CHAPTER 5

Sales Training, Value Propositions, the Brand Promise, Pricing, Legal, and Ethical Considerations

It’s a funny thing about life; if you refuse to accept anything but the best, you very often get it.

—W. Somerset Maugham

The quality of a person’s life is in direct proportion to their ­commitment to excellence, regardless of their chosen field of endeavor.

—Vincent T. Lombardi

Don’t be afraid to take a big step when one is indicated. You can’t cross a chasm in two small steps.

—David Lloyd George

Introduction

The new product introduction team creates sales training, methods to enhance sales productivity, value propositions, the brand promise, and pricing. Throughout the process, the team needs to hold itself and all colleagues to high legal and ethical standards. This chapter discusses key issues in for each of these topics.

Sales Training

The pharmaceutical industry has traditionally hired people with limited sales experience and then systematically trains them in sales techniques, therapy, and product information. The training provides specific instructions on what to say to whom at what time. The sales professional is taught best practices and is tested on messages and objection handling until competent. In the field, sales managers work with the sales people to improve their skills. By contrast, traditional companies’ hire experienced sales people with a successful sales track record. Other companies have sales training programs that are often less developed than pharmaceutical training programs. Still effective sales training needs to ensure compelling and consistent messages (what to ask, what to tell), sales tools that educate the customer, and competence in objection handling. The most effective product launches ensure that their sales team is trained in the products and selling approaches and competencies are validated in the classroom and in the field.

The selling process needs to be continually improved by testing new approaches that measurably improve pipeline value by stage, time to advance to the next stage, and time and success percentage of closing the opportunity. These measurements report productivity by sales person and groups to benchmark best performance that can lead to discovery and sharing of best practices across the sales team.

Figure 5.1 Learning pyramid

Source: National Training Laboratories, Bethel, Maine

The most effective sales training programs include learning prior to a meeting, learning at a meeting, and follow-up learning in the field. Effective sales training programs use techniques that ensure that the learner becomes competent the topics that are required for performing the job. These techniques include lecture, reading, viewing videos, ­demonstrations, discussions, simulations, and having the learner teach others. Theoretical retention rates for each of these methods in shown in Figure 5.1. In addition, sales is learned on the job through trial and error and on joint sales calls with sales trainers, sales managers, marketing, research and development, and other colleagues.

Key Professional Selling Concepts

Effective sales people have a mindset that is ethical, expect success, and help customers be even more successful. At every sales training meeting, sales people need to be re-energized and motivated. Fundamental selling concepts that can be reviewed and provide motivation at any time include the following:

•Professional selling is helping

•Offer only something that you sincerely believe will serve the best interest of buyers

•What’s In it For Me (WIIFM) …. Me means customer!

•Value = monetized benefits less costs

•Value elements: (1) increase revenue, (2) decrease time or cost, and (3) improve quality of life

•People buy on emotion and justify with facts

•Change model: (1) dissatisfied with today, (2) compelling vision of the future, and (3) easy steps to get there

•In sales and in the dictionary, No is just a word that comes before Yes. It may take nine messages before the customer will hear your message and say yes

•In sales, No means I need to kNow more about how you will make my life even better

•Three key questions:

1. Can you see how this will help you _____?
2. Are you seriously interested in ______?
3. Given your beliefs, when do you think it would be best to start ______?

•Objection handling: feel, felt, found, indirect denial, direct denial, compensating for deficiency

How Salespeople Spend Their Time

Salespeople do selling and nonselling activities. The selling ­activities include preparing for, executing, and following up on customer interactions. The nonselling activities include administrative work such as ­completing expense reports, putting information into a customer ­relationship management system, coordinating delivery of products, and working with colleagues on projects. One survey reported the following breakdown of salesperson time:

Administrative tasks 34 percent

Waiting or travelling 32 percent

With customers 15 percent

Prospecting 14 percent

Service calls 5 percent

Companies need to continually improve how they help salespeople spend more time in face-to-face contact or time in contact with customers and reduce the nonselling tasks as much as possible. The quality of selling time is directly related to the salesperson’s interaction with customers. In general, different modes of communication tend to enable different results. For example, e-mail or text or Linkedin or Facebook can build or maintain relationships. However, they can also unintentionally damage relationships because it is a one-way communication and the reader assigns the emotion to the sender’s words. The emotion assigned is often negative or incorrect.

Phone can build relationships and can also effectively maintain relationships because it is a two-way communication that allows the caller to hear tone of voice and adapt to the recipient. It is easier to say no over the phone or break off the interaction, and the level of commitment from each participant is lower so dealing with difficult issues can be more challenging.

Face-to-face communication is most effective at building relationships because it is the most complete two-way exchange between people. Face to face also shows the highest level of commitment from both parties so it predisposes the participants to collaborate. When we meet in person, we use words, tone of voice, and body language. We also perceive overall demeanor and appearance. This method allows the easiest give and take between two people. Our innate ability to size up the other person and decide to trust this person is completely engaged with face-to-face encounters. We make this assessment in the blink of an eye. FaceTime, Skype, and other video and audio communication tools lie between phone and face-to-face conversations.

Territory and Time Management

Professional sales people are paid to sell. In general, the more time they are face to face with customers, the more they sell. Tools that can help a sales person to be more efficient include the following:

•Effective training so the salesperson memorizes what is required and can quickly access what is required.

•Effective support from the home office, manager, and other colleagues so questions get answered quickly and the salesperson can keep moving the customer forward.

•Effective organization of key information related to making sales happen, including customer, product, and administrative information.

•Daily, weekly, and monthly planning so appointments are scheduled to maximize salesperson time in front of the customer and minimize travel time.

•Effective and efficient completion of required tasks for the home office such as expense reports, management reports, pipeline information, and requests for customer and competitive information.

Vignette

You Have Two Jobs; One of Them Is to Learn How to Do Your Job

Students getting ready to enter the world of business always ask about how long the training program is. Forever is not the answer they are looking for. Those who accept the fact that they have just been appointed director of training for themselves will go further and faster than any others. Learning the fact of the day is just the beginning. Finding out from customers what is going on in the trade so that pieces of the puzzle will begin to fit together is a never-ending project if you are to keep up with an ever-changing big picture. Technology moves. We all must move with it. Where it is going is always a good question to study. You don’t have to lead the pack, but it’s not a good thing to be deep in the second tier. You have to learn about general business and about world events, not because they will affect your business, but because well-rounded knowledge is apparent to those doing business with you. Trade data, technology developments, and world events are a big part of your training program. These are best learned every day rather than in formal programs. They require time and effort to be fit into a tight schedule. A ten-minute wait for an appointment can translate into two Wall Street Journal articles (if you have them in your bag). You are now attending graduate school. Study hard; it will pay off! (Falvey n.d.).

Value Propositions

The product introduction team creates detailed messages and objection handling for various levels in the organization (strategic, managerial, and operational) and for relevant constituents or departments (e.g., in the hospital market segment, this includes patients, physicians, nurses, administrators, biomedical engineers, and purchasing). Each customer will have different perceptions of the new product’s value. The operational buyer has the shortest time horizon, so the relevant time period for assessing value may be one week or one month or one quarter. The managerial buyer will have a longer time horizon which could be one year or longer, and the strategic buyer could consider more variables, such as company reputation or synergy with other divisions, which an operational buyer would not consider.

Value to the health-care provider is the monetization of the product benefits that result in

1. Increasing revenue;

2. Decreasing costs or time; and

3. Improving quality of life of the patient and caregiver.

A product’s value can be determined by clinical and market research as follows:

A product used by patients who are trained by nurses has the following benefits:

1. Easier to use; and

2. Less risk of infection.

The product value is the quantification of these benefits in terms of dollar.

1. Easier to use results in 30 minutes less training time and 10 percent less patient dropout from the procedure resulting in 12 more months for the patient on the therapy or $3,000 margin per year for the provider.
   
2. Less risk of infection results in $100 less per month in antibiotics, two fewer hospital days per year at $1,500 per day, and six more months on the therapy or $5,700 economic improvement for the health-care system.
   

Additional value beyond the product that can be monetized includes product reliability; consistent delivery; effective company resolution of issues; services provided by technical, sales, or clinical resources; reliability and quality of the product; and price.

Value may be thought of as a ration of benefits to costs. Customers invest in doing business with you, including financial, time, and effort to achieve a bundle of benefits from the company. The seller can increase the value of his or her offering by

•Raising the number or amount of benefits;

•Reducing the cost to the customer;

•Raising benefits and reducing costs;

•Raising benefits by more than the increase in costs; and

•Lowering the benefits by less than the reduction in costs.

For example, when we shop for a car, we add up and compare the costs and benefits for each alternative. We compare the total package that includes the price and bundle of benefits of each car and dealership.

The product introduction team needs to convincingly provide answers to the question “why buy from us now?” The most effective messaging includes questions, logical explanations, and facts that help the customer emotionally commit to the decision to change. An effective approach to changing customer behavior is to construct messages (what you ask and tell) that lead the customer to decide that they are dissatisfied with the present, desire the compelling vision of the future that you offer, and understand the easy steps to achieve the vision.

The Magic Question That Accelerates Sales

Many years ago, I worked for a company that provided IT systems integration services to large electronics manufacturers. Projects could run over $10 M so each deal was significant.

One night, I had dinner with the COO of a large potential customer. The COO’s company was building a new factory. During dinner, I told the COO, “My company helped Motorola and Siemens use information technology to bring their new factory online six months ahead of schedule. Their faster time-to-production enabled them to generate hundreds of millions in incremental profits. Then I asked, “Would you like to learn more about what they did?”

He put down his fork and quickly answered yes. This one question opened the door to a very large order.

Over the years, I’ve learned that initiating the sales process by asking a single attention-grabbing, curiosity-raising question is the most effective way to accelerate revenues.

The Magic Question™ is that one question you need to ask to get the prospect to say “please tell me more.” The trick is to generate curiosity quickly.

A typical Magic Question starts with a short story of the form “My company has developed (a new product) that has helped (a leading company in the customer’s industry) achieve (the following important business benefits). It then goes in for the (sales) kill by asking, “Would you like to learn how we did it?” If phrased properly, the prospect can’t help but say yes. You have now grabbed their attention and gained their implicit permission to continue to ask more exploratory questions.

While the concept of The Magic Question seems simple, developing effective Magic Questions requires close cooperation between sales and marketing. It is marketing’s responsibility to drive creation of The Magic Question. Marketing must provide the following:

•clear description of what you want sales to sell;

•References that are respected by your prospect; and

•Concisely stated business benefits delivered by your solution that you know will resonate with your prospects.

Is your sales force prepared with the training and tools to drive the conversation further and accelerate the sales cycle if the prospect answers, “yes, tell me more?” Or must your sales team wait for the corporate cavalry to arrive to continue the dialogue? Forcing a delay by improperly equipping sales will unnecessarily slow the sales cycle. As many sales executives have told me, “delays have killed many deals,” it is marketing’s responsibility to ensure that sales is equipped to use The Magic Question to accelerate closing business.

The process of generating The Magic Question can be a powerful test of your understanding of the business value delivered by your product.

Do you know The Magic Question for each of your product and services? (Baron 2010)

The Brand Promise

The brand promise is the commitment from made from the company and brand to the customer. The brand promise is often one sentence, and can be developed based on the features, functional advantages, emotional rewards, values of the target customers and personality of the brand. The brand promise conveys the feeling that the company wants its customers to feel. The 3M brand promise pyramid in Figure 5.2 shows the elements of a brand promise.

Figure 5.2 The brand promise

Source: http://marketminute.typepad.com/photos/uncategorized/brand_promise.jpg

Brand promises from three highly successful, world-wide brands are listed as follows:

The NFL: “To be the premier sports and entertainment brand that brings people together, connecting them socially and emotionally like no other.”

Coca-Cola: “To inspire moments of optimism and uplift.”

Virgin: “To be genuine, fun, contemporary, and different in everything we do at a reasonable price.”

The Promise

The most powerful value proposition includes a specific, monetized promise to the customer. One format for creating promise that is tailored to the specific needs of the customer is shown as follows:

Our promise to you:

This promise can be strengthened by including the specific objectives and shared risk and reward into the legal agreement with the customer. For example, a company can promise to reduce hospitalizations by 10 days per month (let’s assume $1,000 in variable costs to the hospital per day) due to use of its product, and the agreement can state that for every reduced hospital day, the hospital benefit is $1,000 variable cost per day and that the company will receive 20 percent of the savings or $200 per day, or that the price of the product will increase the following year to capture a portion of the savings delivered to the hospital.

Great brands have four characteristics. The brand is

1. Unique, for example, Ikea furniture has exclusive, on-trend styling at unbelievable prices.
   
2. Consistent, for example, Red Bull looks and tastes the same no ­matter where you buy it.
   
3. Relevant, for example, Mini Cooper looks cool and doesn’t use much gas, and you can design you own online.
   
4. Emotionally connecting, for example, an iPad, with hundreds of ­personalized qualities, becomes a loved companion (Richmond 2010, 15).
   

The ideal brand has these characteristics that predispose the customer to view the brand favorably and transfer the positive, trusted feelings of the brand to the salesperson.

Voice of the Customer

The introduction team analyzes the voice of the customer, or the collective insight into customer needs, wants, perceptions, and preferences gained through direct and indirect questioning and observation. “These discoveries are translated into meaningful company actions objectives that help.”* The company increases value delivered to the customer and captures a portion of this created value for the company’s shareholders.

The insights that are most important come from the most valuable and most growable customers. These insights need to be sought after in a systematic manner. Topics to probe and monitor include actual value delivered (compared to the competition and the status quo), product and company awareness, brand preference and impact on purchase decision, message effectiveness, pricing, buying preferences, buying behaviors, benchmarking with competition, and expected competitive responses.

One crucial component of the voice of the customer is providing ­ongoing, thoughtful, honest advice from individuals in the company’s high-value target segment. These individuals are in an ongoing ­conversation about all elements of the product and company. These customers coach and advise the company on how it goes to market and how it can more effectively and quickly create raving fans.

These customer advisors provide input on product development ideas, messages on improved clinical outcomes and lower total costs, pricing, competitive positioning, and future product and service needs. All elements of the product introduction are discussed. Proof statements can be well-designed studies, observational studies, case studies, registry or collection of data, publications, presentations, posters, abstracts, white papers, editorials, testimonials. The goal for each of these advisors is to have their institution become a reference center. After reference advisors and institutions are in place, then the company needs to take actions to connect the reference center to other target institutions via e-mail, phone, webinars, visits to the reference center site, and visits for the advisor or expert to other sites. Each individual reference needs to have sufficient experience with the product and interaction with the company to ensure that they have high-quality insights and are well-informed perspective on all relevant aspects of the product and company. This deep understanding of the product, coupled with the reference’s clinical experience and knowledge of peer practices, enables high-quality input to major decisions concerning the product introduction. The best portfolio of references includes well-known, influential clinicians and administrators who are in demand for their expertise, and who share their perspectives regularly, and references from each target segment for the product (e.g., academic and nonacademic institutions, and geographic mix) as well as leading customers who have the highest usage levels can influence other high-volume users to join your company.

It is important to capture and be able to measure and track patient satisfaction. The net promoter score is a useful tool to get the overall impression of the customer experience. Combining the net promoter score with a few additional questions can be an effective approach to gathering and monitoring the customer experience.

The net promoter score question is

How likely are you to recommend this product to a friend? 0 = not at all likely, 10 = Extremely likely

Customers can be categorized as follows:

=Promoters (score 9 to 10) are loyal enthusiasts who will keep buying and refer others, fueling growth.

=Passives (score 7 to 8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.

=Detractors (score 0 to 6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate your company’s net promoter score, take the percentage of customers who are promoters and subtract the percentage of customers who are detractors.†

Additional questions to add to the net promoter question to gather ­meaningful insights are

•Why did you select this score?

•What did you like best about your experience?

•What would you like to see improved?

Examples of voice of the customer methods.

Legal and Ethical Considerations for Sales Professionals

Our society sets legal standards for behavior of buyers and sellers. The Uniform Commercial Code (UCC) consists of nine articles and declares rules and procedures for business practices in the United States. Article 2 is titled “Sales” and it defines terms and legal obligations for buyers and sellers.

The salesperson has significant legal responsibilities, including

1. Representing the company. Since a salesperson is a legal representative of the company, his or her words carry a legal obligation for their employer. Quite simply, salespersons are speaking for the entire company when they are in front of the customer. Any statement, promise, or action is technically a statement from the company and is a legal commitment.
   
2. Oral versus written commitments. The UCC considers an oral commitment from a salesperson legally binding to the company. Any sale over $500 does require a written agreement; however, salespeople need to know that statements made in front of the customer carry just as much weight as a written contract.
   
3. Implied and express warranties. Products and services often come with express warranties that assure the buyer that the product will perform as represented by the company. However, salespeople need to be careful because statements they make regarding product and service performance, even if they are not consistent with company materials, can constitute an implied warranty. This is especially important in relationship selling. If the salesperson, after learning about the customers’ needs, presents the product as a solution, there is an implied warranty the product will do the job.
   

Unlawful business activities are defined in the Sherman Antitrust Act, Clayton Act, and Robinson–Patman Act. State and municipalities have statutes and can pass laws that directly affect selling. For example, every state has its own set of real estate laws, which influence the sale of real estate in that state. The following are some unlawful activities:

•Collusion: when companies get together to fix prices or unfairly bias a selling process.

•Restraint of trade: force a dealer to stop carrying a competitors’ product

•Competitor obstruction: impeding a competitor’s access to a customer

•Competitor defamation: harm a competitor by making unfair or untrue statements about the company, products, or employees. Defamation can be slander or libel. Slander is unfair or untrue oral statements. Libel is unfair or untrue written statements that materially harm the reputation of the competitor or the personal reputation of an employee.

•Price discrimination: giving different prices to different customers who purchase the same quality and quantity of the product or service. Companies are allowed to charge different prices if they (1) reflect differences in the cost of operations (manufacturing, sales, or delivery), (2) meet competitor pricing to the same customers, or (3) reflect differences in the quality or quantity of the product purchase. It is legal to charge a lower price to a customer who buys more or has received a better price from a competitor. At the end of the day, the issue is the fair treatment of customers (Johnston 2010, 119).

Business ethics define principles that define right and wrong and guide behavior in business. Companies need to define a code of conduct that describes acceptable and unacceptable behaviors related to their business. The code of conduct needs to address honesty, integrity, confidentiality, use of confidential information, gifts, and relationships with employees and customers and other topics that define behaviors of an ethical professional salesperson.

Dell Computer has a code of conduct for their company, not just for their salespeople, that sets expectations for behavior, including ethical issues, with the goal of making employees, customers, and stakeholders understand that they can “believe what we say and trust what we do.” The following are the standards of ethical behaviors.

•Trust: Our word is good. We keep our commitments to each other and to our stakeholders.

•Integrity: We do the right thing without compromise. We avoid even the appearance of impropriety.

•Honest: What we say is true and forthcoming, not just technically correct. We are open and transparent in our communications with each other and about business performance.

•Judgment: We think before we act and consider the consequences of our action.

•Respect: We treat people with dignity and value their contributions. We maintain fairness in all relationships.

•Courage: We speak up for what is right. We report wrongdoing when we see it.

•Responsibility: We accept the consequences of our actions. We admit our mistakes and quickly correct them. We do not retaliate against those who report violations of law or policy.

The Direct Selling Association has published their ethical standards since the 1970s. Their 2011 version of the Standards that Ethical Independent Salespersons Should Follow (Posted on 24 October 2011, from the Direct Selling Association) is listed in the following.

The Standards that Ethical Independent Salespersons Should Follow are

•Offers should be clear, so that consumers may know exactly what is being offered and the extent of the commitment they are considering.

•A description of the goods and quantity purchased, and the price and terms of payment should be clearly stated on the order form together with any additional charges.

•Contracts or receipts use should conform to applicable laws or regulations.

•Any guarantee or warranty stated by the sales representative should be consistent with, and at least as protective as, that of the manufacturer or supplier of the product sold.

•Any description of after-sale service should be accurate and clear.

•Any receipt or contract copy should show the name of the sales representative and his or her address or the name, address, and telephone number of the firm whose product is sold.

•All salespersons should immediately identify themselves to a prospective customer and should truthfully indicate the purpose of their approach to the consumer, identifying the company or product brands represented.

•Salespersons should not create confusion in the mind of the consumer, abuse the trust of the consumer, or exploit the lack of experience or knowledge of the consumer.

•A salesperson should not imply that a prospective customer has been specially selected to receive some reputed benefit or that any offer is special or limited as to time when such is not the case.

•Salespersons should respect the privacy of the consumers by making every effort to make calls at a time that will suit their convenience and wishes. Selling contacts should not be intrusive and the right of the consumer to terminate sales interview should be scrupulously respected.

•All references to testimonials and endorsements should be truthful, currently applicable, and authorized by the person or organization giving same.

•If product comparisons are made, they should be fair and based on facts that have been substantiated.

•A salesperson should refrain for disparagement of other products or firms.

•A salesperson should not attempt to induce the consumer to cancel a contract he or she has made with another salesperson.‡

Another version of a code of ethics was created by Steven L. Boyle and is described in his blog post as follows:

A Code of Ethics for Salespeople to Live By—It is Time to Change Society’s Perception of “Sales People” by Steven L. Boyle

It is time to get people to trust the sales profession again. Through all of the downed economies and the recessions of the past, one career has always survived, sales.

Now over the years, a lot of people’s perceptions of salespeople were spoiled by one rotten apple in the bunch, and in all fairness, that is all it takes. Today I say stand tall, be proud of your profession and realize we are the highest paid profession out there, if you are good at it. No one is just good at being a Doctor or a Lawyer, they studied hard, earned certifications, and crafted their art over years of practice, but most importantly they live by a code of ethics.

Here are mine …. Feel free to make them yours, and let’s start something bigger than any of us. Let’s change the perception of salespeople for future generations to come.

I will

1. Maintain honesty and integrity in all relationships with customers, prospective customers, and colleagues and continually work to earn their trust and respect.
   
2. Accurately represent my products or services to the best of my ability in a manner that places my customer or prospective customer and my company in a position that benefits both.
   
3. Respect and protect the proprietary and confidential information entrusted to me by my company and my customers and not engage in activities that may conflict with the best interest of my customers or my company.
   
4. Continually upgrade my knowledge of my products or services, skills, and industry.
   
5. Use the time and resources available to me only for legitimate business purposes. I will only participate in activities that are ethical and legal, and when in doubt, I will seek counsel.
   
6. Respect my competitors and their products and services by representing them in a manner which is honest, truthful, and based on accurate information that has been substantiated.
   
7. Endeavour to engage in business and selling practices that contribute to a positive relationship with the community.
   
8. Assist and counsel my fellow sales professionals where possible in the performance of their duties.
   
9. Abide by and encourage others to adhere to this code of ethics.
   

As a certified sales professional, I understand that the reputation and professionalism of all salespeople depends on me as well as others engaged in the sales profession, and I will adhere to these standards to strengthen the reputation and integrity for which we will strive.§

The Sale and Marketing Executives International (SMEI) is an organization dedicated to ethical standards, continuing professional development, knowledge sharing, mentoring students, and advancing free enterprise. As no other worldwide executive sales and marketing associations exist, SMEI fills a void by providing a personal and professional community devoted to providing knowledge, growth, leadership, and connections between peers in both sales and marketing. SMEI has developed a Sales and Marketing Creed that states standards for sales and marketing executives.

Sales and Marketing Creed: The International Code of Ethics for Sales and Marketing

Your pledge of high standards in serving your company, its customers, and free enterprise

•I hereby acknowledge my accountability to the organization for which I work and to society as a whole to improve sales’ knowledge and practice and to adhere to the highest professional standards in my work and personal relationships.

•My concept of selling includes as its basic principle the sovereignty of all consumers in the marketplace and the necessity for mutual benefit to both buyer and seller in all transactions.

•I shall personally maintain the highest standards of ethical and professional conduct in all my business relationships with customers, suppliers, colleagues, competitors, governmental agencies, and the public.

•I pledge to protect, support, and promote the principles of consumer choice, competition, and innovation enterprise, consistent with relevant legislative public policy standards.

•I shall not knowingly participate in actions, agreements, or marketing policies or practices that may be detrimental to customers, competitors, or established community social or economic policies or standards.

•I shall strive to ensure that products and services are distributed through such channels and by such methods as will tend to optimize the distributive process by offering maximum customer value and service at minimum cost while providing fair and equitable compensation for all parties.

•I shall support efforts to increase productivity or reduce costs of production or marketing through standardization or other methods, provided these methods do not stifle innovation or creativity.

•I believe prices should reflect true value in use of the product or service to the customer, including the pricing of goods and services transferred among operating organizations worldwide.

•I acknowledge that providing the best economic and social product value consistent with cost also includes (a) recognizing the customer's right to expect safe products with clear instructions for their proper use and maintenance; (b) providing easily accessible channels for customer complaints; (c) investigating any customer dissatisfaction objectively and taking prompt and appropriate remedial action; (d) recognizing and supporting proven public policy objectives such as conserving energy and protecting the environment.

•I pledge my efforts to assure that all marketing researches, advertisements, and presentations of products, services, or concepts are done clearly, truthfully, and in good taste so as not to mislead or offend customers. I further pledge to assure that all these activities are conducted in accordance with the highest standards of each profession and generally accepted principles of fair competition.

•I pledge to cooperate fully in furthering the efforts of all institutions, media, professional associations, and other organizations to publicize this creed as widely as possible throughout the world.¶

Customer Relationship (or Experience) Management

Definition and Goals of Customer Relationship Management

Customer relationship management (CRM) is a philosophy that uses computer software to collect and use customer’s information to get, keep, and grow profitable customers. The CRM philosophy sees every interaction between your company and the customer as an opportunity to grow the business relationship. The philosophy develops trust, concentrates company efforts on high-value customers, and changes the company to better service the most valuable and most growable customers. High-value customers are those that deliver the highest lifetime value to the company. The philosophy enables the salesperson to know about all important interactions with the customer so that he or she can continually build the relationship as opposed to not knowing all relevant information and needing to ask the customer for baseline information that is not moving the relationship forward can crowds out time to more completely understand the customers’ needs and satisfy them.

The software provides structure and storage of relevant information such as customer purchases, service records, contact details, and insights that help the salesperson and company better serve the customer. The software collects data on customers so the company can perform analysis that will reveal traits associated with the most and least valuable customers. The software can also provide sales pipeline information that enables the sales representative and sales management clear and transparent visibility to the probability and size of the sales pipeline.

Organizations need to get, keep, and grow profitable customers. ­Customer relationship management supports this goal because better customer relationships can lead to better competitive success.

If you are my customer and I get you to talk to me, and I remember what you tell me, then I get smarter and smarter about you until I know something about you my competitors don’t know. So I can do things for you may competitors can’t do, because they don’t know you as well as I do. Before long, you can get something from me you can’t get anywhere else, for any price. At the very least, you’d have to start all over somewhere else, but starting over is more costly than staying with me, so long as you like me and trust me to look out for your best interests. (Peppers 2011, 11)

The IDIC model provides a powerful framework to construct and improve the customer relationship management program:

•Identify your customer by relevant pieces of information so that you recognize the person and their up-to-date situation at every contact.

•Differentiate customers by creating groups based on value to the customer and customer’s needs.

•Interact with them in ways that improve cost efficiency and the effectiveness of your interaction

•Customize some aspect of the products or services you offer; treat customer differently based on your interactions (adapted from Peppers 2011)

Promotion

The promotion plan details how the company will connect with the target audience. Communication vehicles include the sales force, press releases, newspaper, radio, TV, journals, magazines, investors, websites, e-mails, webinars, podcasts, white papers, facility tours, peer events for people who buy the product and people who influence the buying process, social media (Facebook, blogs, twitter, etc.), and so on. Each communication vehicle requires its own messages and message frequency tailored to the target group and communication vehicle. For example, a journal article could describe a well-designed clinical and economic study with significant scientific content published one time, press releases could be shorter and briefly announce important advances on a monthly basis, or webinars could share important information from case studies on a quarterly basis. Today, there is more opportunity for dialogue with customers and companies need to construct a promotion or feedback plan that takes advantage of this capability to increase two-way and continual communications and connection with customers and prospects. Companies can keep their messages “fresh by tying the launch into the larger business or technology issues the product serves … the more you wrap around the through its launch period and beyond,” the longer and louder your message will last.**

Pricing

The price of the product, and how company representatives talk about the price strongly influences the customer’s perception of the company. Pricing decisions are informed by analysis of the voice of the customer, competition, expected customer response, expected competitor response, and nonprice elements such as payment terms, warranty, and in-depth understanding of the value of the product. In order to determine the value of the new product, the company needs to quantify the impact of the new product’s benefits compared to the status quo and competition.

For example, assume that a new feature enable the new product to deliver the benefit of saving nurse time. The value of this benefit could be one minute per week or four hours per day. Let’s assume that a nurse is paid $50.00 per hour. The quantification of the benefit, or value, of this product would range from pennies per week to $200.00 per day. The company, based on facts, needs to declare an expected value as well as provide worksheets and the method to confirm this value over time based on customer’s data or perception. The most successful new products clearly show superior economic performance compared to the status quo and competitive products. An example graph is shown in Figure 5.3.

Figure 5.3 Profit comparison by product

Place (Distribution)

The product introduction team plans how the product will be delivered to the market. An analysis of profitability and strategic alignment clarifies which channel or channels create the most company value.

Distribution channels for products can be direct from the company to the customer through the sales team, through independent sales representatives, through distributors or resellers who have relationships with or a focus on the target markets, and online.

This analysis needs to compare the following factors for each distribution channel and for each potential partner in that channel:

•Strategic fit—how will this affect target customer perception of your product and company? If a partner has other products, how will the customer perceive the addition of your product? What is the track record and reputation of the partner in your target market? Does the partner have long-term relationships with your target market?

•Timing of revenue and profit streams—some partners can start up quickly, some will take more time. When do you break even on your costs of starting up with the partner and net positive cash flow?

•Timing of launching your product with the partner—will the partner be able to devote the time, resources, and effort to make your product launch successful? Are there other product launches or issues with other company’s product lines that could reduce the commitment to your product?

•Ease and cost of training the partner—who needs to be trained and what do they need to know?

•Ease of supporting the partner—will the working relationship be relatively smooth or turbulent?

•Contract considerations—can you work out contract terms, minimum quantities, and other items to mutual satisfaction of you and the partner?

•Exit strategy—if new and more attractive partners appear, can you take advantage of them, given your existing partner relationships?

Go-to-Market Plan

A go-to-market plan for a new product describes the market landscape and key actions that will make the company optimize the product launch. This plan describes the vision for the new product, the competitive landscape, and the marketing and sales plans and describes how each function will contribute to the launch and a one-page summary.

Summary

The new product introduction team can ask the following questions:

1. Does the sales training program meet the needs of the sales team?
   
2. What methods have you developed to enhance sales productivity?
   
3. How powerful are your value propositions? How do your customers react to them?
   
4. Do customers clearly understand why they need to buy from you now? Are the reasons to buy compelling enough so that customers make commitments to you? Why or why not?
   
5. Is your brand promise tailored to the specific situation and ­economics of each customer?
   
6. Does your pricing achieve its objectives? How could you change your pricing and be even more successful?
   
7. Are your colleagues aware of and adhere, to your company’s ethical and legal standards?
   

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