Ebook: The Effect of Solution Transition on Steering the Sales Force: For New Marketing and Sales Metrics : For New Marketing and Sales Metrics

The objective of this study is to provide a metric that helps to assess the solution readiness status of a firm’s sales force. Sales are often considered as part of a marketing strategy. It will be analyzed to what extent this perspective is justified and how this is influenced by the emergence of solutions. Besides, an overview about the sales marketing interface will be given to raise the awareness of this topic. Furthermore, this study will increase the understanding of the reader about applied metric concepts in marketing departments that can be found in existing firms today. It will be demonstrated how shareholder value influenced the design and why these metrics are not aligned with the latest study of firm value. Auszug aus dem Text Text Sample: Chapter 3.5, Drivers for Solution Orientation: Reason for the development towards solution orientation is not a single root cause but various circumstances of which the most obvious ones are illustrated in the following. Certainly three major groups shall be considered which are the market environment, selling organizations and buying firms. Market environments changed tremendously over the recent years. While a few companies operated mostly in local markets the situation today is that much more of them exist and local boundaries are diminishing which leads to more competition on local and global basis and also more firms to focus on their core competences. This finally implies that in most cases it is not possible anymore for one company to provide a real solution that mostly is bundling several core competences. As a consequence many firms started to search for strategic but also on demand alliances that leverage their market position by combining several core competences on demand rather than growing all of them organically. Thus the capability to ally with partners is considered critical and is an additional differentiator for solution providers. As shown in 2.3 on page 10 this capability is part of the market based assets. Thanks to this development it becomes also crucial for a firm to recognize its own position in the economy. A firm would have to decide whether it really has the core competences required to sell directly to customers. Alternatively it may be more appropriate to sell to a main supplier or backup supplier as a backend supplier. Dependant on this the author assumes that the service and solution orientation may differ since a backend supplier may need a different strategy. This leads to the question what drives sellers in general to move towards solutions orientation. Science has perhaps not yet identified all drivers for the emergence of solutions from a selling firm perspective. The mindset of sales organizations is reflected on several blogs and also suggested by scholars like Hildenbrand et al. can be summarized as follows. A big shift from a demand rich to a demand poor environment results in survival of the fittest which means that if competition offers solutions or names its offers solutions, firms in the same market are required to do the same. An amplifying effect is the economic landscape that changed from local to global competition. A further important factor is the continuous race for revenue growth and due to very promising outlooks from a return and margin perspective more and more companies are trying to participate in the race for solution providers. From a buying firm perspective the situation is interestingly similar but not equal as Gruhler analyzed. Customer focus on their core competences more which creates resistance to pure product offers that require assembly or integration by the customer. Another fact is that solutions can be easily used to split important functionalities inside a company and even allows complete outsourcing if required. The outsourcing capability itself provides rather low switching costs although many managers confess that this often is more an expectation rather than a waterproof condition. Nevertheless this flexibility is highly regarded by managers who face uncertainty or made bad experiences with a vendor of choice who could not meet the expectations over the expected product lifecycle time. If solutions are selected they often can be accounted to the operational expenditures rather than capital expenditures that are in a way disliked by investors especially in industries with high suspicions. Reducing number of suppliers is appealing to firms since it reduces costs and complexity and also explains why buying firms seek the all in one offering. 3.6, Conclusions about the Evolution from Product to Solution Orientation: Chapter 3 provided a comprehensive overview about what happened to the market place. It illustrated the historical reasons for product orientation that were mainly caused by an attempt to cope with industrialization needs with a focus on economies of scale. From there the service evolution has been followed consequently by many firms in order to stay competitive and has now reached a stage in which the differentiation within the product by price or features is not really an option. The service definition has evolved but its details remain to be a moving target. A firm that has focused on products in the past would have to address the service excellence space in order to differentiate from its competition in solution dominated markets. This is an effect of the service evolution that forced most firms in the past to enhance portfolios with services for the product and later services for profit strategies. Offerings that are ranked as service excellence today lose their value added perception when the majority of firms provide the same. For marketing managers this implies a continuous search for the most appealing service offerings. Here one can ask whether in a world of permanent customization of offerings the traditional setup of marketing and sales can be kept. Due to the significantly increasing influence of customers in the value creation process it is likely that the strategies of marketing and sales shall be influenced. It shall be beard in mind that in product oriented markets the marketing is taking care for the creation of product and service offerings based on markets and segments and handovers them to the sales force, which may be either a part of marketing or a standalone organization within the firm, after the creation process is finished. To analyze what drives the sales forces today it is useful to take a look at the dominating metric concepts that are applied in firms. The author acknowledges that the concept of account management is an attempt to overcome the difficulties raised in complex buying contexts. However this study does not differentiate between account managers and sales personal since evidence is missing that they behave differently. Biographische Informationen Julien Schnerrer is engaged in the telecommunication industry for many years. After his early engineering career, he held various positions in B2B marketing and sales at the telecommunication industry. While working, Julien Schnerrer studied ‘International Management‘ at the ‘Hochschule für Oekonomie und Management‘ in Berlin, Frankfurt and Stuttgart. Today, the author is working as a Product Line Manager for a leading vendor in the telecommunication market that has successfully managed the turnaround from a product to a solution seller. This study was highly influenced by his daily observations derived in a real economy environment - often contradictory to theoretical opinions and thoughts. Further, the writing of this study has been highly supported by Dr. Jan Lakotta, ESCP Europe.