Sales Management Communication

Now, this is a basis for communication which I've worked with companies and also students with for a long time. And it's got a very long history. I mean you're familiar with Boston Box, which is a major excuse for product portfolio management and what about Directional Policy Matrix? Is that something that you've come across in the past? And this tries to be a strategic tool incorporating the things that we as a company have to agree on in our strategy formulation, but also recognizes the things that's the customer is going to do to us regardless of what strategy we start off with. So the first axis, the vertical axis, from low to high is the customers' value to us. And this is normally where the negotiation, the strategic focus has to be decided between sales and marketing in particular but also other parts of business. Next, we have the intelligence that sales should be bringing into this discussion, which is our value to the customer. We need to be realistic about how we're seen by particular customers that we may or may not wish to focus on. So of course, academics will talk in terms of 2x2 boxes. So let's have a look at the quadrants that emerge from this. Now, first of all, the box where there isn't a great deal of mutual value, some people might say, well, why do business there at all? But in fact there are instances where there are some fairly profitable one-off deals or non-strategic deals to be done. Dow Chemical for example, at the beginning of the century had a problem with competition taking away some of their commoditized business. And so the way that they dealt with that, which was considered incredibly scary at the time to some investment analysts and was to spin-off a web based service for customers who just wanted bulk chemicals on a one-off basis, lorry load by lorry load. So they could order that via a portal, and they therefore needed no kind of personal inputs into that business. And it was fine, it worked. I mean obviously the web portal was sub-branded Dow and they gave it a different name, but it had the sub-brand of Dow, and it was very successful and the rest of their business remained successful as well. They didn't undermine the fact that they were the market leaders in innovation in chemicals, but they could also provide the commodity in a different way. So tactical business is not necessarily about a thing and very often it's a case where sales and marketing can agree that if things can be done via the website or by telephone, that's an excellent area in which marketing can take the lead. Now, prospective business where our value to the customer is fairly low; they are not convinced. Maybe they are not doing a lot of good business with one of our competitors and great discussions to be had there about whether or not it is right for either marketing or sales to invest in converting that. And again, very often marketing will take the lead in identifying where customers can be approached and involved in things like reference visits or demos that they will start to build the relationship, so that when opportunity for change comes, and inevitably from time to time customers do reexamine their supplier portfolio, then that's the opportunity for the sales input to start. One of the most difficult quadrants is what I call, cooperative, because this is also good business, and the customer values us and is probably spending quite a lot of money with us. But it's not so good for us, because perhaps this is a powerful customer that drives us down on price or maybe they don't have a very positive attitude to engaging in long-term planning with us. And so we have to keep that business taking over, but in terms of investment to us, as a supplier, it has its limitations. But still good business to have. And last but not least is the box where everybody wants to be, that's where mutual gain has been identified, and this is where we see these very important key account managers really having the power that extends into both businesses, and fantastic boundary spanners as it's called, you can match what the customer is trying to achieve in terms of value with what we as a supplier are trying to achieve. Now, any of you have seen job advertisements for key account managers recently? They are increasingly attractive to my students. They perceive that there is a great deal of status associated with being a key account manager, a great deal of reward. And when you think about it, these guys are mini-business unit managers, the amount of money that a strategic customer maybe bringing into the business, it means that they are actually given profit and loss account responsibility up and down to make things happen in the organization that realizes that customer's potential. So people say with these matrices, well, you're trying to force-fix things here and they are static and you have got to think about movement between these boxes and you have got to think about how circumstances might change those perceptions of value. And I take all those criticisms on board. But in practice and in learning, I time and again find people coming back to me and saying, they are a great basis for discussion. And so consequently, when it comes to the role that sales can play in strategy formulation, this focus on the customer and their value to us, our value to them is a powerful one in terms of negotiating that, that's a right focus.