‘Sales strategy’ is a concept that is widely used in business and in organisations. A problem, however, is that it is not always clear what is meant by it. It is a concept that is worth looking at more in detail.
Some questions that are relevant to this topic include:What is a sales strategy; Why is this relevant to understand; How does it affect performance; and Which sales strategy should we adopt? After all, we are not only interested in the ‘what’, rather we are more interested in the ‘whys’ and ‘hows’.
Marketing and sales research in general do not provide a widely accepted definition for sales strategy, as noted by Panagopoulos and Avlonitis, who have studied the antecedents of the concept. They define sales strategy as follows:
“Sales strategy is the extent to which a firm engages in a set of activities and decisions regarding the allocation of scarce sales resources (i.e. people, selling effort, money) to manage customer relationships on the basis of the value of each customer for the firm.” (Panagopoulos & Avlonitis 2010)
When studying the sales process, it is important to put it in context. This involves considering not only the firm, but also the environment in which the firm operates, i.e. its customers and competition. The sales strategy should be aligned with the overall and marketing strategies of the firm. In brief, the firm strategy is the specification of the business in which the firm decides to be. This is to a certain degree stipulated based on core competence of the firm. The marketing strategy refers to the marketing approach and activities related to generating and sustaining competitive advantage for a firm. This involves selecting the market segments and developing marketing programs that are tailored to the needs and wants of the new and existing customers in the selected target segments. The sales strategy refers to how the firm chooses to relate to and interact with individual customers within a market segment. The sales function is responsible for selling to all potential customers within a segment.
The elements of the sales process include:
- Customer segmentation
- Customer prioritisation & targeting
- Relationship objectives and selling models
- Use of multiple sales channels
- Sales control/ compensation/ supervision systems
- Value proposition
- Salesperson selling process/ behaviours
- Formulation of sales mgmt program
Customer segmentation refers to choosing the right customers in each customer segment.
Customer prioritisation & targeting involves prioritising the customers or opportunities and targeting and pursuing these based on a set of criteria and in a way that corresponds with the firm and marketing approaches and strategies.
Relationship objectives and selling models refer to that the relationship orientation and selling models (transactional vs. relational) that the sales force adopts for a customer or opportunity should be well thought through. In addition, these should be aligned with how the firm on an overall level operates.
Use of multiple sales channels refers to the decisions regarding which sales channels the firm chooses to use for approaching the customer or opportunity. The sales channels that the seller can choose from include: personal selling through a field sales force, channel sales partners, distribution network, telesales, and Internet-based selling.
Sales control/ compensation/ supervision systems refer to setting up and using appropriate control systems, compensation policies and schemes, and supervision systems for sales that guide sales in the direction that is pointed out by the firm and marketing strategies.
Value proposition refers to understanding the value for the customer of the service that the seller is offering. Value can be understood as the result of the benefits for the customer of the service after all costs involved (of acquiring the service) have been deducted. In brief: Value = Benefits – Costs. It is worth noting, that the costs are not limited to only financial costs, but that ‘costs’ can also include other aspects. In the event that the benefits exceed the costs, the value for the customer is positive. Conversely, in the event that the costs exceed the benefits, the value of the service becomes negative.
Salesperson selling process/ behaviours refers to the sales and selling process and how these are regarded and operationalised. Optimally, the sales and selling process should correspond to the buying process of the customer or opportunity.
Formulation of sales management program refers to managerial tasks such as deciding on sales teams, how to manage sales calls, setting up the sales territories, sales training, sales reporting, sales objectives and quotas, and remuneration of the sales force.
What is sales strategy? – Route for operationalization of mktg program and firm strategy (thereby taking the customer into consideration)
Based on this brief go-through of the sales strategy, the questions that were asked in the beginning of this post can be answered as follows:
- Why is this relevant to understand? An appropriate sales strategy can have a major impact on a firm’s resource allocation, on focusing on the right customers in each segment, and overall success of the company.
- How does it affect performance? When setting up the sales strategy is conducted professionally and in a way that links to the selling firms and customer’s approaches and strategies, this usually has a very positive effect on sales and overall performance.
- Which sales strategy should we adopt? Instead of seeking for one ‘truth’ and trying to come up with a sales strategy that fits all situations, a contextual approach is recommended. This refers to adopting a portfolio approach, i.e. an approach that is based on the firm and marketing strategies, and that takes each customer’s preferences and strategies into consideration.
What does ‘revisited’ in the heading of this post refer to? Instead of regarding the sales process as something that is constructed only from the perspective of the seller, however, does not correspond to today’s world. When constructing a the sales process, not only the selling firm’s firm and marketing approaches and strategies should be taken into consideration. In addition to that, the seller should take the buyer’s buying strategy (which should be linked to the buyer’s marketing and firm approaches and strategies) into consideration. In summary, the sales strategy should take both the selling firm and the buyer/ customer/ opportunity into consideration.