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Arindam Chaudhuri, Editor-in-Chief, 4Ps B&M Editor-in-Chief
Arindam Chaudhuri
A.Sandeep Editor's Desk
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How Strategic is your Sales Organisation?
In an Era of Strategic Customer Management, you need to Quickly Reshape the “front-end” of your Company to meet its Full Value-Delivering Potential
Issue Date - 19/05/2011
The salesforce has long been the unfashionable and unloved part of marketing. However, our research at Warwick Business School suggests the revolution taking place in the demands customers place on sellers, provides an outstanding opportunity for the sales function to add value to companies and customers in new ways. In fact, that potential is for the growth of the strategic sales organisation with a strategic customer management role.

Why Sales Has Become Strategic today?
Sales management strategy is increasingly linked directly to a company’s competitiveness, as well as its ability to implement corporate “turnaround” in turbulent markets. The changing role of the sales organisation increasingly makes sales teams strategic resources concerned with relationship management with strategic customers at home and abroad, which certainly demands active senior management attention.

Transformation in sales organisations is underlined by escalating levels of company expenditure on sales and account management, reflecting the growth of collaborative, relationship-based customer management. Many organisations have seen a significant shift in resources away from marketing towards sales, because sales strategies are increasingly critical to achieving many of the top priorities of marketing and business strategy.

Strategizing the Sales Organisation Managerial priorities change as the demands of the outside world evolve. Relevant topical questions are concerned with how the conventional sales organisation can change to fulfil a strategic role focused on customer management. Our research suggests that the strategic re-positioning of the sales organisation demands several imperatives to be addressed by the management. These are:

Involvement – means positioning the sales organisation back in the center of business and marketing strategy. Close involvement of sales executives in generating business strategy is mandated, rather than simply taking a role in implementation. A company’s customer portfolio is an investment matrix, where different levels and types of investment are indicated by customer characteristics – potential growth, but also risk. The dependence of a seller on a small number of customers, adding customer business risk to our own, radically different profitability in different parts of the customer portfolio, the need to match resources advantageously to opportunity, the development of sales capabilities as a critical resource that drives competitive advantage – these are all issues that belong to the boardroom rather than the sales office.

Intelligence – means building customer knowledge as a strategic resource critical both to strategy formulation and to building added-value strategies with major customers. Market sensing capabilities are a distinguishing characteristic of many successful companies and the sales organisation is a major source of these capabilities. The strategic role is both interpreting changes in the market environment for the company, but also demonstrating deep knowledge of customers’ end-use markets as a route to added-value and competitive advantage. In fact, major customers now regard traditional sellers as commodities, and the supplier leading the way to improved efficiency and enhanced competitive advantage in end-use markets is a partner.

Integration – establishing the cross-functional relationships necessary to lead the processes which deliver superior value propositions to customers, and managing the interfaces between functions and business units impacting on service and value as it is perceived by customers. Major customers demand seamless value delivery. The challenge of achieving total integration around the value offering to the customer increasingly belongs to sales and account management.

Internal marketing – using sales resources to “sell” the customer across functional and divisional boundaries within the company and across organisational boundaries with partner companies. Meeting the escalating requirements of business-to-business customers depends increasingly on buy-in throughout the company and partner organisations. This internal marketing challenge belongs to those responsible for key customer relationships, and underlines a growing role for sales and account management inside the company.

Infrastructure – focuses on developing the structure and processes needed to manage sales and account management organisations to match customer relationship requirements and to build competitive advantage. Traditional organisational structures may need to be redesigned to implement customer-based relationship strategies. Sales management approaches may need to be realigned around the drivers of customer value and salesperson performance in critical selling and relationship-building activities. The drivers of superior salesperson performance may be quite different to those of the past.

However, these issues alone may not be enough. Executives also need to consider broader forces on strategic sales, which include:l Inspiration – sales managers providing leadership not simply within the sales function, but also as part of the “top team” and in managing relationships with collaborators and strategic suppliers.

l Influence – the new sales role defines a new degree and extent to which the sales organisation exerts influence over the company’s strategic agenda and the key decisions which are made. Leadership has to turn into influence if things are change.

l Integrity – there has probably never been a time when scrutiny of the ethical and responsible behaviour of companies was greater, and when the cost of being judged unethical was higher. Increasingly, major customers cannot do business with people they cannot trust, or whose corporate reputations carry a danger of contamination by association. This may be the highest priority in new types of buyer-seller relationship.

l International – the globalisation of markets, the emergence of global customers, and the spread of international competition make an international perspective on how customer relationships are managed in both domestic and overseas markets essential. International issues are critical to developing business models and new strategies, to managing the customer portfolio, and to developing the sales organisation infrastructure.

There is no “one size fits all” approach which will work, but our framework provides the basis for some searching management questions about how the “front-end” of the company can be reshaped to meet its full value-delivering potential. Change in the way sales is managed should be driven by realignment and new developments in strategy leading to an overall design or template for the sales organisation of the future.

It is already clear that for many companies this transformation is urgent and overdue. For many the sales and account management, or “front-end” of the organisation, is the next challenge in enhancing company performance and managing customer relationships strategically.

Sanchit Verma           
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