Strategic Sales and Strategic Marketing

Nikala Lane, Nikala Lane

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781317982272
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

There is growing evidence that the traditional role of the sales organization in business-to-business marketing is quickly evolving from a tactical, operational function to a strategic capability concerned with the management of critical processes that support business strategy and deliver value to profitable customers. This topic is of major relevance to scholars in both the sales and marketing domains, and this relevance is underlined by the intense interest of managers and companies in how this field is changing. This collection is a unique gathering of views on the critical issues to be confronted in the strategizing of the sales function, from distinguished scholars from throughout the world. Their focus is on the linkages between strategic marketing and the corollary of strategic sales. This book was published as a special issue of Journal of Strategic Marketing.

Strategic sales and strategic marketing

 

 

This double-issue of Journal of Strategic Marketing (JSM) is devoted to the subject of the linkages between sales and strategic marketing, but particularly the way in which these linkages are evolving as scholars and executives take a more strategic view of the traditional sales function and the management of major business-to-business customer relationships.

It seems some considerable time ago now that we started planning a special journal issue concerned with the increasingly strategic role of new types of sales and account management in managing critical relationships with different types of customer, and indeed other types of third party relationships, such as those with alliance and network members and other value chain participants. I am very grateful to the editors of JSM for allowing us the time to build what I think will be a very influential set of papers. I am also delighted that they were able to allow us a double issue of the journal, in which to publish our collection of papers.

The underlying rationale for what we have attempted here is the growing evidence that the traditional role of the sales organization in business-to-business marketing is fast evolving from a tactical, operational function to a strategic capability concerned with the management of processes that support business strategy in delivering value to profitable customers. In this sense, there is a case that the much-debated question of the relationship between sales and marketing has been rendered partly obsolete by the importance of the interface between sales and strategy. Related issues pertain to the development of strategic account management models, as an approach to coping with the demands of dominant customers. The topic is of considerable relevance to scholars in both the sales and strategic marketing domains, and this relevance is supported by the intense interest of managers and companies in what is happening in this area.

We suggested to our potential authors that a broad range of topics could be relevant to enhancing our understanding of the new types of sales organizations which are developing: we were interested in the changing role played by sales organizations in business-to-business marketing companies; relatedly process-based models of the contribution of the sales organization to the creation of superior customer value might be insightful; one point of attack could be the evolution in the organizational positioning and form of the customer-facing components of the organization and the development of sales capabilities as a critical resource supporting and influencing business strategy. Possible approaches extended to empirical tests of the effectiveness of sales organizations in implementing business and marketing strategies, and the evaluation of the impact of new organizational forms, like customer business development and strategic account management approaches, on business performance, the effectiveness of organizational linkages between the sales organization and strategic decision making, and tests of the impact of sales capabilities on competitive advantage and business performance.

With this ambitious range of topics we were able to attract an outstanding set of authors to offer their insights into the evolving role of the sales organization in shaping as well as implementing business and marketing strategy. Inevitably, our ambitious target coverage of the field has been only partly achieved. Indeed, one of the exciting implications of the collection is that it helps identify the new work which needs to be done in this area to extend both our conceptual understanding and the value we can offer managers in confronting the practical problems they face in rethinking the role of sales and implementing the organizational changes necessary to support a new strategic sales function.

It is also particularly pleasing to be able to report as Guest Editor that we were successful in attracting contributions to the special issue from some of the most distinguished scholars in this field in the world, but at the same time we were able to balance these with papers from researchers at earlier stages in their research programmes. We believe the originality and potential interest for readers is uniform across the authors and groups represented in the special issue.

The issue starts with an attempt to demonstrate the links between the various contributions and to underline the unique contribution of each.

Nikala Lane

Warwick Business School

[email protected]

May 2009

Searching for strategy in sales

Nikala Lane

This issue of the journal contains seven separate contributions to the debate regarding the emergence and characteristics of the strategic sales organization. The papers published here move the strategic sales issue from the generalized prescription of a more strategic approach to sales, to more specific analyses of critical topics: the strategic realignment needed for effective organizational change; the need to capture key account performance as a basis for making strategic choices; the impact of the leaning of operations and lean enterprises spanning value chains on buyer–seller relationships; the need to locate sales ethics in an enterprise-wide ethics system that represents a company’s key values and its undertakings to stakeholders; the importance of accommodating marketing/sales interface issues in the transformation process; and, focusing on the processes of strategizing the traditional sales organization for the new type of role it is expected to play.

This volume contains a collection of essays provided by scholars who were challenged to examine the relationships between strategic marketing and the growing strategic role of the sales organization. Our starting point was the observation that the traditional role of the sales organization in business-to-business marketing is fast evolving from a tactical, operational function concerned with the operational implementation of marketing strategies and programmes, to a strategic capability focused on the management of the processes that support business strategy, and which plays a growing role in the shaping of that strategy.

The authors were provided with no direction by the editor as to specific topic or approach to be taken and were allowed complete editorial freedom in how they addressed the central issue and developed insights to take the academic and practical debate forward. The result is a relatively diverse set of contributions, which bring several different insights to the strategic marketing/strategic sales relationship, and yet there are common themes which are worthy of some note.

In the broadest terms, we have grouped the papers in the way discussed below. The grouping and ordering does not imply priorities or relative importance, but a simple and straightforward way of laying out the contributions. Thus, we move from considering the processes of strategic alignment that underpin sales organization transformation (LaForge, Ingram and Cravens) to the driving force of key/strategic account management (Jones, Richards, Halstead and Fu) and the organizational context for value chain collaborations provided by the lean enterprise to which many companies now aspire (Piercy and Rich). A strategic and enterprise-wide approach to ethics in sales (Ferrell and Ferrell) provides an important structure for incorporating in our thinking a critical moral dimension. Two contributions return to the marketing/sales interface as one of the topics which once again becomes significant in the context of an important organizational transformation (Malshe; Fitzhugh and Lane). Finally, we examine the strategizing of the sales organization in terms of the types of changes which are unfolding, how they can be managed and the research opportunities they provide for scholars (Lane and Piercy).

In overview, the contribution of each piece to the general debate can be identified as follows.

Strategic alignment

While it is common to discuss the alignment (and by implication realignment) of sales processes with market change, LaForge et al. develop a detailed and compelling framework for identifying the types of alignment underpinning the strategic sales organization, their logic and rationale and the management challenges faced in achieving this kind of fundamental organizational change in developing superior customer value offers.

Two major contributions stand out from this paper. First, the authors provide a novel integrative model which compares sales organization transformation characteristics (sales organization strategy and sales management practice) to firm transformation. Their logic is that as the firm creates market orientation to focus efforts on superior customer value, this leads to a focus on customer relationship management and strategic relationships, a shift from emphasis on structure to one on process, promoting marketing and sales cooperation and the determination of new metrics based on the transformation. Their model links each aspect of firm-level transformation to related changes in sales organization strategy and sales management practice, as a basis for developmental action by management.

Second, and most particularly, the development of their model rests on the identification and evaluation of the underlying interfaces where strategic alignment is a priority. Their view of sales organization strategy examines alignment in terms of: the link between market orientation and customer-oriented selling; the impact of strategic relationships (e.g. with major customers) on sales and selling strategy (in terms of customer segmentation, relationship selling, sales channel strategy); the need to map process structures onto sales processes and vice versa; the marketing/sales relationship; and, the need to change sales organization metrics to match those used by the firm and the marketing function. Correspondingly, LaForge et al. identify the alignment priorities for sales management practice: customer-oriented selling and sales management alignment; sales strategy and sales management alignment; sales process and sales management alignment; marketing and sales relationship alignment with sales management; and alignment between sales organization strategy metrics and sales management practice. This conceptualization provides a rationale for sales organization transformation management imperatives and a framework identifying several interesting research opportunities.

Importantly, in addition to their compelling models of transformation and alignment interfaces, the LaForge et al. rationale also provides us with several links to other contributions.

Key/strategic account relationships and the lean enterprise

The rationale for emphasizing strategic alignment is related among other factors to the impact of strategic relationships with major customers, and to firm-level transformation. The next two papers in our collection examine in more detail important aspects of these shaping forces: key account management and the implications of the lean enterprise. Both papers address in different ways the essentially cross-functional processes that develop to handle complex relationships with major customers.

Jones et al. have developed a strategic framework for key account performance. The urgency and importance of developing valid and diagnostically useful performance criteria for key or strategic account relationships is underlined by the choices companies face in how they realign processes around such customers. In these terms the key account issue becomes a matter of firm-level investment (or disinvestment) based on the chosen criteria of performance.

The Jones et al. conceptualization introduces a strategic framework for key account management drawing on the strategic marketing theories of relationship marketing, key account management and customer equity. Their framework uses three drivers of customer equity (value equity, brand equity and relationship equity) to examine both important relational outcomes (relationship commitment and trust), and financial performance outcomes (profitability and share of customer spend), which are produced by the strategic decisions made in key account programmes.

Importantly, the Jones et al. framework provides a mechanism for directly relating key account performance to the strategic choices that the firm makes in dealing with key accounts. Their framework has a four-part structure: the strategic decisions made in the key account programme; resulting improvements in value equity, brand equity and relationship equity; producing greater relationship commitment and trust; ultimately driving the performance of the key account in profitability and share of spend. They place emphasis on the linkage between marketing strategy choices and the growth of value, brand and relationship equity to make the link between strategic marketing choices and key account performance fully explicit.

This contribution relates both to the search for appropriate process alignment strategies discussed by LaForge et al., but also to the major questions which have been raised regarding the potentially unequal sharing of benefits between sellers and their key accounts (see, for example, Fink, Edelman, & Hatten, 2007). The link between marketing strategy and key account performance is emerging as a critical firm-level issue in making choices about transformation investment.

Piercy and Rich also draw attention to the essentially cross-functional nature of the processes surrounding relationships with customers and suppliers as value chain partners. Their focus is on the lean enterprise, as it has become a common model in approaching operations and manufacturing management in many European and US businesses. The parallel with the key account management issue is that central to the lean operation is a significant shift in the management of supplier relationships, and particularly the shift from transactional, cost-based buying to long-term collaborative partnerships. The central argument made by Piercy and Rich is that the nature of purchasing and sourcing in the lean organization presents unique challenges for the seller, which are not yet fully recognized. They underline the problems for the traditionally organized sales operation in coping with the requirements of lean customers for complete transparency across supplying organizations and their focus on organizational capability rather than simply cost. Indeed, one implication of selling to the lean organization is the mandate for the seller to adopt lean strategies and organizational designs. The pressure to become lean adds a further dimension to the strategic realignment of processes in the transforming sales organization and the strategic choices in investments with value chain partners (key accounts).

They describe a process whereby the effects of lean change pull the sales force away from traditional production/sales-push approaches (selling existing products to customers based on discounting), towards offering bespoke services that the buying customer wants and needs. This leads to an additional and powerful force for sales force transformation. While the Piercy and Rich contribution is developed from an operations and supply chain perspective, their argument resonates with the issues of market orientation and transformation in buyer—seller relationships. Importantly, from a cross-functional perspective, they point to the need for the lean sales force.

Piercy and Rich produce case study evidence to identify the changing role and requirements for sales under lean sourcing. Their findings point to: the changing role of price and the decline of price-based competition; greater product customization; higher service provision; managing orders to avoid holding stock in the supply chain; working with internal departments to change working practices; and, the sales organization playing a greater role in education and information sharing as opposed to traditional adversarial and low-trust exchanges sometimes found in traditional sales practices. Perhaps the strongest message from the Piercy and Rich contribution is underlining cross-functional interests in buyer–seller relationship management and the implications of active cross-functionality for a new type of sales organization.

An ethical dimension becomes an imperative

The recurring themes of market orientation and cross-functional process underpinning the strategic sales organization are further reinforced in the Ferrell and Ferrell appraisal of sales ethics in an enterprise-wide stakeholder approach. Their position is, in fact, that a strategic stakeholder orientation goes beyond market orientation, and customer orientation to provide the foundation for an organizational ethical culture and an ethical sales sub-culture.

The underlying logic for this approach is that strategic sales leadership built on an ethical organizational culture contributes to ethica...