In a nutshell: How sales strategy translates into performance

Scientific articles contain valuable management implications, but are usually not very easy to digest. We summarize the core results so that you can use the latest research findings for your company.

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Original

How can firms increase the performance outcomes of their sales strategy? “By effective implementation” is the most straightforward answer. Drawing on a large-scale sample of 816 salespeople and directors from 30 sales organizations […], this study sheds light on the chain of effects that transforms sales strategy as an organizational variable into selling performance captured on the individual salesperson level. Our focus lies principally on salespeople and their role in implementing sales strategy.
In sum, this research underscores the challenge of implementing sales strategy in business markets.
On the salesperson level, our findings establish value-based selling as an important driver of salesperson performance in business markets. The empirical results […] further show that salespeople’s customer orientation is a central antecedent to value- based selling, indicating that value-based selling builds on and also goes beyond customer orientation. […] The findings underline that business-to- business salespeople are effective not only to the degree to which they meet customer needs, but also to the extent to which their selling approaches facilitate customer value creation.
[On the organizational level], the findings demonstrate that a firm’s sales strategy […] affects salesperson selling performance both directly and indirectly. Of the three dimensions of sales strategy studied, only segmentation directly impacts salesperson selling performance. Prioritization and selling models impact salesperson performance indirectly, via their impact on customer orientation and value-based selling. This underlines the importance of developing a granular perspective of the firm’s target customers and providing salespeople with a customer typology that enables them to anticipate and understand important differences between customers and their business needs.

Key statements

In their study, the authors examine the influence that the sales strategy has on sales performance. In order to do so, they developed a model by differentiating between the effects of the sales strategy on (1) the sales performance of individual sales staff and (2) the sales performance at company level. They surveyed 816 sales staff and sales managers from 30 different sales organizations to test their model.
The authors come to the conclusion that the effective implementation of the sales strategy is crucial for translating sales potential into sales performance. At employee level, they identify value selling as an important driver of sales performance, which requires a high degree of customer orientation on the part of the individual member of sales staff. At company level, the results are not quite as clear. For example, the segmentation of customers is the only strategic dimension that is shown to have a direct effect on sales performance. The remaining two strategic dimensions of prioritizing customers and using sales models are shown to only improve sales performance indirectly. Companies can take the following approaches to increase sales performance:

  • Segmentation: Refrain from using generic customer typologies and instead develop your own segmentation models in order to better cater to the specific requirements of your customers.
  • Value selling: Train your sales staff to gain an understanding of their customers’ business models, formulate a value proposition and effectively communicate the value-added that they provide.
  • Sales models: Provide your sales staff with different sales models (e.g. alignment with purchasing or customers’ value-creation processes) so that they can translate their customer focus into specific measures.

Source:
Terho, H., Eggert, A., Haas, A., & Ulaga, W. (2015). How sales strategy translates into performance: The role of salesperson customer orientation and value-based selling. Industrial Marketing Management, 45, 12–21.
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