Statement of Problem
Omnico Inc was found to be trailing in the industry with regard to customer retention. The market research study indicated that the company was below the industry average as far customer retention is concerned. Buddy Towers, the new sales manager, believes that the cause of the problem is their sales people’s poor customer relationship management. The company thus has to identify which is the most effective approach to customer relationship management the company should adopt—the very friendly and personal approach that the manager has known or the more impersonal and technical approach.
Summary of the Facts
A market research study has shown that Omnico Inc was performing below average as regards its customer retention. Buddy Towers, the newly appointed sales manager and formerly one of the top salesmen of the company, foresees that the company will continue to decline in sales as a result in the next few years and eventually fold up. He assumes that the reason for this decline is the poor relationship building efforts of the sales people. In particular, he thinks that the sale people do not play enough golf with their clients and wants his sales people to pursue this direction. After all, Buddy has been the top salesman of Omnico for the last 20 years. His success is largely the result of his specific approach to relationship building—playing golf with clients.
The sales people disagree with Buddy. In particular, Laura Kilburn, a successful sales person but with few years of experience than Buddy, objected to the old fashioned approach to selling and claimed that many of her own clients do not play golf at all.
Omnico—in particular, Buddy and his sales team—needs to identify which selling approach would work best for the company. It needs to address this quickly because if, as Buddy predicts, the company would be in serious trouble in three years. At the same time, the conflict in perception in how to approach customer relationship building in itself a problem. I could result in a deadlock and aggravate the situation and lead to further deterioration in the sales performance of the company.
Analysis
Buddy Towers and Laura Kilburn are at two opposite poles in their approach to relationship management. Buddy tends to rely heavily more on relationships; Laura, on products and services. The two have valid points and strengths. Their chief weakness is that they both negate or deny the other’s strengths.
Buddy is correct about the importance of personal relationships. In a situation where all things are equal (i.e., all competitors are at par with each other), the final decision of the customer may be based on the relationship he has with a supplier. However, he is wrong to assume that all this is related to playing golf. It is highly doubtful that corporate officers would be making decisions purely on the basis of friendship or personal relationships.
Laura is also correct about the importance of product and service knowledge. In a highly competitive environment and with high product and service knowledge, it is important that the sales person is more knowledgeable about these things than the customer is. This is particularly important in technological industries. However, this is not always the basis for decision-making. After all, decision-makers are humans with feelings. Again, in a situation where all things are equal especially with regard to product or service quality, other things—like friendship—would matter.
An approach to customer relationship-building based solely on Buddy’s or Laura’s model does not seem to work for Omnico. Both are top performers in the company. So everyone in sales would be doing something in-between their two approaches. Unfortunately, the market research findings indicate otherwise. Omnico is below average as far as customer retention is concerned. So, the two extreme ways may not really be that effective. This is a serious threat that the company—especially the sales team—should be concerned about.
Laura provided an opportunity for Omnico to explore. She said that her clients do not play golf. This is something that Omnico and especially Buddy should think about and explore.
Recommendations
The solution to the problem of Omnico is somewhere between Buddy’s and Laura’s approaches. Buddy should be able to probe how he had approached things that led to his success and find out how these could be applied into relationship-building other than playing golf. He should also allow for greater feedback from his team. As Laura said, his approach might be a bit old fashioned. However, that does not mean it is invalid. Human or personal relationships still matter in sales.
The same thing may be said about Laura and the rest of sales team. Technical knowledge of product and service are important They should however learn to apply Buddy’s techniques to other areas that are of interest to their clients.
Based on Laura’s feedback, Omnico should do deeper research or probing into what she meant that her clients do not play golf. The company—especially Buddy and the sales department—should know exactly what these are. After finding out what these are, Buddy should develop a model or strategy as to how his experience in gold could apply to these. Related to this, the company should also do a needs analysis not only with regard to product and services related matters but also with regard to customer expectations of the sales person ( Rackham, pp. 53–65).
Omnico should also do further investigation into the research findings, specifically into how the top companies in their industry did right. Omnico is below average in customer retention and it should use as benchmark the performance of those who were above average. While Buddy and Laura were among the top in Omnico, given the company’s performance in the research findings, they might just be mediocre in the industry. So, they cannot benchmark themselves.
Conclusion
In the end, what Omnico may need is a sales approach that is a balance between that of Buddys’ and that of Laura’s. It may something that is referred to as consultative selling (Rackham and De Vincentis, pp. 125–130). The sales person will have to be both a friend and a consultant to the client. To be effective in presenting everything best about the company’s products and services, he or she must be able to get the client to listen well. Good knowledge of products and services is not enough. Good and intimate knowledge of the customers is also very helpful. After all, if all things are equal among competitive companies, other things—like relationships—would matter more.
References
Rackham, Neil (1988). SPIN selling. New York, NY: McGraw Hill.
Rackham, Neil and De Vincentis, John (1999). Rethinking the sales force: Redefining selling to create and capture customer value. New York, NY: McGraw Hill.
