Comprehensive Study Notes: International Business Studies - Sales and Customer Management
Definition and Fundamental Concepts of Sales
Verbatim Definition of Sales: The term "sales" refers to all activities involved in selling a product or service to a consumer or business.
Practical Scope: In practice, sales encompasses sourcing prospects, building relationships, and providing solutions for customers. While teams are measured by monthly quotas and benchmarks for converting leads and closing deals, the primary goal is "solving for the customer."
Marketing-Sales Relationship: Marketing and sales functions processes differ but both impact lead generation and revenue. Research suggests salespeople source approximately of their leads from marketing efforts.
Key Sales Terminology:
Salesperson: An individual performing all activities associated with selling. Synonyms include sales associate, seller, sales agent, and sales representative (rep).
Prospect: A point of contact at a company that a salesperson intends to target using techniques like warm calls, email outreach, and social selling.
Deal: Represents the product or service offered and its associated price. Deals move through multiple stages tracked in a CRM.
Sales Pipeline: A visual representation of the stages in a sales process, showing where prospects reside in the sales cycle.
Sales Plan: Outlines goals, objectives, strategies, target customers, market conditions, revenue targets, pricing tactics, and team structure.
Specialized Sales Approaches and Case Examples
Inside Sales: Selling from within the company office using remote engagement (phone, email, internet). Processes are often leaner and more automated with structured hours.
Example: AT&T: Inside sales reps contact leads to uncover needs for phone, internet, or TV services and close deals using sales software.
Outside Sales: Also known as field or door-to-door sales, involving face-to-face deals outside the company. These teams have more freedom to develop independent strategies.
Example: Medtronic: Reps for medical-grade equipment travel to meet medical professionals and administrators at hospitals or conferences to build relationships and match products to needs.
B2B (Business-to-Business) Sales: Companies selling to other businesses. Transactions usually have higher ticket values and complex terms as products are essential to the buyer's operations.
Example: GetAccept: A sales enablement platform that works with other sales managers to create long-term revenue-generating clients.
B2C (Business-to-Consumer) Sales: Transactions between a company and individual consumers. These involve lower price-values and higher volumes of variety.
Example: uPack: A moving company that uses digital ads to offer free quotes, with B2C reps enticing customers via lower prices and faster service.
eCommerce Sales: An online-only model where customers research and purchase without human engagement. This grew by more than in .
Example: Kissed By A Bee: Provides herbal remedies and beauty products through targeted digital marketing and an online storefront.
Direct Sales: Individuals selling one-on-one to consumers outside traditional retail, often for commission (e.g., real estate or network marketing).
Example: Telfar: A digital fashion business selling unisex bags only online, bypassing department stores and creating a high-demand secondhand market.
Account-Based Sales: Serving large enterprise accounts with multiple points of contact. The team manages the lead through to customer success to increase Lifetime Value (LTV).
The Sales Organization: Responsibilities and Role Hierarchy
Core Responsibilities:
Direct Sales: Personal contact (face-to-face, phone, video) involving sales conversations, negotiations, and formalizing deals.
Maintaining Customer Contacts: Focused on Relationship Management (regular contact), Aftercare (technical support), Satisfaction Follow-up, Cross-selling/Up-selling, and informing customers of new offers.
Customer Acquisition: Identifying, qualifying, and approaching leads to expand the customer base and market position.
Campaigns: Strategy development, campaign execution (advertising/events), and result analysis.
Sales Roles and Positions:
Inside Sales Representative (Operational): Handles administrative tasks, phone/email/chat inquiries, and supports the outside team.
Commercial Employee (Tactical/Supportive): Bridges sales, marketing, and customer service; assists with quotes and market research.
Sales Representative (Field/Operational): Focuses on long-term relationships, navigating a specific region or customer group through visits.
Outside Sales Representative (Field/Operational): Similar to the sales rep but with a more aggressive, short-term focus on closing deals.
Account Manager (Strategic): Focuses on key accounts to maximize revenue per customer and ensure satisfaction.
Sales Leader (Managerial): Directs, coaches, and motivates the team; manages daily operations.
Sales Manager (High Management): Develops the overall sales strategy, manages budgets, and reports to executive management.
Organizational Structures for Sales Departments
Geographical Division: Dividing the market into zones (postal codes, cities, countries).
Pros: Travel optimization, clear division, regional networking.
Cons: Requires salespeople to have extensive knowledge of the entire product range.
Product-Based Division: Used for complex or diverse product lines where reps become specialists.
Pros: In-depth product expertise.
Cons: Inefficient travel; multiple reps may visit the same customer, hindering cross-selling.
Customer-Centric Division: Assigning reps to specific customers (e.g., A, B, and C classifications).
Pros: Optimal response to individual customer needs.
Cons: Higher travel costs; potentially less developed product knowledge across different segments.
Market-Oriented Division: Focuses on segments like industries (hospitality vs. retail) or types (B2B vs. B2C).
Pros: Tailored strategies for specific target audiences.
Cons: Difficulty in delineating work areas; potentially less specialization in specific products.
Functional Division: Split by tasks, such as Inside Sales vs. Field Sales.
Pros: Simple, clear, and specialized by task efficiency.
Cons: Less customer focus; risk of departmental silos.
Sales Planning and Objectives
Operational Sales Plan Components:
Sales Forecast: Predictions based on historical data and market trends to plan resources.
Sales Objectives: Specific goals (revenue, volume, market share).
Strategies/Tactics: Analyzing the current situation to determine how to increase sales (e.g., new markets, loyalty programs).
Activity Planning: Timelines for visits, demos, and marketing support.
Resources: Assessing personnel, budget, tools (CRM), and training needs.
Levels of Objectives:
Strategic ( Years): Long-term vision (e.g., total market share growth).
Tactical ( Years): Concrete actions (e.g., increasing customers in a specific region by ).
Operational (Short Term - Weeks/Quarters): Daily tasks (e.g., calls/week).
SMART Criteria: Specific (clear), Measurable (trackable), Achievable (realistic), Relevant (aligned to mission), Time-bound (deadline).
Assortment Policy and Product Classification
Assortment Hierarchy:
Core Assortment: Best-selling, essential products.
Peripheral Assortment: Complementary items (e.g., locks in a bike shop).
Supplementary Assortment: Profit-boosting, temporary, or seasonal items (e.g., gardening tools in a supermarket).
Assortment Dimensions:
Width: The number of different product groups/categories.
Depth: The number of variants (brands/sizes) within a product group.
The Pareto Principle ( Rule): Approximately of an assortment is typically responsible for of revenue.
Product Classifications (Buying Effort):
Convenience Goods: Routine, low-effort purchases (e.g., bread).
Shopping Goods: Comparison-based purchases (e.g., clothing).
Specialty Goods: Rare, high-research purchases (e.g., cars).
Unsought Goods: Postponed or unknown items (e.g., smoke detectors).
Economic Classifications:
Necessary (Primary): Essential items (water, vegetables).
Luxury (Secondary): Income-dependent items (cookies, travel).
Inferior: Items purchased less as income rises (e.g., supermarket bread vs. bakery bread).
Indifferent (Independent): Demand remains steady regardless of income (e.g., salt).
Assortment Affinity and Branding
Assortment Affinity Types:
Consumption Affinity: Items used together (Complementary like coffee/creamer; Follow-up like printers/cartridges; Substitution like different apple varieties).
Production Affinity: Items produced similarly (leather bags and belts).
Purchase Affinity: Items bought in a similar manner (supermarket selling batteries and meat together).
Other Affinities: Size, Brand, Theme (Christmas), Color, Age (Toddler vs. Junior), Price, and Style (Modern vs. Baroque).
Brand Types:
Manufacturer’s Brand: Created by the producer (e.g., Unilever brands like Unox).
Umbrella Brand: One brand name for all products (e.g., Philips, Sony).
Individual Brand: Unique names for every product under one house (e.g., Ola under Unilever).
A-Brands: High quality, high price, high status, extensive promotion.
B-Brands: Good quality, price roughly lower than A-brands.
C-Brands: Low price, low awareness, often bottom-shelf placement.
Retailer/Private Label: Store-owned brands (e.g., AH Basic, HEMA house brand).
Sanitizing and Trading:
Sanitizing: Removing low-performing items from the assortment to make it "healthy."
Trading Up: Adding more expensive variants to improve image (e.g., Aldi selling Coca-Cola).
Trading Down: Adding cheaper variants to attract new customers.
Cannibalization: When a new (often cheaper) item reduces the sales of an existing item (e.g., digital vs. print newspapers).
Demand, Buying Behavior, and DMU
Types of Demand:
Initial Demand: First-time purchase.
Additional Demand: Buying an extra of a product already owned.
Replacement (Replace) Demand: Replacing an existing item.
Expansion Demand: When initial and additional demand happen simultaneously.
Final Demand: Direct consumer request for an end product.
Derived Demand: Demand for industrial inputs driven by final demand (e.g., demand for planes drives demand for aluminum).
Customer Typologies (DAS Principle):
Dominant: Direct, straightforward, poor listener, fast decider. Approach: Be to the point and tangible.
Aloof (Afstandelijk): Measured tone, detail-oriented, seeks certainty. Approach: Be thorough with detailed knowledge/data.
Social: Friendly, warm, seeks attention/approval. Approach: Be personal, friendly, and non-threatening.
The Decision Making Unit (DMU):
User: Employees who use the product.
Influencer: Provides advice based on experience.
Gatekeeper: Controls information flow (e.g., secretaries, assistant buyers).
Decider: Makes the final choice (e.g., CEO, Buyer).
Buying Situations:
New Task Buy: First-time purchase; high information need.
Modified Rebuy: Existing product but with new specifications needed.
Straight Rebuy: Routine reorder with no changes.
The Sales Funnel and Customer Value
Sales Stages in the Funnel:
Suspects: Target audience with no contact yet.
Leads: Showed interest (e.g., newsletter sign-up).
Prospects: Qualified leads ready to buy. "Hot" (short-term) vs. "Cold" (long-term).
Order: The conversion into a customer.
Jay Curry’s Customer Pyramid:
Top (): Generates of revenue.
Large (): Generates of revenue.
Medium (): Generates of revenue.
Base (): Consists of Small, Inactive, Prospects, and Suspects.
Customer Lifetime Value (CLV): Net worth of a customer including referral value (new leads brought in), advocacy value (ambassadorship), financial value (past/future purchases), and knowledge value (feedback).
Sales Methods, Techniques, and Commercial Terms
Sales Techniques:
Cross-selling: Selling additional supplementary products (e.g., toothpaste with a toothbrush).
Upselling: Selling a more expensive, better-performing variant.
Deepselling: Selling more of the same product (e.g., "Buy 2 get 1 free" or large menus).
Hardselling: Direct, aggressive, pressure-based selling (e.g., door-to-door energy contracts).
Commercial Terms (Incoterms):
EXW (Ex Works): Buyer picks up from seller's premises.
FOB (Free on Board): Risk transfers to buyer when on the ship.
DDP (Delivered Duty Paid): Seller bears all costs including customs.
CIF (Cost, Insurance, and Freight): Seller pays freight/insurance; risk transfers to buyer once on board.
Franchising:
Hard Franchising: Strict uniformity and operational control (e.g., McDonald's).
Soft Franchising: Flexibility in marketing and product offering (e.g., The Body Shop).
Relationship Management (CRM) Principles: Customer-centricity, data centralization, interaction management, personalization, and continuous improvement.