenhard & Tabarizi (ASQ, 1995): NPD knowledge sharing

Hansen (ASQ, 1999): importance of sharing knowledge across organizational subunits

Focus on integrative solutions

Clopton (JMR, 1984): critical need in interorganizational relationships to adopt a winwin (integrative) attitude instead of zero-sum (distributive) game. ( )g Jap (JMR, 1999): Pie-expansion

Conceptualization & Measurement

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g g Sharing market knowledge

Proposing integrative solutions

• refers to the extent to which individuals (salespeople) develop relevant market expertise and share their knowledge with others (their customers). • Ex: “I keep my buyers aware of market changes.” 7-point Likert, SDA to SA • refers to the extent to which an individual (salesperson) applies information and knowledge to construct and propose recommendations that are mutually beneficial to the involved parties (the selling and buying firm) firm). • Ex: “I’m good at finding opportunities that benefit both my firm and my customer’s (firm).” 7 point 7-point Likert, SDA to SA
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Conceptualization & Measurement

What key tasks does the salesperson perform that can be influenced by using information technology? i f i h l ?

What manageriallycontrollable factors motivate salespeople to use technology?

How much and how does the salesperson use technology?

What Wh t account t objectives & key aspects of salesperson performance could be influenced by one’s use of information technology, both directly and indirectly through sales tasks?
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Conceptualization & Measurement

Considered multidimensional instead of uni-dimensional construct (based on learning from previous study: JPSSM 2006) Conceptualizing dimensions
Information technology is often conceptualized as the • collection, • analysis, • dissemination, and • storage of information.

Sinkula (JM, 1994) proposed four stages of market information processing: acquisition, i i i ii interpretation, di ib i i distribution, and storage. d Using sales technology to store information (expands memory) should have temporal effects and would be better addressed through timeseries design design.

Thus, we propose and tested three dimensions:
• accessing (acquisitioning), • analyzing (interpreting), and (interpreting) • communicating (distributing).

27 Conceptualization & Measurement

Using technology for accessing information refers to the extent to which salespeople use technology to retrieve information relevant to the l l t h l t t i i f ti l t t th performance of their sales jobs.

Access

Analyze y

Using technology to analyze information refers to the extent to which
salespeople use technology to better understand the implications of information relevant to the performance of their sales jobs.

Communicate

Using technology to communicate information refers to the extent to
which salespeople use technology to transfer information both to individuals within and outside their sales organization in the f f h l b performance of their sales jobs.

Semantic differential (bi-polar adjectives) scales
Routine, frequency, emphasis, and confidence.

Conceptualization & Measurement

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What key tasks does the salesperson perform that can be influenced by using information technology? i f i h l ?

What manageriallycontrollable factors motivate salespeople to use technology?

How much and how does the salesperson use technology?

What Wh t account t objectives & key aspects of salesperson performance could be influenced by one’s use of information technology, both directly and indirectly through sales tasks?
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Conceptualization & Measurement

g gy g Factors affecting sales technology usage

Personal innovativeness, attitude toward the new ST, and facilitating conditions influence ST infusion (Jones, Sundaram, and Chin (2002) Alternative f Alt ti frameworks f adoption of i k for d ti f innovations exist ti i t Parsimony dictated constraints on model specification Social influence theory (Thibaut & Kelley, 1959)

A social influence (e g another person or group norm) can positively (e.g. or negatively influence ones behaviors (e.g. sales technology use)

Two key antecedents:

Customer’s (buying firm) IT expectations, and Sales technology training effectiveness

Conceptualization & Measurement

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FIGURE 1

Conceptual Model of Antecedents and Consequences of Sales Technology Uses and Relationship Forging Tasks Relationship-Forging

Fundamental management inputs

Type of ST uses

Relationship-forging tasks

Key aspects of performance

• Customer’s IT expectations • ST training effectiveness

• Communicating • Analyzing • Accessing

• Sharing market knowledge • Proposing integrative solutions
Individual performance factor covariates

• Relationship-building performance •Administrative performance

• Work experience • Eff t Effort

Conceptualization & Measurement

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See DeVellis (1991) Desired host firm characteristics (population generalizations): 1. salespeople conducted typical internal and external B2B sales tasks (e.g. they did not sell to final consumers) 2. ST implementation was under way, 3. variance in salesperson ST use (voluntary use) and skills, 4. management would encourage participation in responses that would be kept confidential to researchers, 5. the sales force was large enough to support statistical h l f l h i i l tests of the hypothesized relationships. Selected host firm was a well known consumer goods company well-known (not P&G, my former employer, and not the same firm used in my previous sales technology study publishing in JPSSM 2006)
Administration
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Evaluated preliminary questionnaire with host firm managers for clarity and completeness. • • Final Fi l responses rate was 79% . t We dropped 3 observations for missing data yielded an effective rate of 77% and sample size of 151.

Administration

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• 66% male •Average age was 42 (ranging from 23 to 63) • Annual salaries from $24,000 to $139,000 not including bonus pay which ranged from $400 to $ , g $ $25,000 p y per year •Average years of sales experience was 18--new hire to 38 yr veteran • Average work week: 47 hours • 17 were spent doing administrative work, • 16 interacting with customers, • 7 doing data analyses, and h i ii • 7 on other activities • The average salespeople interacting with 34 people monthly outside the selling organization and 15 people within the selling organization
Administration
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Used SEM modeling approach See Anderson & Gerbing (1988):
1. 2. 3. Fit separate CFA’s for each of the proposed scales to assess reliability and convergent validity Fit separate (one vs. two dimensional) CFA’s for scales that were most susceptible to cross loadings (e.g. two aspects of performance) Tested fit of overall structural model and size of hypothesized effects yp

Relied on following fit statistics:
Jöreskog and Sörbom’s (1986) goodness of fit index (GFI) and (AGFI) Bentler’s (1980) Comparative Fit Index (CFI) χ2 statistic with its associated degrees of freedom (and ratios) Browne and Cudeck’s (1993) root mean square error of approximation (RMSEA).

Methods

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• Construct reliability estimates • Fornell and Larcker (1981) computations •B Bagozzi and Yi (1988) criterion: over .6 i d i bl i d i i 6 is desirable • All of the constructs here exceed .71 • Worst fitting CFA fit had GFI = .94; AGFI = .90; CFI =.90. g ; ; • Item reliability estimates • Item reliabilities greater than .15–.20 (or equivalently, 15– 20 (or, equivalently squared multiple correlation coefficients greater than .38– .45) indicate internally consistency with other items comprising a scale i i l • 36 items for composite measures: • 33 have item reliabilities ≥ .30, and • all items are greater than .20 (lowest is R-scored).
Results
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• Followed conventional approach for large item surveys • Scale scores for constructs • Incorporates effect of measurement errors through model constraints
• Set error construct effects to the square root of the reliability estimate • Set the error variances to the products of the scale variance and (1 – scale reliability)

Block-recursive model required algebraic identification (Bollen, 1989; Bekker & Pollock, JE, 1986)

• Overall fit statistics indicate an excellent fit
(χ2= 37.1 (p = .17), df = 30; CFI 98 CFI= .98, RMSEA =.04, GFI = .96, AGFI = .91). 04 96 91)
Results
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• Variance explained for endogenous constructs
Technology Uses Communicating: Analyzing: Accessing: Relationship-forging tasks Sharing market knowledge: Proposing integrative solutions: Aspects of salesperson performance f Relationship-building performance: Administrative performance: • 13
Results

24% 20% 15%

30% 21%

% 57% 12%

out 15 h t hypothesized paths are significant at p. < 05 th i d th i ifi t t <.05
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FIGURE 2
Managerial inputs

Results
Types of Sales Technology Uses RelationshipRelationship-Forging Tasks
Sharing market knowledge SMC = .26

Performance Aspects

.20 (p < .05) 20 (p.< 05) Customer IT expectations

Communicating SMC = .23 .33 (p.< .001) Analyzing and better understanding SMC = .21 .23 (p.< .01)

.28 (p < .01) 28 (p.< 01)

Rel.-building performance SMC = .50

.18 (p.< .05)

Proposing integrative solutions SMC = .21 Experience

-.04 (p.= .56) Effort

Training effectiveness

-.08 (p = 34) (p.=.34) Administrative performance SMC = .12

.22 (p.< .01)

Accessing SMC = .15

.30 (p.< .05)

Standardized maximum likelihood parameter estimates. P-values for one-tailed significant tests of path coefficients. Solid lines indicate significant effects. c Model was specified as a block-recursive which produced correlations estimates of .34 between buyer IT expectations and training effectiveness, .31 between communicating and analyzing, .37 between communicating and accessing, .68 between analyzing and accessing, .71 between the relationship-forging tasks, and .48 between the two aspects of performance. 39 * Overall model fit statistics indicate an excellent fit: (χ2 = 37.1 (p = .17), df = 30, CFI= .98 RMSEA =.04, GFI = .96, AGFI = .91).
b

a

• Specification alternatives and discriminant validity • Comparisons between:
• proposed block-recursive model and one-dimensional alternatives (non-nested model comparisons via CFI and AIC), • proposed block-recursive model and higher-order constructs (nested models comparisons via χ2 difference test) • proposed block-recursive model and unrelated constructs (nested models comparisons via χ2 diff d l i i 2 difference t t) test) All tests supported block (see paper Appendix Table A1) • Item to scale composite and other scale comparisons • One double loading ( 52 and .55) >> kept for content validity double-loading (.52 55) • Common

method bias test

• Harmon’s one factor Harmon s one-factor • Same source bias test with equivalent effect constraint
Results

• No evidence of bias in estimates.

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• • •

RFTs represents an important new theoretical perspective for future research in interorganizational contexts f f t hi i t i ti l t t RFTs as new “smart-selling” behaviors in a relational context Salespeople can be viewed as value-creators in implementing a sales-service differentiation strategy. Different uses of technology have differential effects on different aspects of performance. Sales managers may increase sales technology costs yet decrease potential returns. Training and buyer encouragement represent relevant social influences on technology use that may be in conflict with each other.

• • •

Discussion/Conclusion

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• •

Standard concerns with self-reports Potential for common method bias despite absence of statistical evidence Behavioral performance measures where ideal would be truly “objective” measures (if such measures exist) Seller’s views on relationship-building performance would benefit from supplements from buyers’ perspectives Consumer packaged goods industry versus other contexts
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Discussion/Conclusion

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