Sales representatives' perceptions of the effectiveness of relationship building activities with members of a segment.

Peterson, Robin T.

INTRODUCTION

For many firms, one of the keys to marketing success in today's increasingly competitive and fragmented market is a well-conceived program of market segmentation. The program requires careful implementation if it is to attain its goals, however. Increasingly, managers are discovering that a vital ingredient for implementation is the creation and maintenance of strong and positive relationships with members of the segments.

Satisfaction of members of target segments often requires planning and carrying out a relationship marketing strategy (Duncan & Moriarty, 1998; McKenna, 1991). "Supplier firms in long-term relationships with select customers are able to retain or even improve their profitability levels more than firms which employ a transactional approach" (Kalwani & Narayandas, 1995). In turn, relationship marketing has been defined as "marketing with the conscious aim to develop and manage long-term and/or trusting relationships with customers, distributors, suppliers, or other parties in the marketing environment" (Bennett, 1995). The antecedents for achieving a relationship status include trust, cooperation, commitment, and satisfaction (Morgan & Hunt, 1994). Achrol (1997) furnishes further insight into this process. He relates that "Relationship marketing emphasizes that customer satisfaction is a necessary but not sufficient goal of marketing activity; rather the goal should be to develop a lasting relationship based on a structure of long-term benefits and mutual affinity between buyer and seller" . This paper focuses on developing relationships with members of target segments. The objective of the strategy is to enhance the firm's ability to satisfy the needs of customers and operate within a rapidly and continually changing environment (Peppers, Rogers, & Dorf, 1999; Zeithaml, Berry, & Parasuraman, 1996.

In many companies, much of the relationship marketing with segment members is implemented through the activities of the sales force (Smith & Barclay, 1997). It is these individuals who are in close contact with customers and who are in a position to learn their needs and make provision for the delivery of products and services which will result in need satisfaction. (Ramsey & Sohi, 1997). Sales representatives form a nexus between the company and its customers and it is largely through their efforts that effective relationships are formed and maintained. An important ingredient to successful relationships is a high degree of trust in the sales representative, on the part of customers (Doney & Cannon, 1997).

A trend in recent years has been to assign sales representatives to specific segments (Often referred to as organization "by customer", "by customer type", or "by market" in the literature). This pattern has largely replaced geographic, product, and other forms of organization in many companies. The assignment of representatives to individual segments is compatible with the marketing concept and with relationship marketing, as it permits representatives to develop expertise in serving particular customers and types of customers.

Given that sales representatives shoulder much of the responsibility for relationships, how can they go about fulfilling this obligation? What activities should they perform? What inputs should they provide to their customers? Upon whom should they concentrate their relationship marketing efforts? What criteria will customers employ to assess the worth of these efforts? This manuscript addresses these and related issues.

OBJECTIVES OF THE STUDY

The objectives of the inquiry outlined in this paper were:

1. To determine which activities are perceived by sales representatives as most effective in accomplishing successful relationship marketing objectives with segment members.

2. To determine which inputs to customers are perceived by sales representatives as most effective in achieving successful relationship marketing objectives with segment members.

3. To determine what buying roles are perceived as the superior targets for relationship marketing building efforts with segment members by sales representatives.

4. To determine the sales representative perceptions of the relative importance of segment member criteria for the assessment of' relationship marketing efforts.

5. To assess differences between sales representatives employed by consumer and industrial goods companies as regards the preceding four objectives.

This last objective was assessed, since there is evidence that the process of relationship marketing differs to some degree between consumer and industrial goods companies. (Sheth & Parvatiyar, 1995; Bagozzi, 1995).

In order to address these objectives, the researchers queried a sample of sales representatives from industrial and consumer goods firms which organized the sales force by type of customer, calculated measures of the variables set forth in objectives one through four (stated above) and noted differences between representatives from these two types of companies (in order to address the fifth objective). Self reports from the sampled sales representatives formed the basis for measures of effectiveness and frequency counts.

Sales representatives are probably the best parties to query as to the effectiveness of relationship building activities. It is these individuals who are in the closest contact with customers. It might be argued that the customers of sales representatives are the best judges of the effectiveness of relationship construction efforts. But these individuals may not be aware that representatives are attempting to generate a relationship and, further may not recognize the nature of the tactics that are being employed by the representatives. As such, their ability to provide useful assessments is limited.

A reasonable degree of satisfaction of the five objectives could be potentially advantageous to sales managers and sales representatives alike. It would furnish insights for sales managers' training, supervision, and promotion programs, since all of these can be instrumental in implementing relationship marketing strategies. In addition, satisfaction of the objectives could furnish action prescriptions to sales representatives, as to how they might effectively carry out relationship marketing programs in their day-to-day activities.

METHODOLOGY

The sample frame was the list of Fortune 500 companies. Telephone inquires were made to a randomly-selected 100 of these. Of the total, 68 indicated that they were organized by type of customer. The random selection process was continued until a total of 100 firms with sales forces organized by type of customer were selected. This was the final sample composition.

The researchers mailed ten questionnaires and a cover letter to the sales managers (a total of 1,000 questionnaires). The cover letter promised anonymity and indicated that the research was for academic purposes. Further it related that respondents would be able to obtain copies of the results, if they so desired. Each sales manager was requested to furnish questionnaires to ten randomly-selected sales representatives employed by the company, to collect these when completed, and to return them to the researcher in a self-addressed envelope. The sales managers were asked to choose only sales representatives who had at least two years of field experience beyond the initial training period. This insured that novice sales representatives, who probably would not be in a position to contribute substantially to the goals of the study, were excluded.. This effort produced 281 usable returned questionnaires.

A second set of questionnaires was sent to nonrespondents, yielding 68 additional completed questionnaires. This produced a final sample size of 349, comprising 192 consumer goods and 157 industrial goods sales representatives. (The two categories included sellers of both goods and services).

The questionnaire furnished listings of sales representative activities, inputs, targets, and criteria for assessment as they correlate to relationship marketing. Activities were defined as "processes which sales representatives could employ to build and maintain satisfactory relationships with potential customers." In turn, inputs to customers were defined as "benefits which customers would visualize as being associated with satisfactory relationships with suppliers." The items in each of the lists were derived from a content analysis of seven widely-adopted college level personal selling texts examined by the researchers. The respondent sales representatives were asked to rate on a five point scale the degree to which each item in the list pertained to relationship marketing. The definition of this process was as follows: "marketing with the conscious aim to develop and manage long-term and/or trusting relationships with customers" (From Bennett, 1995). The scales ranged from very effective, effective, neutral or no opinion, ineffective, and very ineffective.

The questionnaire was pretested through thirty sales representatives employed in the city where the researchers are employed. The pretest respondents reviewed an initial questionnaire and suggested various improvements. After reviewing a revised questionnaire, they indicated that the measuring instrument was such that it enabled them to effectively communicate their perceptions about relationship marketing. Further, they reported that the process of answering the questionnaire was not overly difficult. They agreed that the listings on the questionnaire were all-inclusive--they were not aware of items other than those included in the questionnaire.

RESULTS

The representatives were asked to indicate the extent to which various activities which they might perform in conjunction with customers were effective in relationship marketing. Table One sets forth the results. Those activities drawing the highest mean scale values for the sample at large were "fill buyer company needs", "study buyer company needs", use account management process", "fulfill commitments to buyer", solve buyer problems", "indicate intent to partner with buyer", and "use consultative selling". Comparisons between the two groups reveal some significant differences. Representatives serving consumer goods firms granted more emphasis to "category management for buyer", "do surveys for buyers", and " provide automated reordering". Conversely, industrial goods sales representatives gave higher scores to "indicate intent to partner with buyer", "use key account process", "customize orders", "provide telemarketing service", "provide entertainment, and "inspect buyer physical facility". Of the total twenty activities, significant differences appear in the case of nine, suggesting some differences in the perceptions of the two groups of representatives.

The respondents were asked to evaluate a number of inputs which they might provide to buying organizations to further relationship marketing programs. Table Two sets forth the mean scale values for these variables. Those with the highest magnitudes are "assistance in problem solving", "empathy of the representative", "listening by the representative", "making company resources available", and "assistance in identifying problems". A comparison of the two groups reveals that consumer goods sales representatives provided higher scores than did industrial goods representatives for "product quality", "information about the industry", "marketing research studies", and "fast delivery". On the other hand, industrial goods representatives furnished higher values for "assistance in identifying problems", "consulting service", "information on vendor products", "service personnel support", "obtaining price reductions", "technical support", and "customized orders", Eleven of the inputs show significant differences between the two groups, further reinforcing the notion that consumer and industrial goods representatives have differing perceptions on relationship marketing.

The respondents were asked to indicate what buying roles were the best targets for relationship marketing. Table Three presents the result of the enumeration and analysis. In turn, the categories emanated from Berkowitz, Kerin, Hartley, & Rudelius (1994). The top two targets, as measured by mean scale value are buyers (those who select suppliers and negotiate terms of sale) and deciders (those who approve supplier selections). Following these are influencers, users, and gatekeepers. Buyers and deciders were evaluated higher by consumer goods representatives than by industrial goods representatives. The latter provided higher scores for users than did their consumer goods counterparts. The two groups posited significant differences for three of the five categories.

Finally, the sales representatives were asked to indicate the importance of the criteria which they found to be important to buyers for assessment of the sales representatives' relational marketing efforts. These criteria were derived from a previous study of relationship marketing endeavors (Kanter, 1994). Table Four sets forth the results. The highest mean score values were for "interdependence" (the partners need each other), "individual excellence" (representatives add value and their motives are positive), and "information" (partners communicate about goals, data, problems, and solutions). Representatives handling consumer goods granted the highest ratings to "independence", "investment" (seller devotes resources to the relationship), and "institutionalization" (relationship has formal status with clear responsibility). Conversely, industrial goods were significantly higher for "integrity" (sales representative and his or her firm are trustworthy and honorable) and "integration" (partners develop shared methods of operating). The two groups provided significantly different mean scale values for five of the eight criteria, further suggesting different perceptions regarding relationship marketing.

DISCUSSION

This paper has provided an examination of several facets of salesperson behavior in implementing relationship marketing programs with market segment members who carry consumer goods and industrial goods firms. The respondents were asked to assess the effectiveness of various activities in carrying out relationship marketing. For the sample at large, large scores were noted for "fill buyer company needs", "study buyer company needs", "use account management process", "fulfill commitments to buyer", "solve buyer problems", and "indicate intent to partner with buyer". All of these are consistent with the marketing concept--directing company resources toward satisfaction of the customer at a profit. A comparison of the activities rated most highly by representatives employed by consumer and industrial goods firms, however, suggests that different means are employed to achieve customer need satisfaction.

Category management was rated more highly by consumer goods than by industrial goods representatives. The respondents for the former perceive that their customers desire detailed consultation on the product mix that will assist them in achieving their merchandising objectives. Also ranked highly was " do surveys for buyers". Purchasers of consumer goods apparently look for information on areas such as consumer behavior, the competitive environment, and major trends taking place in the industry. In addition, automated reordering received a higher score for consumer goods. This cost and time saving process is perceived as being useful in forming relationships with economy-minded customers.

Industrial goods sales representatives evaluated certain activities as more effective than did members of consumer goods sales forces. To a large extent, these activities relate to a perceived desire by industrial goods customers to obtain specialized attention and service from the sales representatives. This is logical given the substantial differences in the needs of individual industrial goods buyers and in the relatively large size of their purchases. Specifically, industrial goods sales representatives granted higher scores than consumer goods representatives for" indicating intent to partner with buyer"," using key account process", "customizing orders"," providing telemarketing service"," providing entertainment", and "inspecting buyer physical facilities."

The respondents were also asked to assess the effectiveness of various inputs to buying organizations, as a means of furthering relationship marketing. For the total sample, the highest mean scale values were registered for "assistance in problem solving", "empathy of the representative", "listening by the representative", "making company resources available", and "assistance in identifying problems". These are all inputs which relate directly to the individual behavior of the sales representative--they are benefits that representatives can personally furnish to service the customer. Hence, they are activities in which representatives who seek to build relationships should develop expertise and practice on an ongoing basis.

There are differences in the assessments of the value of the inputs between consumer and industrial goods representatives. The former give "product quality", "information about the industry", "marketing research studies", and "fast delivery" high evaluations, relative to industrial goods representatives. Generally, these are inputs that are dependent upon personnel in the salesperson's company who are not members of the sales department. In order to bring these resources into play, the sales representative must depend upon outside parties, and his or her ability to activate these parties, either through some type of formal or informal control or through persuasion. The utilization of these inputs requires that the salesperson develop either power (as through authority) or the ability to convince others to take certain actions, as a means of building relationships.

Several inputs were substantially higher rated by industrial goods than for consumer goods representatives. These were "assistance in identifying problems", "consulting service", "information on vendor products," service personnel support", "obtaining price reductions", "technical support", and "customized orders". The first three of these are inputs which can be supplied directly by the representative, while the last four require the services of other (other than the salesperson) members of the salesperson's organization. Hence, both the ability to directly provide inputs and to obtain them from other company members is required.

The respondents indicated that buyers and deciders were the superior buying role targets for relationship marketing. This would suggest that sales representatives devote the brunt of their efforts to these individuals. This is not to say that the others should be neglected, but only that they probably should not receive the same degree of thrust as do buyers and deciders. It should be recognized, of course, that the same individual will occupy more than one role in many cases, and this may magnify his or her importance as a target.

For consumer goods, buyers and deciders were perceived as more superior targets for relationship building than for industrial goods. In the case of the latter, users were seen as having considerable significance. Many industrial goods are machinery and equipment and other items that are operated by buying company personnel or are other items that are involved in the production process, whereas this is less common for consumer goods. This probably explains the bulk of the difference between the two groups.

The sample members evaluated the criteria for assessment of sales representative relational marketing efforts. For the sample at large, the highest evaluations were for "interdependence" (the partners need each other), "individual excellence" (representatives add value and their motives are positive), and "information" (partners communicate about goals, data, problems, and situation). The perception is that mutual dependence of the parties, reinforced by very high quality work on the part of sales representatives and a properly functioning flow of information are of substantial importance to buyers in assessing relationship marketing efforts.

There are some major differences between consumer and industrial goods representatives on the assessment criteria. Those in the former place more reliance, versus the latter on "interdependence", "investment" (seller devotes resources to the relationship), and "institutionalization" (relationship has formal status with clear responsibility). All three of these criteria are related to the underlying notion that the relationship should be a permanent and not a transitory arrangement. A long-range perspective appears to be in effect, in this regard.

Industrial goods representatives granted higher evaluations, versus consumer sellers, for "integrity" (sales representative and his or her firm are trustworthy and honorable), and "integration" (partners develop shared means of operating). It is not evident why buyers in this sector would place more reliance on integrity than would buyers in the consumer goods area. It is possible that integration was rated higher in the industrial goods field because many of the products involved are employed in the manufacturing and distribution processes of buyers, requiring a high degree of integration with vendors.

The findings provide guidance for sales representatives who seek to establish and maintain relationships with potential customers. They indicate which activities appear to have promise and what inputs targets might seek. Further, they provide guidance as to the buying roles which might be the most receptive to relationship building endeavors. Finally, they suggest criteria that customers might employ in assessing these endeavors--providing direction as to how the sales representatives might address their communications to target customers.

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Robin T. Peterson, New Mexico State University Table One Reported Effectiveness of Various Activities Sales Representative Activity Mean Scale Value Total Consumer Industrial Sample Goods Goods Fill buyer company needs 4.9 4.9 5.0 Study buyer company needs 4.9 4.9 5.0 Use account management process 4.7 4.5 4.9 Fulfill commitments to buyer 4.5 4.6 4.5 Solve buyer problems 4.4 4.4 4.4 Indicate intent to partner with 4.3 3.9 4.6 * buyer Use consultative selling 4.3 4.1 4.5 Category management for buyer 4.0 4.6 * 3.3 Use key account process 3.9 3.5 4.4 * Respond effectively to buyer 3.7 3.9 3.6 questions Customize orders 3.7 3.0 4.5 * Provide telemarketing service 3.5 3.1 3.9 * Do surveys for buyers 3.5 4.1 * 2.9 Provide automated reordering 3.3 4.1 * 2.5 Develop friendships with buyer 3.2 3.0 3.4 Provide entertainment 3.2 2.9 3.6 * Inspect buyer physical facility 3.0 2.6 3.5 * Provide small gifts 2.6 2.4 2.8 Provide bribes 1.9 1.6 2.1 Other 3.3 3.5 3.4 * Signifies a mean scale value that is significantly greater than the corresponding mean scale group in the other column, according to a t test at the .05 level. Table Two Reported Inputs for Buying Organizations Sales Representative Inputs Mean Scale Value Total Consumer Industrial Sample Goods Goods Assistance in problem solving 4.8 4.6 4.9 Empathy of the representative 4.8 4.8 4.8 Listening by the representative 4.8 4.9 4.7 Making company resources available 4.8 4.7 4.9 Assistance in identifying problems 4.7 4.3 4.9 * Consulting service 4.5 4.2 4.9 * Product quality 4.5 4.9 * 4.3 Information on vendor products 4.3 4.0 4.7 * Service personnel support 4.1 3.6 4.7 * Obtaining price reductions 3.8 3.3 4.4 * Technical support 3.8 3.3 4.4 * Information about the industry 3.5 3.9 * 3.0 System integration with buyer 3.5 3.3 3.7 Customized orders 3.2 2.7 3.8 * Expense reduction programs 3.1 3.3 2.9 Product development assistance 2.7 2.4 2.9 Marketing research studies 2.5 3.4 * 1.7 Reliable delivery 2.5 2.8 2.2 Fast delivery 2.2 2.6 1.7 Rapid decision making 2.2 2.0 1.7 Other 2.7 2.9 2.6 * Signifies a mean scale value that is significantly greater than the corresponding mean scale group in the other column, according to a t test at the .05 level. Table Three Superior Buying Role Targets for Relationship Marketing Buying Role Target Mean Scale Value Total Consumer Industrial Sample Goods Goods Buyers (select suppliers & negotiate 4.7 5.0 * 4.3 terms) Deciders (approve suppliers) 4.4 4.8 * 4.1 Influencers (affect buying decisions) 4.1 4.3 4.0 Users (use product or service) 4.1 3.5 4.7 * Gatekeepers (control inputs of information) 3.5 3.3 3.8 * Signifies a mean scale value that is significantly greater than the corresponding mean scale group in the other column, according to a t test at the .05 level. Table Four Evaluations of Criteria for Assessment of Sales Representative Relational Marketing Efforts Criteria Mean Scale Value Total Consumer Industrial Sample Goods Goods Interdependence (The partners need 4.6 4.9 * 4.2 each other) Individual excellence 4.4 4.5 4.2 (Representatives add value and their motives are positive) Information (Partners communicate 4.3 4.0 4.7 about goals, data, problems, and situation) Importance (Relationship helps 4.0 4.0 4.0 buyers reach objectives) Integrity (Sales representative and 4.0 3.7 4.4 * his or her firm are trustworthy and honorable). Investment (Seller devotes resources 3.7 4.2 * 3.3 to the relationship) Integration (Partners develop shared 3.6 3.3 4.0 * means of operating). Institutionalization (Relationship 3.5 3.9 * 3.0 has formal status with clear responsibility) * Signifies a mean scale value that is significantly greater than the corresponding mean scale group in the other column, according to a t test at the .05 level.