Managing

Personal Selling in B2B Market

 What is personal selling?
 It is a process of directly selling products/services to
customers or resellers.
 Personal selling plays dominant role in the success of
the company.
 It is the most expensive one among all the
communication tools.
 Companies spend around 10% of their overall budget
on personal selling.
 Personal Selling
 Why personal selling is important and feasible in b2b
market?
 Relatively less number of business customers
 Customers’ purchase in large quantities
 Product is generally complex and technical in nature
e.g. ERP, Air Compressor, Production System
 Several customers buy customized products
 Relationship building is important
 Buying process is more complex due to involvement of
multiple people.
 Personal Selling
 How to organized personal selling efforts in business
market?
 1. Geographical organization
 Each sales person sells all the products of a firm to all
the customers in a defined geographical area. E.g.
Pearson publication house.
 Advantages
◦ It reduces the travelling distance and minimize costs.
◦ Sales person knows all the customers and prospects.
 Disadvantages
◦ Each sales person is responsible for all the selling tasks for all
the products and customers.
◦ Sales person can choose the specific products to sell and which
customers to serve.
 Personal Selling
 2. Product organization
 Each sales person sells a specific set of products of the
firm to all the customers in a defined geographical area.
 E.g. Sun Pharma has three division – cardiac,
pedestrian, and surgery.
 Used when product is large, diverse or complex, and
sales person’s need a high level of application
knowledge.
 Advantages
◦ Sales person can develop the level of product knowledge the
enhance the value of the firm’s offering.
 Disadvantages
◦ Cost is high for developing and deploying a specialize sales
force
 Personal Selling
 3. Market organization
 Organize personal selling efforts around customers type
or industry.
 Sales person can better understand customers need and
can serve them well.
 E.g. HP has separate sales person for retailers, financial
institution, and oil and gas firms.
 Each target segment should be large enough to justify
separate sales efforts.
 Several software firm employ separate sales person for
small size and large size customers.
 Major or Key Accounts
 Business customers vary in terms of:
 1. Purchasing power e.g. order size or quantity
 2. Level of customization of products
 3. Need of value added services e.g. product
development, cost reduction, JIT.
 4. Purchase mix and order pattern e.g. regular

 All these characteristics of customers have major

impact on marketers cost to serve them and its
profitability.
 Many companies find that 80% of their
business/costs/profits comes from 20% of their
accounts.
 Major or Key Accounts
 Personal selling is the most expensive tool, so it should
be used wisely to enhance company’s profitability.
 Rather than using uniform sales strategy, marketer
should identify most important/profitable customers
and organize sales efforts accordingly.

 How to identify major or key accounts?

◦ Purchase a significant volume as a % seller’s total sales.
◦ Involve several people in the purchase (buying Center)
◦ Buy for a number of geographically dispersed units
◦ Expect specialize products and services
 Major or Key Accounts
 How to select Key accounts?
 Capacity Utilization (Order size)
 Price & Margins (Profit)
 Order Patterns (Regular orders)
 Customer maintenance costs
 Interested in long-term relationships
 How to manage the key accounts?
 Assign a Key Account Managers and a team for major
accounts, or on one account.
 Team consist of individuals from Sales, Marketing,
Finance, Logistics, Engineering and other functional areas.
 Key account manager directly reports to a senior executive
 Major or Key Accounts
 How to manage the key accounts?
Technical Service for Purchase Early access
Assistance repair and Criteria in purchasing
maintenance process

Building
Seller’ relationship by Buyer’
s Org. KAM at s Org.
Multiple
levels

Logistic/Inve Production Buying center – New purchase

ntory support urgency role & composition opportunity

Resources mobilization and Access to

cross functional coordination information

Integration of buying process of client and internal operations

of the selling firm through communication and coordination
 Role of Account Manager
 Solving Customer Problems
 Improving Customer performance
 Reducing Customer costs
 Generating profit for own company
 Traditional Selling vs. Key Account Selling
Traditional Selling Key Account Selling Focus
Focus
Sales Volume Varies Large volume of purchases by the customer often
across multiple business of the seller
Nature of Core product/service Core product/service plus customized applications
Product/Service and value-added services
Time Horizon Short-Term Long-Term

Benefits to Lower prices & higher Lower total costs; Broader set of strategic benefits
Customer quality
Information Limited: Narrow focus Extensive: Broader focus as firms share strategic
Sharing on price goals
and product features
Sales Force Maximize revenue Become preferred supplier; Lower customer
Objectives Satisfied customers firm’s total costs; Enhance learning in the
relationship
Structure of Selling Individual salesperson Many individuals from multiple functional areas
Center is primary link to on the selling side interact with counterparts in
customer organization the customer organization
Structure of Buying Purchasing Manager Many individuals within the customer
Center and a few other organization interact in making decisions and
individuals are involved evaluating the relationship
in buying decisions
 Performance Evaluation
 How to evaluate sales person’s performance?
 1. Behavior based
 Sales manager monitor and direct salespeople
activities.
 Activities: sales person’s product knowledge,
presentation and selling skills etc.
 Subjective in nature
 Used:
 When sales reps are inexperienced,
 Firm wants to control how products are presented to
customers,
 When sales reps are asked to perform more non-selling
activities.
 Performance Evaluation
 How to evaluate sales person’s performance?
 1. Output based
 Sales manager directly monitor the outcomes of
salespeople.
 Outcomes : sales volume, market share gain,
profitability, new product sales etc.
 Objective in nature
 Used:
 When skills and efforts of sales rep are directly linked
to sales.
 Sales reps are experienced
 Sales managers generally use the combination of both
behavior and output based measures.
 Deployment of sales resources
 Objective : to match sales resources to market
opportunities or market potential.
 How to deploy sales resources effectively?
 1. Define the planning and control units (PCUs) e.g.
group of customers or sales territory.
 2. Assess the market potential in each of the PCUs e.g.
sales territory
 3. Assess the selling firm’s strength and level of
existing sales resources in each PCUs. E.g. number of
sales persons or total available selling time.
 4. Position all the PCUs on the Grid (based on market
potential and selling firm's strength)
Sales Resource Opportunity Grid: Planning & Control Units
(PCU)
 Deployment of sales resources
 How to deploy sales resources effectively?
 5. Adjust the sales resources based on the market
potential, organizational strength in each PCUs.

 PCUs grid analysis is useful for:

◦ Determining the size of the sales force
◦ Territory design
◦ Allocation of sales call to customers
Thank you