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All right. These are the audio slides here for Chapter 13, which we’ve moved up to the very beginning of
class here. Just to cover a few key objectives, these are going to be underlying a lot of the concepts that we
go throughout the remainder of the semester. We’ll start off by talking about some of the different types of
relationships between buyers and sellers– the appropriateness of each kind of different goals of the buyer
and the seller; characteristics of the success for those partnerships; the benefits and risks of engaging in
them, because they’re certainly not warranted in every scenario; and then overall, kind of where the sales
person comes into play, how they help develop the relationship over time, and what are the sales person’s
responsibilities within that stage? So as we start off by talking about relationships and selling, a lot of the
key conversation early on is about how to get the relationship going, and how to maintain a long-term
value of that relationship. And one of the key concepts that comes into play there is understanding the
lifetime value of customers. The key to understanding that lifetime value is really kind of at the end of
that definition there. It is the combined total of all future sales. And so we had a nice discussion in
terms of what that means in terms of future sales, and how we actually know what to predict in terms of
how much a group or an individual customer is going to buy from us over and over. And it really comes
down to somewhat of the historicals– the transactions, the number of transactions, the frequency of those
transactions, the overall value. But embedded within that is the notion of loyalty. And loyalty is really
that predictor of whether or not the customer is going to purchase from us again– whether or not they’re
likely to come back; whether or not they’re likely to buy the same product over and over; whether or not
they are likely to withstand certain competitive threats. These are all kind of a function of how loyal the
customer is to us individually as a salesperson, our product, or company. Also stemming from that is the
different types of loyalty, one being behavior loyalty and one being attitudinal loyalty. So a lot of the
conversation was split out around understanding the things that are really characteristics of behavioral
loyalty– just the notion of repeating, purchasing, coming back over and over, kind of out of a habit, or
routine, and some degree of satisfaction, versus attitudinal loyalty, which is really that strong emotional
attachment. It really capitalizes on that willingness to stick with the customer– or stick with the product,
the solution, the salesperson– regardless of all these other things that are happening within the
environment. So the attitudinal loyalty can arguably be a much stronger form of loyalty. But behavior
loyalty– kind of the counter to that– is it represents actual purchases. So there are scenarios when we
might be very attitudinally loyal, but not actually worth that much value to our organization. We use this
database conversation to split it out and say, all right, you know, how can we look at a database such as
this and say, which group of consumers is really actually loyal? And then within that, what would
we need in order to differentiate between behavioral loyalty and attitudinal loyalty, which is in reality a
major challenge, and something that’s really hard to achieve here. From there, we went into the different
types of relationships. And really there’s four main relationships. And they’re split out across two main
headers. So the first header is market exchanges. And that represents two different types of relationships-the first being solo exchange, the second being functional relationship. Solo exchange is really kind of at
the very end point, where there’s no future business. Everybody is self interested in pursuing the best
possible deal they can get, because it’s a one-time transaction and they want to maximize their value that
one time. And there’s really no shadow of the future hanging over it. Functional relationships still now
get into long term exchanges. So pretty quickly we’re moving from a one-off exchange to a long-term
exchange. But what we talked about in this case is, it’s characterized by that behavioral loyalty. So again, if
we flip back a few slides, that behavioral loyalty is really the thing that’s a function of habit, or
routine, and some degree of satisfaction. And it’s really not that attitudinal part of it, quite yet. So a lot of
this is about driving customer satisfaction if you’re the salesperson here. From there we moved into the
second header, which is partnerships. And within partnerships, there’s two main types of relationships-one being a relational partnership, and one being a strategic partnership. And in this case, really, again,
they’re going to be long term. Because we’re moving off of functional relationships. So we’re moving even
further downstream in terms of the length of the relationships. But now we’re starting to move beyond
just the behavioral loyalty into some of the things that might be more attitudinal. They have close
personal relationships, open trust, and communication. We’re not really worried about kind of the
details and the things that are written within the contract, because a lot of this is things that we work
out in inter-personally. The main thing that differentiates these two forms of partnerships are when
you start to get into these strategic relationships, we start to talk a lot more about strategic
investments, mutual investments, growing the overall size of the pie, as opposed to splitting it in different
ways and taking different slices. So we’re trying to grow the overall value of the relationship. And that’s
really achieved through the flow of investments into the relationships coming from both parties. So all
these things of trust and so forth are that much more important when parties start to put money and
nontransferable assets into the relationship to get more out of it. This is a great slide that I encourage you
to look over and review as you’re going through the slides. It gives you a good kind of progression from
what it’s like to move from the solo exchange of transaction to more of a strategic partnerships– and the
length of the relationship, the benevolence within the other party, the importance of trust, and so
forth. The nature of the relationships are a great kind of way to understand these different types of
partnerships and relationships, as is understanding when certain types of investments, you know, present
certain types of risk, and the trade off between that, based on the potential benefits here. So it’s a great
overview slide, and certainly it’s representative of the material there. The main takeaway– or not the
main takeaway– but one of the main takeaways from this was, as we move towards strategic
partnerships and those mutual investments, a key function is understanding the solutions there. So we had
a reading at the beginning of class that focused on solutions. We then went into a discussion about DuPont
and Ford that focused on solutions. And then we want to extend that into our own into our own role plays
here. So if we’re selling a CRM system, how we could understand what the underlying solution– not the
product– but what the underlying solution actually is, and therefore how we would want to make
investments into the partnership. So those are the different types of relationships. Much like interpersonal
relationships in our own life and in other aspects of business, they follow kind of a predictable pattern
here. And they really go from this awareness stage, where the salespeople are really trying to locate and
qualify prospects, identify sources supply, all the way down to the end of relationships. So again, if we
connect this to our personal lives, this is how relationships develop, right? At some point, we become
aware. Then we start to explore the potential benefits by kind of small purchases, or small, I guess,
trials. Once we have some degree of satisfaction, we understand that what they’re going to be able to
deliver and live up to their promises, we start to expand upon that and give more– embed more trust,
embed more investments, and start to kind of shut out other options and alternatives here. The deepest
stage of that would be commitment, in which we are fully committed to the other partner. That’s when
those strategic investments come into play. That’s when the solutions mentality really comes into
play. And then some relationships don’t last forever. From the salesperson’s perspective, it would be, all
right, when that happens, how do we win them back? How do we go about bringing back those customers
that were lost? Each of these, again, has a strategy for the salesperson. Again, during that awareness
stage, it’s really trying to locate and qualify prospects. During that exploration stage, it’s trying to derive
some of that satisfaction that you know you’re going to be able to deliver, and therefore get some of that
repeat purchases– a little bit of behavioral loyalty, if you will. That expansion stage– we can start to
expand upon the relationship and engage in cross-selling and up-selling– things that are going to get more
value out of our existing relationships. Build in a little bit more switching cost because of the things that
they’d be missing out on if they left. The commitment stage– we’re really looking for the pledge to
continue this relationship for a long period of time. The investment’s coming into it– the enhanced
information coming from the salesperson, and therefore the solutions that you might be able to embed
within that. In order to make those progressions from one step of the relationship to the next thing and so
forth, and get to that deepest stage, there’s a lot of things that are really a part of that foundation for
successful partnerships and successful relationships. And they build off these building blocks here. So we
did talk about kind of when, maybe, some of the loyalty to the salesperson, for example, isn’t necessarily
the best. Because it can represent some risk to the organization. But for the most part, these are the
building blocks of relationships. Relationships themselves are advisable and advantageous to the supplier,
and it takes a number of things to develop them. Again, the figure here is fairly representative. They
literally are the building blocks for success relationships. Again, you can connect these to your own
personal life. What makes a good relationship? Mutual trust, strong communication, commitment to
mutual gain, having the same goals in mind, and the right type of structure to make that
relationship successful here. One of the key conversations we took from here was about mutual trust, and
trust not just being this holistic thing. But it’s made up of multiple dimensions here– things like
dependability. Am I going to be able to do what I say I’m going to do? Competence– am I
knowledgeable? Am I an advisor? Am I somebody you can consult with because I know the product, the
company, the industry, and all these things that, you know, I spend all my days thinking about? The
customer orientation– am I benevolent in my thinking about the customer and having them in mind? Am
I perceived to be honest and truthful and sincere? And then it also comes down to little things like
likability. But trust is this multi-dimensional thing. And it’s not just something you can hand over with
one of those. There can’t really be a zero in any of those columns, right? It has to kind of come from all
these different dimensions, across dependability, and competence, and customer orientation, and honesty,
and likability. And that can happen from the very get go. So we talked a little bit about things that you
could do to instill dependability very early on– things like showing up on time. Things you could do to
instill competence from the very first meeting– be an expert. Be knowledgeable. Be somebody who can
teach and train them. Likewise being customer oriented– asking them questions, actually being
honest, and those type of things. So these things happen from the very first interaction on, and it’s very
hard to build them over time. It takes a lot of time and continual iterations. But again, once you have a
zero in some of those columns, it’s pretty easy to kind of swipe this away and deteriorate that trust. Trust
is really important. Again, from the left side, we have all those factors driving trust. But once it’s
embedded within the relationship, the perceived risk of working with that supplier goes way down, as
well as the decision-making uncertainty. So they’re able to make those decisions with a lot more certainty
and speed. The opportunism of the customer, as well as the concern that the supplier’s going to act in kind
of not the best interest of the buyer goes way down. And the things that are improved include the
customers’ willingness to share information, which is really important as you’re trying to get towards that
solution perspective. And the overall performance of the seller and the supplier in that case. The second
building block was open communication. In this case, it has a lot to do with listening skills, questioning
techniques, and then active listening, showing that you’re listening and responding
appropriately. Common goals are important to make sure you’re both working towards the same
objectives, as well as the commitment to that objective. So it’s not just investments in the relationship, but
the mutual investments coming from both parties, so that power and dependence isn’t skewed in some
way. And finally, the organizational support. Again, organizations can say, we emphasize
relationships, relationships, relationships. But if they aren’t giving you the right type of structure, for
example– if they’re not giving you a salary base that says, yes you earn commission based on sales. But we
also gave you this base to emphasize relationships and to do other tasks aside from just sell and just close
deals. If they aren’t training you on how to do this, if the reward structure– again, kind of similar to
that structure– isn’t set up properly, then you could argue that the organization is kind of all talk without
a lot of support for these actual goals. Again, the key things we talked about in this chapter– the different
types of relationships. We went from solo exchange all the way to strategic partnerships; when each type
of relationship might be more or less appropriate based on those investments and the risks versus the
benefits coming out of it; characteristics of successful partnerships; those building blocks; the benefits and
risks to the organization and to the salesperson; how they develop over time from that awareness stage
all the way to the potential of dissolved relationships; and their responsibilities to salespeople across each
one of those stages. What’s their goal at the awareness stage? What’s their goal at the exploration, the
expansion stage, at the committee stage, and so forth. So what should the salesperson be doing as the
buyer is following this process? Overall, those are some of the key concepts that come out of chapter
13. And the material really should be fundamental, again, as we move forward to future chapters in the
textbook, here.
• What different types of relationships exist between
buyers and sellers?
• When is each type of relationship appropriate?
• What are the characteristics of successful partnerships?
• What are the benefits and risks in partnering
• How do relationships develop over time?
• What are the responsibilities of salespeople in
• What is customer lifetime value (CLV)?
• Customer lifetime value (CLV): Combined total of all
future sales
• Why is CLV important?
• Strong relationships with customers are a source of
competitive advantage
• How do you measure CLV?
• Reflects customer satisfaction, retention and/or loyalty
Group 1
Group 2
Group 3
Group 4
Lifetime Sales
Avg. Purchase
Total Number
of Transactions
Number of
Transactions /
One & Done
• As companies’ attempts to develop stronger
relationships with their customers, loyalty is the linkage
to CLV:
• Behavioral loyalty: Purchase of the same product from
the same vendor over time
• Attitudinal loyalty: Emotional attachment to a brand,
company, or salesperson
• Which is more important to you as a salesperson?
1a. Solo exchanges
• Both the buyer and the seller pursue their own
• No future business
1b. Functional Relationships
• Long-term market exchanges characterized
by behavioral loyalty
• Customer satisfaction: Buyer’s expectations are
met and needs are fulfilled
2a. Relational partnerships
• Buyer and seller have a close personal relationship
• Marked by open, and honest communication
• Partners trust each other and don’t worry about small details
• Not necessarily strategic but provides flexibility
2b. Strategic partnerships
• Long-term business relationships
• Partners make significant investments to improve the
profitability of both parties
• Partners have gone beyond trusting each other
• Partnerships get a strategic advantage
• Created for uncovering and exploiting joint opportunities
– Product
Product Focus
Cola Drink / Syrup
Taste, Brand
Patrons to
the Theater
DuPont Paint
Paint (for cars)
Ford –
Raw Materials,
NetSuite CRM
CRM systems are technology that
allow customers to organize
customer information, identify sales
opportunities, forecast sales and
inventory levels, maintain oversight
of employee behaviors, etc.
Product Description
• Trust: Belief by one party that the other party will
fulfill its obligations in a relationship
• (a) Dependability: Perception that the salesperson, and the product
and company, will live up to promises made
• (b) Competence: Demonstrated knowledge of customer, product,
industry, competition, etc.
• (c) Customer orientation: Degree to which salesperson puts
customer needs first
• (d) Honesty: Truthfulness and sincerity
• (e) Likeability: Behaving in a friendly manner and finding a
common ground between buyer and seller

Perceived Risk
DM Uncertainty

Share Info
• Key building block for building successful relationships
• Different for relational and strategic partnership
• Relational partnership – Communication goes through the
• Strategic partnership – Direct communication between the
buyer and seller
• Cultural differences should be considered
• Listening
• Provide …
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