The Negotiator Magazine

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Dear GM,

An excellent question and a somewhat complicated answer.

The issue of time and expense in sales has been around since the first traders who most surely were searching also to find better and more cost-effective ways of accomplishing their objective. We could look back to the earliest establishment of sales representatives, trading posts, stone representations of sheep and goats and cuneiform monetary records to see some of the early attempts to manage the cost-of sales issue.

In more recent times, we could look at the telegraph, the telephone, video-conferencing and interactive data transfer as all addressing the salesperson-customer communication matter. It has been a non-ending search for cost-efficiency in sales.

Consumer sales have moved from the Fuller Brush salesperson and the itinerant peddler who called at every house to the telephone solicitor, the Internet marketplace and the shopping mall. Each of these changes was profitability driven and the cost of sales has always been an integral factor in that calculation.

Major account sales management has changed also over recent years. It retains its intensely personal component and its face to face format, but it has been supplemented by conference-calling, videoconferencing, interactive design tools and the instant and unbroken availability of the marketing contact through beepers, cellular phones and laptop computers. Each of these new technologies was introduced and sold as a means to cut down business travel costs and improve customer satisfaction. Certainly, each of them addressed those issues. The question you pose, however, goes to the heart of the customer relationship. Are face to face meetings still the core of the major customer relationship? My answer would be an emphatic yes.

I would go at this matter from several perspectives. First, I would begin with a customer by customer profitability analysis. Hopefully, your sales force and you are not measured solely on revenue.

It well may be that your customers fall along the curve that most large company’s experience. Twenty percent of the customers generate 80 percent of the profit. Perhaps, the bottom 10-20 percent are revenue generators whose costs make them negative profit contributors. Through this analysis you may find real savings not only in travel costs, but also in all sales and support costs. You need to pursue this avenue and act upon it.

Now, for the profitable customer core, customer expectations and competitive pressures have to govern. We all know the truism that to gain a new customer often costs ten times as much as retaining a current customer. Base retention travel costs get pretty small on this quotient.

I would sound out my customers on how they would prefer their relationship be managed without suggesting in any way that this is a budgetary matter for your people. That is critical. Some might prefer using more frequent forms of communication in lieu of the current schedule of visits. Others may ask for more visits. Collaborative sales relationships are of course founded upon cost-effective customer communication preferences.

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