Is personal selling still required
once a company has establishedonline ordering capability for customers to
access?
This written report
examines how our interviewed company, Soca Computer, has performed in relation
to personal selling and online selling. It examines their business model with
the evaluation of the advantages and disadvantages of both personal and online
selling, as well as the effectiveness of both methods.
Soca Computer was
first founded in 1991 and had its first store in Kallang Pudding road. It
focused mainly on B2B and began its expansion in 1995. Soca Computer managed to
achieve more than 1000 customers by the end of 1995 and it soon announced its
intention to become the One Stop Office Stationery Supplier. Soca Computer now
engages in both personal as well as online selling.
In 2009, Soca ventured
into internet sales. It launched their first website www.socacomputer.com and established its first domestic
e-commerce and extended its range of products available. Soca works with
various organisations such as offices, schools, banks and small-medium
enterprises and these organisations make up the bulk of the company’s profile
of customers.
Although Soca started
with personal selling, online selling helps it with easier tracking and
processing of customers’ order. Online selling also helps in the usual routine
ordering of staple products like pen and paper and promotes a greater variety
of products through an online catalogue; without the need to deliver the actual
physical product each time for customers to view. Although online selling
through internet sales helped Soca as it is more cost efficient and incurs
lower operating cost. Soca only allows long-term customers to place orders
online as personal selling has more of a personal touch and is essential for
relationship building. Therefore, Soca adopts personal selling towards newer
customers to first build a good relationship and trust. On the other hand, Soca’s
salespeople often visit their older customers, mainly the key account holders
to maintain their existing relationship that has already been built over the
years. Therefore, Soca is actually more reliant on personal selling compared to
online selling.
Key Account of Management
Soca Computer has
30% of its customers as its key accounts. Key accounts are wholesalers or
retailers which are primary customers and accounts for a large percentage of
sales in the company. Trust and relationship is the most essential element in
building key accounts. These 30% of the key accounts account for 75% of their
total revenue every month and have been with the company for 5 years or more.
Soca Computer maintains a strong relationship with its key account holders
through relationship selling and these key holders are not price sensitive
neither are they easily swayed by competitors. This could also be due to the
fact that office stationery is considered to be low involvement goods.
The following
factors are essential in Soca’s consideration in being a key account.
1. High
sales potential
2. Complex
buying behaviour
3. Willing
to enter into long term alliance/partnership
There are several
advantages in having key accounts management. Firstly, companies can have
closer working relationships with the customer, improved communication and
co-ordination which would help facilitate placing or delivering orders. Better
follow up sales & service such as replacement, warranty or credit term can
also be negotiated among firms and this will definitely lead to higher sales. Lastly,
having closer relationship with key accounts can also create an opportunity for
advancement of career for salespeople and also incur lower cost through joint
agreement of optimum production and delivery schedules and demand forecast.
Personal selling
Personal selling is
the interpersonal aim of the promotional mix, used particularly in complex
selling situations such as business-to-business marketing.
The objectives of
personal selling includes building product awareness as certain potential
customers may not be aware of the product’s existence and in turn creating an
interest among potential customers. Personal selling enables sellers to provide
first-hand information to the customers and answer any queries that the
customers have. Once the customers develop recognition for the product, it
stimulates a demand. Personal selling enables a salesperson to elaborate on the
effectiveness and benefits of a product and reinforce its brand name. Finally,
it aims to provide services to satisfy customers for example: after buying a
computer part, the customer is not sure as to how to install or use the
hardware. Personal selling enables the salesperson to provide after sales
service such as installation or servicing of the product.
Advantages of
Personal Selling
v
Personal
selling has a key advantage over other promotional method as it relies on a
two-way communication. Soca focuses on business-to-business sales, allowing its
salespeople to get immediate feedback from customers, communicate directly with
them, answer specific questions and provide additional information.
v
It
also allows Soca to make adjustments to its products; addressing customers’
requests and concerns. Through personal selling, Soca achieved more than 1000
customers within 4 years and continues to expand after 1995.
v
Personal
selling is especially important for companies like Soca which sell products at
a lower cost but at a higher volume; relying heavily on customers who make
repeated purchases. Such purchases may take a considerable amount of time to
complete and may involve the input of many people at the purchasing company
with the need for better follow up on sales and service. Sales success often
requires the company to develop and maintain strong relationships with members
of the purchasing company. In the case of Soca Computer, its clients come from
schools, offices, banks and small-medium enterprises. These key accounts are
crucial as they make up 30% of their total customer base and 75% of revenue
every month. Strong relationships through personal selling would make customers
less price sensitive and not easily swayed by competitors with joint agreements
to lower purchase costs.
v Personal
selling can be an important source of marketing information for Soca where its
salespeople may learn about competitors' products or emerging customer needs
with high sales potential. This might lead to the development of a new product.
So, in-person meetings are incredibly effective at getting across large amounts
of technical or complex product information.
Disadvantages
of Personal Selling
v Since
personal selling involves person-to-person contact to potential and existing
customers, the money spent to support a sales staff can be high. These costs
include compensation to the sales people in terms of salary, commission, bonus,
and provision of sales support materials, allowances for entertainment
spending, office supplies and telecommunications. With such high cost for
maintaining a sales force, selling is often not a practical option for selling
products that do not generate a large amount of revenue. In Soca Computer, there
is the provision of training to strengthen salespeople’s product knowledge and
industry information as well as their selling skills. This would add on to the
company’s costs.
v Salespeople
would usually focus on calling on one customer at a time. This is not a
cost-effective way of reaching a large audience. Similarly, Soca focuses on its
key accounts and would neglect smaller accounts as a result. This would create
inefficiency as it is not reaching out to their consumer base as a whole.
v Moreover,
there may be the danger of customers having ever-increasing demands for higher
levels of service as they feel that it is part of the service in personal
selling where some customers may ask for special delivery services to provide
the goods.
Online selling
Online selling is
when a company, organization or person uses a website (own or third party) to
bring their products or services for sale, and then another company,
organization or person using a computer connected to Internet to purchase
products or services, we can say that the parties involved in an electronic
transaction or sale online.
Objectives of online
selling: The first objective of online selling is to do brand building in which
it can enhance a brand’s equity. It is also to advertise a brand or
product through the various online selling websites and to make sales
subsequently. Online selling also has the objective to provide product or
services information and business information through the website. Online
selling also provides customer service and support so as to improve interaction
with current and potential customers.
Advantages of
Online Selling
v Online
Selling allow transactions between buyer and seller to take place without the
need for the involvement of expensive sales people. As the process is dealt
with over electronic systems such as the Internet and other computer networks,
both parties are able to carry out the transactions anytime and anywhere with
only the necessary internet carriers and laptops or mobile phones through
electronic funds transfer, internet marketing or ibanking. Soca key account holders are able to
use their log-in ID and password to purchase their products through Soca’s
website anytime, without having to personally meet the salespeople.
v Salespeople are able to operate from
any computer in the world, taking orders from any part of the world. For
example, Soca’s online selling website is able to compete with larger
businesses by being able to open 24 hours a day, 7 days a week which provides
an additional comparative advantage in the competitive market. This allows
buyers to make transactions easily whenever necessary and Soca to receive
payment more quickly from their customers through online transactions
v As
salespeople are able to work comfortably from homes and offices, the fast and
rapid process of communication networks over the internet saves time and extra
costs for them. Hence, salespeople
in Soca Computer make use of these saved time and resources to focus on
building customer relationships, developing customised solutions, prospecting
for new business. For example, sending feedback forms to customers via emails
or through internet forums to gather salesperson evaluation. Soca salespeople
also use the time saved to personally visit its key account holders and provide
follow-up services to cater to their needs more adequately.
v Salespeople can also improve company’s
offerings using the data gathered by tracking customer purchases. Soca Computer
gets more information about its customers and their buying habits and studies
them legitimately, which in turn enables it to innovate and provide better
products and services to their customers. This would generate also more repeat
sales from loyal customers.
v Soca displays its range of products
online and this serves as an online catalogue for existing customers. Customers
may then view all the available product choices online and make their decision
before either ordering online or going down to the shop personally. This makes
it more convenient for customers who wish to purchase products that they are
not familiar with.
Disadvantages of
Online Selling
v Consumers can easily search, access
and get exposed to other electronic vendors causing firms to lose their
customers within a short period of time. By allowing their customers to order
online, Soca is exposing its customers to other online shops when they surf the
internet as they may digress off while making online purchases.
v Online shops need to obtain expensive
certificates and secured payment sites stating that they are legit online
sellers, due to many credit card fraud incidents. As such, Soca spent a
significant amount of money getting the necessary certifications to ensure that
their customers are protected when they make purchases.
v The amount of trade conducted
electronically has grown extraordinarily with widespread Internet usage. When
customers have access to more businesses online, they can compare prices more
easily and this increases price competition. Also, the low cost of online
selling enables businesses to offer lower prices to customers and this puts
companies that have physical stores at a disadvantage. Thus, Soca may not be
able to offer relatively low prices as compared to other online stores since it
has a physical store which requires high maintenance.
|
Some companies only engage in online selling such as
blogshops. Companies like these only deal with online transactions and they
usually have small start-up capitals, which is also why they only do online
selling due to its low cost. However, businesses that do online selling would
ultimately venture into personal selling once they have a regular flow of
customer and a wide customer base.
They would then adopt a click-and-mortar strategy,
which is a
type of business model that includes both online and offline operations, which
typically includes a website and a physical store. A click-and-mortar
company can offer customers the benefits of fast, online transactions or
traditional, face to face service. For example, this can happen when a
blogshop decides to open their own store to carry their line of clothing or
when departmental stores approach them offering to carry their line of clothes
in their stores. When they have their own stores, the salespeople that they
hire would then engage in personal selling with customers. It can also be
considered a B2B model engaging in personal selling when they start working
with departmental stores.
|
There are some companies that do only personal
selling, specifically in the business-to-business industries. For example,
wholesalers that sells their goods to retailers and resellers. These businesses
focus and rely on key account management to encourage customer retention.
Similarly, Soca also uses this technique to retain their customers.
However, in the increasingly IT-savvy world,
businesses would ultimately venture into online selling to provide convenience,
as well as reach out to a wider range of customers. This is also to cater to
their key account holders as once they have built up a relationship based on
trust, and have a fixed number or orders every month, the company could give
them accounts to make their purchases online so that they do not have to spend
time going down to the company personally.
|
Soca Computer first
started with personal selling before branching out to online selling. Currently
the business still focuses on key account management. However, it is operating
on a click-and-mortar business model. Therefore it is able to fully utilise and
enjoy both the advantages of personal selling and online selling.
Therefore, even in the various industries and business
models, personal selling is still required even if the company has an
established online ordering capability. Venturing into both online and personal
selling increases efficiency and effectiveness for the company as it allows
them to reach out to a wider customer base. Both methods of selling are used to
satisfy the needs of all customers, be it for convenience or face-to-face
queries.
Though both methods are effective in their own ways,
online selling is more of a product catalogue or price reference for customers.
Customers may look through the products online before going down to the store
to buy it. Also, online selling is more transaction-focused where customers may
just purchase a certain item and not buy anything else again; this also means
there is no customer loyalty. Relationship selling on the other hand promotes
customer retention since the sellers and buyers build a trust-based
relationship. Hence, relationship selling would benefit the company in the long
run as the customers will be loyal to the company and would continue to
patronize the shop.
Therefore, personal
selling is still important for Soca Computer even though they have online
selling capabilities.
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