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Chapter 1
RELATIONSHIP SELLING OPPORTUNITIES IN
THE INFORMATION ECONOMY
The two chapters that make up Part 1 establish a foundation for the entire textbook.
Chapter 1 provides a contemporary definition and description of personal selling and describes
information-age personal-selling career opportunities. Sales-training programs offered by
academic institutions, sales-training companies, and employer-provided sales training are also
presented.
EXTENDED PRESENTATION OUTLINE
Today’s workforce is made up of millions of knowledge workers who succeed only when
they add value to information. Salespeople, and many other knowledge workers, add value to
information when they collect it, organize it, clarify it, and present it in a convincing manner.
As part of the Reality Selling Video Series, this chapter features Alex Homer from the
Tom James Company, selling luxury clothing.
I. Personal Selling – A Definition and a Philosophy
A. Definition: Personal selling occurs when a company representative interacts directly
with a customer to present information about a product or service.
1. Personal selling is a process of:
a. Developing relationships.
b. Discovering needs.
c. Matching the appropriate products with these needs.
d. Communicating benefits through informing, reminding, or persuading.
2. A product is broadly defined as information, services, ideas, and issues.
3. Increasingly, personal selling is viewed as a process that adds value
4. In an ideal situation, the salesperson:
a. Builds a mutually rewarding relationship.
b. Diagnoses the customer’s needs.
c. Custom fits the product to meet these needs.
5. Having knowledge of customer needs will:
a. Lead to higher customer satisfaction.
b. Willingness to purchase a product.
B. Developing a personal selling philosophy includes three prescriptions, which are part of
the Strategic/Consultative Selling Model:
1. Adopt the marketing concept.
2. Value personal selling.
3. Become a problem solver or partner.
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II. Emergence of Relationship Selling in the Information Age
A. Shifts from industrial economy to an information economy began approximately 50
years ago
B. Major advances in information technology and electronic commerce.
C. Strategic resource is information.
1. Information is often too plentiful.
2. Salespeople help filter information.
D. Business is defined by customer relationships.
1. The real new economy is the customer economy.
2. Customers have taken more control of their destinies.
3. Relationships build a conduit of trust for information exchange.
E. Sales success depends on adding value.
1. Value-added selling is defined as a series of creative improvements in the sales
process that enhance the customer experience.
2. Salespeople can create value by:
a. Developing a quality relationship.
b. Carefully identifying the customer needs.
c. Configuring and presenting the best possible product solution.
3. The value added by salespeople today is increasingly derived from intangibles
such as:
a. Quality of advice offered
b. Level of trust that underlies relationship between salesperson and customer
III. Considerations for a Future in Personal Selling
A. Wide range of employment opportunities.
1. The 500 largest sales forces in America employ more than 24 million salespeople.
2. There is no single “selling” occupation.
3. Opportunities exist that match your interests, talents, and ambitions.
4. Old stereotypes about sales are gradually going by the wayside.
5. Careers of highly successful relationship salespeople discover that ethical sales
practices represent the key to long-term success.
B. Activities performed by salespeople.
1. Outside salespeople spend 26 percent of their time in face-to-face sales and 75
percent in sales prep, travel, waiting, and administrative tasks.
2. Salespeople have tremendous freedom to manage their time and activities.
3. The proliferation of sales titles in today’s business world has two causes:
a. The shift from selling to consulting and partnering.
b. The increased skill sets and education needed to fill selling positions.
C. Titles used in selling today.
1. Just as selling occupations differ, so do the titles by which salespeople are known.
2. Two factors have contributed to the creation of new titles.
a. Shift from “selling” to “consulting” and “partnering.”
b. New titles reflect a difference in education and skill sets needed for the
position.
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c. Regardless of title, salespersons play an important role in sustaining the
growth and profitability of organizations of all sizes.
d. Also support the employment of many non-selling employees.
D. Above-average income.
1. Table 1.1 describes sales force compensation for different performance levels.
a. Research indicates that salespeople involved in transactional sales earned the
lowest compensation.
b. Sales personnel involved in value-added sales earned the highest
compensation.
E. Above-average psychic income.
1. Psychic income (psychological rewards) gained from a selling career may include
recognition and security.
2. In selling, recognition will come more frequently and with greater intensity than
in most other occupations.
3. Accomplishments of sales personnel seldom go unrecognized.
F. Opportunity for advancement.
1. High visibility affords opportunities for advancement.
2. Sales experience is invaluable in many middle and high management positions.
G. Opportunities for women and minorities.
1. Sales offer women high income and flexible work schedules.
2. There is a growing awareness that gender is not a barrier to success in selling.
IV. Employment Settings in Selling Today
A. Careers in sales include both inside and outside sales positions.
1. Inside salespeople perform selling activities at the employer’s location, typically
using the telephone and e-mail.
a. In some cases called “customer service representatives” and provide a number
of support services on behalf of field salespeople.
b. Inside sales can be either “inbound” or “outbound.”
2. Outside salespeople travel to meet prospects and customers in their places of
business or residence.
3. Inside and outside salespersons often work together and rely heavily upon each
other.
B. Three major settings include:
1. Services channel.
2. Business goods channel.
3. Consumer goods channel.
C. Services Channel.
1. Approximately 80 percent of the U.S. labor force is now employed in the service
sector.
2. Career opportunities in the service channel:
a. Hotel, motel, and convention center services.
1) Salespeople sell room space, food, beverages, and services related to
hosting seminars, conferences, and meetings.
2) Competition for convention business is intense.
b. Telecommunication services:
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1) Deregulation of telephone service has resulted in the fragmentation of
major telephone companies and the creation of numerous new
communication companies.
c. Financial services:
1) There are nearly 342,000 sales jobs in securities and financial services.
d. Media sales:
1) Sales force employed by radio/television stations sell broadcasting time to
current and prospective advertisers.
2) Newspapers and magazines generate their main revenue from advertising
rather than from subscriptions.
3) Media sales personnel help develop advertising campaigns.
e. Real Estate:
1) Buying a home is usually the largest single expenditure in an average
consumer’s life.
2) Real estate salespeople play an important role.
f. Insurance:
1) One of the most rewarding careers in sales.
2) Policies sold include: fire, liability, life, health, automobile, casualty, and
homeowner’s.
3) Two broad types of insurance salespeople.
(a) Those employed by major insurance companies.
(b) Independent insurance agents who represent various companies.
g. Business services:
1) Outsourcing of services is increasing.
h. Other fields of service sales include: home and business security, travel and
recreation, pest control, and transportation.
C. Business Goods Channel.
1. Common titles of salespeople:
a. Sales engineer or applications engineer – must have detailed and precise
technical knowledge.
1). Requires expertise in identifying, analyzing, and solving customer
problems
2) May introduce new products and answer technical questions.
b. Field salespeople – find and meet needs of new customers.
c. Missionary salespeople, (detail salespersons) – primary goal is to develop
goodwill and stimulate product demand.
1) Calls on wholesale, retail, and other customers to help improve their
marketing.
2) Collects information regarding customer acceptance of products.
3) Must be able to offer advice on credit policies, pricing, displays, and so
forth.
D. Consumer Goods Channel.
1. Retail selling:
a. Profile: Asbury Automotive Group
1) Success due to expert staff.
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2) Customers are willing to pay higher prices because they value the quality
products and assistance provided by salespeople.
3) Well- trained salespeople add value to the shopping experience.
4) Profile: Asbury Automotive Group
2. Direct selling:
a. Independent contractors who represent manufacturers.
b. There are 18.2 million direct salespeople in the United States and 78.2 million
outside this country.
c. The top 15 countries each have more than $1 billion in direct sales revenue
and are a combination of old and new markets
d. $90.8 billion in annual revenues for the world’s direct-selling companies,
which translates to almost 90 percent of the industry’s global sales.
e. A rapidly growing form of direct sales is network (or multilevel) marketing.
V. Selling Skills – One of the “Master Skills for Success” for the Knowledge Worker
A. Knowledge workers are individuals whose work effort is centered on creating, using,
sharing, and applying knowledge.
1. One way to add value to information is to collect it, organize it, clarify it, and
present it in a convincing manner.
2. Creating networks with social ties allows knowledge workers to acquire and
provide information more successfully.
B. The following four groups of knowledge workers use selling skills, too:
1. Managerial personnel.
a. Some of the managers’ most valuable information comes from customers.
b. Executive selling helps managers learn more from customers.
2. Professionals.
a. Doctors, accountants, lawyers, engineers, and other professionals need to use
selling skills.
b. Technical skills are not enough in the information age.
c. Professionals need relationship skills to develop new business.
3. Entrepreneurs and Small Business Owners.
a. Entrepreneurs need to sell their new business plan to investors and others.
b. Business owners rely on personal selling to build their business.
4. Marketing Personnel and Customer Service Representatives (CSRs).
a. CSRs have traditionally worked with customers in non-selling areas.
b. CSRs are now learning and applying selling skills.
c. CSRs often discover customer needs.
VI. Learning to Sell
A. Basic question: “Are salespeople made or are they born?”
1. The principles of selling can be learned and applied by a variety of people.
2. Hundreds of corporations spend millions of dollars to develop salespeople.
B. Sales training has been expanded on four fronts.
1. Corporate-sponsored training
2. Training provided by commercial vendors (see Table 1.2).
3. Certification programs
4. Courses provided by colleges and universities (see Table 1.3).
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END-OF–CHAPTER ACTIVITES
Included in this section are answers to selected end-of-chapter exercises. Answers are
provided for all review questions, application exercises and case problems. In addition, a brief
description of each role-play is provided.
Not included in this section are answers to the Regional Accounts Management Case
Study. The answers are found in the Instructor’s Manual for Appendix 2: Answers to the
Regional Accounts Management Case Study.
Also not included in this section are answers to exercises related to Appendix 3:
“Partnership Selling: A Role–Play/Simulation.” Answers, forms, and instructions related to
Appendix 3 will be found in Instructor’s Manual for Appendix 3 and the Instructor’s Manual
titled Traditional Role Play Exercises and Forms.
Key Terms
Personal selling, p. 5: Personal selling occurs when a company representative interacts directly
with a customer or prospective customer to present information about a product or service. It
is a process of developing relationships; discovering needs; matching the appropriate products
with these needs; and communicating benefits through informing, reminding, or persuading.
Product, p. 5: The term product should be broadly interpreted to encompass information,
services, ideas, and issues.
Personal-selling philosophy, p. 5: The development of a personal-selling philosophy involves
three prescriptions: adopt the marketing concept, value personal selling, and assume the role
of a problem solver or partner in helping customers make informed and intelligent buying
decisions (Figure 1.1).
Information economy, p. 5: The restructuring of America from an industrial economy to an
information economy began approximately 50 years ago (Figure 1.2). During this period, our
economy began shifting from an emphasis on industrial activity to an emphasis on information
processing.
Selling, p. 6: Selling is the second-largest employment category in the United States
(government jobs are the largest) and research indicates there will be two million more
salespeople added to the U.S. sales force by 2020. One out of every nine people in the United
States is employed in selling, a number that has remained constant for many years.
Value-added selling, p. 7: Value-added selling can be defined as a series of creative
improvements within the sales process that enhance the customer experience.