Top Management’s Selling Role
In the competitive decade of the 1990s, when customers are “partnering” with fewer suppliers and expecting better quality and service, CEOs may be forced to brush up on their selling skills.
June 1 1990 by Roy Serpa And Donald W. Jackson
Once almost solely the responsibility of the sales force and the credit department, customer contact is fast becoming commonplace across many corporate functions-including the CEO level. When CEOs get involved in selling, it demonstrates to customers that their business is valuable. The business relationship is strengthened, and the opportunity for valuable feedback is guaranteed. Top management’s involvement fosters a customer-oriented culture throughout the corporation.
Peter Schultz, chief executive of Porsche, indicated in a Harvard Business Review article that, “Management of this company, in all disciplines, has maintained a close enough contact with our customers that we know how they think; we haven’t made too many mistakes. I spend about 25 percent of my time with customers-not only dealers, but customers.” The controller of a large firm also indicated that with one of his key customers, he was almost the only vendor to get paid on time. Why? He made periodic visits to the customer and took the accounts payable people out to lunch-a practice not followed by other suppliers. Merely calling on customers is not enough. Top management’s performance in the role of customer, or prospect contact is critical. If top management does a poor job of dealing with customers, this can have a significant negative impact. Top management can harm their companies by misunderstanding their role in dealing with other firms. Andrew S. Grove, president of Intel, tells in a Fortune essay that he once dealt with a key customer improperly. He indicated that once he and his salespeople were outside the customer’s building, the Intel salespeople almost lynched him for behavior they considered totally inappropriate in the customer’s presence.
Selling skills are important in a large corporation or a small start-up. Some CEOs report that they spend up to 50 percent of their work day in sales-related efforts. On the other hand, selling skills are equally important for top managers when they are starting up a new business in an entrepreneurial setting. James E. Challenger, president of Challenger, Gray and Christmas, in an interview with Success magazine, reported two rules when advising those thinking about starting their own business. “That the person be under 50, and he be willing to sell.”
Distributors are another key customer group that top management must work closely with. Many firms now talk of partnering with their distributors, as well as customers. When top management makes distributors an important part of the management team, it shows a closeness and a commitment that strengthens the relationship between the two firms. Several years ago, a distributor for a large firm tried to place an emergency order, but could not get through to the company’s order center. The distributor was able, however, to call the firm’s chairman because he is always available to talk to all distributors. The chairman listened carefully to the distributor and even took an order, following up later to see that the order had been processed. News of this sent a clear message to the firm’s employees and to the distributors.
BENEFITS OF TOP MANAGEMENT CONTACT
One of the most important groups with which CEOs must deal is customers, especially in an industrial setting where the firm has relatively few customers. For instance, according to Sales and Marketing Management magazine, a team led by GE Vice Chairman Lawrence A. Bossidy opened up all kinds of potential sales for the company’s 14 strategic business units by calling on General Motors Chairman and Chief Executive Roger B. Smith.
John McDonald, CEO of Casino, in an interview with Success magazine, indicates that “major accounts, without whom you’d have trouble opening the door tomorrow, are the ones you visit periodically, accompanied by your sales staff to let them know you value their business.”
Calling on customers is an occasion for feedback about how the firm is doing. CEOs can secure input from the customer on additional services or products which could be provided to the customer. Often, customers will tell them about problems because they feel that top management can solve the problem. On the other hand, especially if the calling arrangement is rather formal, problems may be glossed over or ignored. Thus, top management who really want to “get close to customers” and get good constructive feedback must actively search out response. Questions such as, “How are we doing?” and “What can we do to better serve your needs?” are often effective. It should be noted, however, that when feedback is generated from these types of inquiries, it must either be acted on or customers must be given clear explanations of why it was not. Responding to customer’s feedback shows that you are listening and that you care. On the other hand, the lack of response can weaken this relationship with customers.
Having top management call on customers communicates to other employees that this is an important activity and a valued part of the corporate culture. The message is clear: if talking to customers is important enough for top management to spend time on, then others in the organization should also call on customers. This example may serve to make the entire organization more customer oriented.
Robert Galvin, the chairman of Motorola, encouraged his top executives to get more involved with their customers by making several customer visits himself. Upon returning from the calls, he wrote extensive trip reports describing what he learned. Filling out reports such as this is a rarity at the senior executive level.
Harvey Mackay, CEO at Mackay Envelope, reports in the Harvard Business Review that, “Salespeople need to see top people out there, mixing it up, setting the example. That’s why some of
Calling on customers also keeps top management involved in the marketplace and helps to avoid isolation. It is easy to get so involved in dealing with internal problems that top management can become shielded and isolated from “real world problems” by layers of management and overly protective assistants. In firms where top management is out calling on customers, this awareness and involvement makes their firms capable of anticipating or at least responding to market-place changes much more readily than in firms where top management is not aware of customer needs and problems.
Contact with customers may serve as a source of new ideas for top management. Calling on customers at their place of business may give CEOs an opportunity to see how other businesses are operated. Listening to customers provides top management with practical sources of new product ideas.
Joint calls with sales personnel allow top management to empathize with their salespeople and become more sensitive to their needs. When top management is along, it is possible to get on-the-spot policy directives or commitments. Balanced against these advantages are two potential difficulties with joint calls: lack of preparation and conflicting stories. Lack of preparation is evidenced when top management is not briefed properly and says or does something to injure the relationship with the customer.
One CEO quoted such a low price to his CEO counterpart that his people spent the rest of the year apologizing and trying to rework the deal. Likewise, conflicting stories happen when salespeople say one thing and then top management comes in and says the opposite.
Both of these problems are caused by lack of preparation. Before going out to call on customers, top managers need to be sure that they are properly briefed. They must know who the key individuals in the customer account are, what factors are important, what information has been given by other members of their firm, and what other contacts have been made with the customer.
An important aspect of planning for joint calls is deciding the role that each individual will assume in the call. Sometimes top management’s role will be as passive observers to show their commitment to a customer. In other instances the top manager will play an active role in the call specifying policy or making commitments. The problem arises when these roles are not clearly understood. A top manager for an electronics firm went out on a joint call with one of his salespeople. The manager agreed to take a minor role in the call. However, as the call progressed the top manager, accustomed to dominating and taking charge in meetings, took over the call and ended up losing a large order because he made some inappropriate statements to the customer.
Determining what questions might come up on a joint call, deciding who will answer the questions, and how each question will be answered is also important. For instance, it might be determined that if a question about price comes up, the vice president for marketing will handle it and how she will handle it. On the other hand, the salesperson will handle any questions on delivery. Preparation in this manner insures against conflicting stories or inappropriate responses.
A word of caution is appropriate here since customers are inclined to use CEO visits to negotiate better pricing or terms. Unless the supplier’s top management has this purpose in mind, letting them know in advance that this is not a negotiating session will generally avoid embarrassment.
During the joint call someone must be in charge and act as a quarterback fielding questions and handing them off to other team members. Whether it will be the salesperson or the top manager who will be in control will depend on the situation and the personalities of the people involved. However, it is important to have someone in charge and to make sure that all involved know who that is before seeing the customer.
After a joint call, a debriefing is advisable. Finding out what various people’s perceptions are of what went on is a good idea, as is discussing the necessary follow-up. Finally, it is a good idea to critique the visit and determine what could have been done better.
TOP MANAGEMENT’S ROLE
Top management’s participation may take the form of prospecting, managing existing relationships with customers, handling customer complaints and negotiating. Each of these is briefly explored below.
Prospecting: As a result of contacts in the community, and through social interactions, top management may court potential new business. Given interaction with other top executives, top management may generate potential prospects and may pave the way for future sales efforts. Organizations have even been established which allow CEOs an opportunity to network with other top management. One such organization, which operates in several cities in
Maintaining Relationships: Top management can have a significant impact on managing relationships with existing customers. While top management may not actually ask for business, they may be a key element in maintaining a favorable long-term relationship. Maybe this evolved into what Philip Kotler, a marketing professor at
Complaint Handling: Customer complaint handling is also important. According to In Search of Excellence, at Lanier, the president handles a large number of customer complaints himself and he charges his regional sales and service people at his hourly rate for performing this selling function. Knowledge of where complaints or problems are coming from is important for top management so that the problems can be addressed and solved. When top management gets involved in solving customer’s problems, the problems typically get resolved more quickly than they would have been without top management involvement.
Negotiating: Sometimes top management engages in closing activities or putting together major deals with customers or prospects. This is especially likely when the terms of the sale are contractual as in programmed purchases, or when top executives are involved in making large sales.
GUIDELINES FOR EFFECTIVE CALLS
Teamwork: As was mentioned earlier, top management selling must be a team affair in order to be effective in contacts with customers. For instance, the CEO must involve other top management in contacts so that when the CEO leaves the company, relationships with the customer will continue. For instance, according to Business Week, when Mary Wells Lawrence became less involved in Wells, Rich & Green, Inc., the advertising agency lost some key accounts that were based on her personal relationship with the clients. Another aspect of this teamwork is effective coordination and communication by top management team members so that the strategic thrust of the various contacts are congruent and so that conflicting stories don’t arise.
One suggestion would be to set up an in-depth selling plan showing the interactions between top management and the management team in the customer’s business. For example, the plan might include a sales representative calling on a purchasing agent, the sales manager calling on the firm’s vice president of purchasing and the CEO calling on the customer’s CEO.
Careful consideration must be given to the avoidance of the perception that the supplier’s top management is bypassing the customer’s lower level employees in purchasing and manufacturing. In one case, a production manager felt he was being bypassed by the executive of a major supplier who was dealing directly with his executives. He let the supplier know that dealing with him was also important by rejecting several shipments due to alleged “contamination.” In order to avoid this situation, effort should be made to involve the customer’s lower level employees when appropriate or to visit them separately.
Planning: In terms of planned calls on existing customers, before top management goes out to call on customers, they must be briefed on the current status of the account and any problems or developments regarding the account. Failure to plan results in situations such as the case where a CEO ignored a new system designed for a customer and spent an entire call discussing last year’s model. This briefing avoids having top management being surprised by unanticipated events or questions. Top management should also have a clearly defined call objective specifying what they want to accomplish on the call. This gives the call direction and insures that attention is given to important areas.
Consistency: Customer contacts by CEOs will not be successful if the contacts are sporadic and come in flurries only when a major order is sought. In order to be successful, contacts must be systematic and be made consistently over time.
Selectivity: Although CEOs should listen to all types of customers, big and small, new and old, they should be selective and concentrate their efforts on the best customers or prospects and those with the highest potential. Concentrating efforts on these customers and prospects will tend to get the most return for the time invested.
Coordination: The efforts of top management in dealing with customers must be coordinated. Messages delivered by the managers should be consistent so that others in the firm that call on the customer are aware of top management contact. If someone within the firm serves as a national sales manager, then all contacts made can be reported to that individual.
Feedback: It is also important that top management communicates the results of their call to the other people in their organization so that they are aware of their contacts and the result of the calls.
Follow-up: After top management calls on customers it is important that any promises or commitments which they make be implemented. In order to effectively do this, top management must contact the proper people in their organizations to make sure that these commitments are kept. It is important that top management be kept informed of progress so that the next time they call on the customer they know where they stand.
CLOSE THE DEAL
Despite the importance of top management calling on customers, little has been written concerning how these calls should be conducted. Hopefully, this essay will serve as a step toward filling that void.
Simply calling on customers in a random manner will not succeed. Top management efforts must be carefully planned and orchestrated to ensure that they are effective.
With this type of attention, top management can have a substantial impact on customer relations and be a major force in establishing profitable relationships with customers.
Roy Serpa is president and CEO of Instamelt Systems, a supplier of technology and equipment to the plastics industry. Donald W. Jackson, Jr. is a professor and associate dean of the