Relationship Selling: Its Effects on Salesman Performance in the Service Industry
Chapter One
Objectives of the Study
The general objective of this research is to understudy the nexus between relationship selling and salesman performance in service industry in the Nigerian economy:
- To understand the practice of relationship selling and effects on sales performance in the Nigerian banking industry.
- To show the effect of relationship selling on clients retention in the industry.
- To understand the peculiarities of banking sector in usage and strategizing with relationship selling
- To evaluate the moderating role played by sales experience in linking relationship selling and sales performance in the Nigerian banking industry.
- To show the effects of relationship selling on general performance of banks in terms of market share improvement.
CHAPTER TWO
LITERATURE REVIEW
CONCEPTUAL FRAMEWORK
INTRODUCTION
Review of related literature is essential in a research study. A good researcher reviews existing literature which entails works which can be found in journals, books, magazines or other forms of literature. This chapter is divided into conceptual framework, theoretical framework, theoretical literature, empirical literature, summary and value added of the research.
RELATIONSHIP SELLING: EFFECTS ON SALESMAN PERFORMANCE IN SERVICE INDUSTRY
There is a paradigm shift in the personal selling research. Thetransaction-oriented selling approach is getting replaced byrelationship selling approach (Jones et al. 2005; Weitz andBradford 1999; Peppers and Rogers, 2004). Traditionally, theemphasis was on close with little thought given to the qualityof the buyer–seller interactions. However, with the dramaticincrease in competition combined with increasinglysophisticated customers, the emphasis in sales is movingtoward relationship selling (Keillor et al., 2000). The salesresearch has recognized that the long term success of thebusiness depends upon the relational approach to business(Dwyer et al. 1987; Weitz and Bradford, 1999). Relationship-orientedselling focuses on constructs which are intended tobuild mutually beneficial long-term relationship with customers(Jolson 1997). These constructs develop trust and addvalue in the long run (Avila et al. 2006). The relationshipselling literature focuses on the following four constructs (or characteristics):
Customer orientation: Individual customer orientation isa strong and significant predictor of relationship development(Williams, 1998). Individual customer orientationis the application of marketing concept at theindividual salesperson–customer level and is understoodas a set of behaviors to help customers makepurchase decisions that best satisfy their needs (Saxe andWeitz, 1982). This conceptualization given by Saxe andWeitz (1982) is widely accepted in sales research.Customer-oriented salespersons involve themselves inthe difficult process of determining their clients’ needsand provide assistance that best satisfies those needs(Saxe and Weitz, 1982). They are committed to behaviourswhich build long term customer satisfaction ratherthan short-term self-interest (Saxe and Weitz, 1982;Kelley, 1992). Numerous studies have shown that highperformers are highly customer oriented (Keillor et al.1999). Salespeople who are highly customer orientedare likely to stimulate repurchases and positive word-ofmouth(Kotler, 2003). Customer orientation is alsopositively related to outcomes such as sales performance,and job satisfaction (Hoffman and Ingram, 1991;Jaramillo and Grisaffe, 2009).It is necessary to study individual salesperson customerorientation because customer satisfaction is initiated andnurtured at the individual salesperson–customer levelthrough the efforts of salespeople (Sheth and Parvatiyar, 1995).
Service orientation of the salesperson: Another importantcharacteristic of relational selling is the serviceorientation of a salesperson. In selling, customerorientation means that salesperson orient the salesprocess to satisfy customer’s needs. Infact, the service orientation concept asks questions about satisfying customer’s needsduring the sales encounter. Conversely, a service orientation means that the salesperson attempts togo beyond the limits of the dyadic sales encounter andprovide the customer additional information andassistance that continues after the sales encounter (Keillor et al. 1999, p. 103). Thus, the customerorientation construct focus on the extent to whichsalesperson orient the sales process to meet customer needs whereas the service orientation construct takesinto account the seller’s willingness to engage in bothselling and non-selling tasks (such as post-salesproblems) throughout the buyer–seller relationship(Keillor et al. 2000). Service orientation construct captures tender, loving care (TLC) activities of asalesperson directed toward customers in both sellingand non-selling tasks (Keillor et al. 2000). Treatingeach buyer as if they are the only customer, devotingtime to each customer irrespective of the amount ofmoney the customer intends to spend, taking care ofpost-sales problems, going an extra mile for customersin both selling and non-selling tasks, etc. are some ofthe characteristics which describes a service-orientedsalesperson (Keillor et al. 2000).
Adaptive selling: A sales interaction is a dyadicinterplay between buyer and a seller. Evans (1963)notes that ‘‘the sales is a product of the particulardyadic interaction of a given salesman and prospectrather than a result of the individual qualities of eitheralone’’ (p. 76). Therefore, salesperson needs to adaptaccording to the nature of the customer and sellingsituation. Adaptive selling is understood as salespersons altering of their behaviours during a customer interaction based on the perceived information regardingthe customer and the selling situation (Spiro and Weitz 1990; Weitz et al. 1986). Spiro and Weitz(1990) identify six characteristics of adaptive selling.These are: (1) a recognition that different sellingapproaches are needed in different sales situations, (2)confidence in the ability to use a variety of differentsales approaches, (3) confidence in the ability to alterthe sales approach during a customer interaction, (4) aknowledge structure that facilitates the recognition ofdifferent sales situations and access to sales strategiesappropriate for each situation, (5) the collection ofinformation about the sales situation to facilitateadaptation, and (6) the actual use of differentapproaches in different situations. These characteristicsof adaptive selling insure meaningful dialoguewith customers.
Ethical selling behavior: Ethical selling behavior is anelusive construct and clear-cut generalizations of whatis considered as ethical behavior is difficult becausethe construct is often situation-specific (Lagace et al.1991; Robertson and Anderson 1993). Nevertheless, most of the researchers agree that ethical sellingbehavior relates to widely recognized societal normssuch as fair play, honesty, and full disclosure (Robertsonand Anderson 1993; Roman and Munuera2005). Consequently, ethical sales behavior can beunderstood as the fair and honest actions that promotethe well-being of customers (Roman and Munuera, 2005).Ethical selling behavior is important to practicebecause customer’s perception of salesperson’s ethicalbehavior leads to trust, satisfaction, and commitment tothe salesperson which further increases share-of-customerand word-of-mouth (Hansen and Riggle 2009).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
No meaningful research project can be embarked upon without adequate, relevant and current statistical data on the research topic or subject matter. Data were collected, edited, compiled and analysed to bring out the required information inherent in them for scientific deductions and inferences on the subject matter of the research, which is the effect of salesman performance in service industry in Nigeria. It was ensured that the data set collected were free from periodicity, excessive sampling and human errors as well as outright falsification, so that accurate and reliable statistical inferences can be made.
The focus of this chapter is therefore to present the research and data collection design adopted in this study.
RESEARCH DESIGN
The research design to be used for this study is a survey. The survey approach adopted because the respondents are spread all over the departments that make up the study organizations, hence, the study focused on obtaining their views through the use of questionnaire and personal interviews. As such, it involves the identification of the problem, stating the problems and the objectives of the study and formulating some hypotheses with a view to testing the hypotheses through the administration of questionnaire and booking for oral interview with the appropriate people. The information obtained from these copies of questionnaires will be analyzed using various statistical tools such as X2 scores (chi square distribution) to arrive at a conclusion. Tables, percentages and frequency distribution were used when necessary.
THE STUDY AREA
The study will be limited to the banking industry while the context of the research bothers on matters that pertain to relationship selling and salesperson performance in the Nigerian banking industry. In specific term, Union Bank Plc.shall be used as a representative of the entire banking industry. This is based on the rationale that every bank in the country has similar policies and have all met the basic standard required by the regulatory authorities to run a banking business in Nigeria.
STUDY POPULATION
The population of any research work refers to the totality of objects, elements, or people to be studied in a research work. The population of this will be made up of mainly management and staff of Union Bank Plc. In this work, the population size of the study is one thousand and two hundred (1200) respondents. The total population will be represented in selected respondents from head offices and other selected branches of selected banks in Lagos metropolis.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
The essence of this chapter is to present and analyze the data collected for the study. The presentation and interpretation of data were based on questionnaires administered to the staff of Union Bank Plc. located within the metropolitan of Lagos.
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
SUMMARY
In this study, the researcher attempted to explore the effect of relationship selling on salesman performance in the service industry with particular emphasis on the banking industry. To this end a number of hypotheses were tested to ascertain the main objective of the research.
The work was divided into five chapters. The inception pertained to the overall introduction of the work where problem statement was used to express unsatisfied state of affairs that motivated the researcher to embark on this work. From this, the research hypotheses were formed and this translated to the objective and hypothesis of the research work. Chapter two involved review of previous literature while chapter three related to methodology which was used to empirically test the hypotheses drawn up. Here, descriptive analysis and chi-square analysis were recommended. Chapter four contains empirical analysis which were reported and titled as data presentation and analysis.
The main objective of this study was to understudy the nexus between relationship selling and salesman performance in service industry in the Nigerian economy. From the supported material and results of the study it was observed that there is a significant relationship or link between the two variables of interest.
FINDINGS
In line with the presentation and analysis of data, the following findings were made empirically:
Relationship selling has a significant effect on clients’ retention in the banking industry.What could be concluded in this survey is major role of sellers in relation with customers that enhances salesperformance. Sellers with sufficient skill and knowledge to deal with customers display high sales performanceand are satisfied with their selling job. Besides, they have implemented customer orientation and sales orientationphilosophy. However customer orientation philosophy of sellers doesn’t up to date their sales practically.According to findings of Richheld and Sasser (1990) 5% increase in customers’ retaining rate could averagelyincrease customer life cycle value to 35-95%.
As a sequel to the aforementioned, it was also discovered that that the banking sector possesses some level of significant peculiarities in the usage and strategizing with relationship selling. This is why the industry has to encourage specialized products and services due perculia nature of their form of relationship selling activities. No wonder banks have different specialized and customized services such as hybrid accounts and so on.
More so, it was also discovered empirically that sales experience plays a significant moderating role in linking the relationship selling and sales performance in the Nigerian banking industry. A pivotal factor regarding performance is selling skills and former contacts. A real seller is the one who has sufficient knowledgeand art in order to be successful in the complicated and modern competitive markets. Making a strong relationwith customer is one of the important indexes to evaluate successful sellers in sales industry that retains andincreases customers and finally is led to long-term profitability of the company (Gwinner et al, 1998). Given tothe conducted survey for customer orientation there must be a predictor for sales performance and special sellingskills. Moreover, experience has shown that sellers must use sales-oriented approach that is versus the customer-orientedapproach if they don’t have selling skills. Perceiving personality style of the buyer is called personalityknowledge. Individual skills mean that the seller utilizes influence and effectiveness in the buyer.
In addition, it was also found that thatrelationship selling has a significant effect on the general performance of banks in terms of market share improvement. Thus relationship selling is a force for the growth of the banking industry and the economy at large.
RECOMMENDATIONS
This research provides a solid reasoning that relationship selling has a significant effect on salesman performance in the service industry. To this end, the following recommendations were made:
In first place, company policies should try to influence salespeople’sattitude to practice relationship selling. This is because a customerorientation approach cannot be imposed by management, andsalespeople need to believe and value such orientation in order toeffectively implement it. In this vein, it is ofgreat importance that the sales supervisors act as an example tofollow to the sales team.
In addition, training can be used to reinforce salespeople’s positiveattitudes towards relationship selling, and prepare salespeople to effectively satisfy customer needs. Likewise, training should provide salespeople with the necessary knowledge in terms of products andcompetition. Product knowledge should emphasizethe benefits and utilities off e red to the customers. Competitorknowledge is to be used in a professional an ethical manner, and notto criticize competition without any objective reason.
Sales training should also provide salespeople with the necessaryskills and abilities so that they are able to distinguish different typesof customers, identify their buying motive, and effectively analyzetheir needs. All these skills could be taught through role-playingwhere the salesperson acts consecutively as the customer and as thesalesperson. These exercises can be complemented with interactivetraining assisted through computers.
Finally, salespeople need topractice what they have learned through on-the-job training, sincesuch methodology allows supervisors to evaluate and monitorsalesperson’s behavior, with the chance to correct the mistakesmade.
Nevertheless, besides the above, there has to be a commitment from management that short-term goals will not be pursued and that thesatisfaction of long-term customer needs is a priority in the company. Accordingly, managers shouldimplement a behavior-based control system, where the activitiescarried out by salespeople (e.g., through customers evaluations) are considered when evaluating their performance.
Moreover, managers should try to communicate with their salespeople,assisting and guiding them in accurately viewing their day-todaysales activity from a relational perspective; then they should notreward them on a 100% commission based on the sales made, butevaluate their various activities, not just the outcomes achieved (sales volume). We do not imply that companies should avoidincentive programs, rather they could use a combination of basesalary plus incentive pay in the form of commissions, bonuses orboth based not only on the sales performance but on how well long-termobjectives such as customer satisfaction have been achieved.
CONCLUSIONS
The changing dictates of the contemporary selling environment has recently challenged the transactional sellingapproach. Firms at the vanguard of strategic thinking have without delay adopted the relational selling model inresponse to these shifts. Despite this, skewed competition, lack of trust, poor customers’ knowledge and internalmarketing, high rate of customer turnover, low technical development and the like in Nigeria has totally challengedthe adoption of the relationship selling model.
The implication of this is that the African continent especially Nigeria offersample viable venture opportunities to prospective investors. The transactional selling framework has constantlydominated our selling philosophy as a result of the afore-highlighted factors. To dislodge the dominance of thewin/loss selling approach, it will make great professional sense if sales units of the banking industry in Nigeria can move towardsmore credible itinerary to restore trust through promises fulfillment, reduction of customers’ perceived risk anduncertainty, sincerity and commitment. This cannot materialize if organizations refuse to organize internalmarketing orientation training for their employees.
It will equally make great sense if the Nigerian banking industry willdevote more time to seek and understand the needs and wants of the customers instead of undue emphasis inquota realization. Consistency in price administration, quality, service delivery, attitude, energy and vitality arecritical factors that will facilitate the implantation of the relationship selling tradition in Nigeria banking industry.
Finally, ifgovernment can implement policies and programmes that will trigger more intense competition among banks, they will come to the reality of the values of relationship selling in a fiercely competitiveenvironment in no time.
SUGGESTIONS FOR FURTHER RESEARCH
This research provides several directions for future research. First, oncethe concept of relationship selling has been rigorously delimited, there is room for further researchers to develop and validate a scale to measurerelationship selling. In this vein, the work by Crosby et al. (1990) can bevery useful in the items generation. Second, results from experimentaland/or longitudinal designs may provide new insights into the changes inthe relationship between seller and the buyer, and the role placed by thesalesforce. In this regard, research by Frankwick et al. (2001) and Martínand Román (2003) may be used as a starting point. Finally, it can beargued that relationship selling represents just one of several approachesto personal selling. For instance, the benefits of the frequency of contactand communications may lead to the misperception that all organizationalbuyers prefer to be called on and checked up with a lot. In fact, someorganizational buyers may not desire excessive contact (Liu and Leach,2001). Future research should certainly address this issue.
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