April 05, 2007
by Professors Annie Liu and Mark Leach
In today’s stressful and time-crunched world, buyers often look to streamline their purchasing by establishing relationships with a few companies they trust and they believe provide value-added solutions. Recognizing the importance of customer relationships and the pivotal role the salesforce plays in enhancing relational exchange, many direct selling firms have emphasized providing credible and high-value-added solutions to their customers. As a result, many direct sellers have endorsed and promoted the concepts of consultative selling, relationship selling and solution selling. Direct sellers have realized that salespeople who forge stronger relationships with customers often are able to better understand customers’ needs and, thereby, add additional value to customers as well as facilitate cross-selling and up-selling activities. As such, these more relationship-focused salespeople have been able to improve customer satisfaction and retention, have seen sales revenues grow and, even more importantly, have increased customer profitability.
Consultative selling is the process of providing credible information to help customers make intelligent decisions to achieve their goals. A salesperson practicing consultative selling needs to maintain two-way proactive communication with his or her customers to help customers identify their needs and problems and to further facilitate the development of credible solutions. In addition, consultative salespeople must communicate effectively with internal customers such as support staff and manufacturing and technical departments to fulfill their clients’ demands. As a result, the salesperson and the adopted solutions they provide add value to customers.
Through consultative selling, the sales professional is often viewed as a valued expert and a trustworthy advisor, rather than someone merely promoting a particular product. Meanwhile, the development of trust and increasing levels of dependence by customers provide a barrier to switching and a source of sustainable competitive advantage for the sales firm. As customers become more long-term focused, a trustworthy salesperson’s expertise becomes an integral part of what customers are buying; a salesperson’s advice becomes part of the product.
As salespeople struggle to establish a relationship-focused, consultative-selling approach with their customers they should ask themselves an important question: “Where do I focus my effort to make the most impact and add the highest level of value to my customers?” Salespeople often are unsure of what they need to do to enhance credibility, strengthen value-added perceptions and manage the impressions of their customers, and most importantly, which of these efforts lead to customer loyalty or profitability.
To answer these questions, we intend to share results of our study of developing loyal customers through building salesperson credibility (see diagram). In our study, we have set out to accomplish three main goals. First, we want to examine how salesperson credibility is developed and what salespeople can do to enhance credibility perceptions. Second, we want to explore impression-management activities and how they influence salesperson credibility. And last, we want to look at the impact of salesperson credibility on customer loyalty and retention. In sharing these results, we hope to provide guidance to salespeople, sales managers and direct selling firms on how to manage customer perceptions of salesperson credibility. Ultimately, we hope our findings will help direct sellers increase customer loyalty.
To investigate these issues, we extensively questioned 170 customers regarding their relationships with their salespeople. Half of these customers provided information on a salesperson from a company they perceive having a long-term relationship with. The other half provided information on a salesperson from a company they use but have little commitment to. Follow-up in-depth interviews were conducted with several of these customers.
Our examination of these customers and their exchange relationships show that salesperson expertise and trustworthiness are two critical and integral dimensions of salesperson credibility; this is consistent with past academic research on “source credibility.” As problem solving and providing customized solutions by salespeople become an integral aspect of the offering, a customer’s perception of a salesperson’s credibility becomes increasingly important. Because the credible salesperson is trusted, a customer and salesperson can rely on one another to keep promises and to share sensitive information needed to design appropriate solutions. Because a credible salesperson is seen as an expert, this salesperson becomes a valued information source and possibly a business partner. Therefore, in the exchange relationships investigated in our study, we find that customers are more likely to forge relationships with companies whose salespeople they trust, and they can only trust those who they see as having a high level of expertise. How then do salespeople ensure that customers see them as having a high level of credibility?
Trust in Salesperson.Trust in a salesperson requires a belief that the salesperson can be relied on to behave in a manner such that the long-term interests of the customer will be served. A customer’s trust involves confidence that the salesperson will deliver on promises and fulfill long-term needs through coordinative actions. Customers evaluate a salesperson’s dependability, reliability, honesty, responsibility and likeability when evaluating trust. Because consultative selling often requires an enhanced level of partnering and the sharing of information, customers may feel that they become increasingly vulnerable to the salesperson. Under these situations, the trust they establish with the salesperson is what allows consultative selling to take place; without trust, customers do not share the information needed for a salesperson to develop appropriate solutions.
Perceived Expertise. Perceived salesperson expertise is the belief that a salesperson possesses special knowledge relevant to the business relationship. Expertise is most often demonstrated through the solutions a salesperson provides to a customer. As such, expertise is a primary mechanism by which a salesperson provides added value to a customer; the higher the level of perceived expertise by a customer, the higher the perceived level of value added. Therefore, for a salesperson to be perceived as having a high degree of expertise, they must acquire accurate, current and specialized knowledge. Furthermore, the salesperson must utilize and convey this knowledge to the customer by providing tailor-made solutions.
Impression Management Activities
To help answer the question of how to enhance salesperson credibility, we further explore activities that can positively influence salesperson credibility. Among the customer relationships we examined in our study, we find that salesperson credibility is positively related to two key impression-management activities. First, salesperson credibility is related to a client’s perception that a salesperson has the power in their own firm to get things done. Often, whether a deal is made or broken relies on the salesperson’s ability to effectively advocate their external customer’s position internally to those who are going to finance, manufacture, alter, transport or service the sale. Thus, our findings suggest that, not only do salespeople have to effectively deal with their internal customers, they must also try to communicate this effectiveness to their external customers and make customers aware of their abilities and efforts.
Second, perceived credibility of a salesperson is also related to a customer’s perception that interactions with a salesperson are appropriate and valuable. Qualitative interviews indicate that customers dislike it when sellers attempt to interact too often or without substantial justification. Furthermore, many clients prefer not to have extensive contact with a salesperson but expect the contact they have to be valuable. As such, salespeople who are able to determine how often customers wish to be called on are more apt to be viewed as more credible. In today’s rapidly advancing technological environment, customers are adopting various means of communicating (e.g., electronic mail, voice messaging, etc.). Thus, salespeople must also evaluate customers’ preferred methods of interaction and align their communications to customer preferences.
Salesperson Credibility and Customer Loyalty
When a source is considered credible, the information provided is more persuasive and more likely to lead to purchase intentions and brand choice. Our findings indicate that, across all loyalty measurements, a customer’s perception of their salesperson’s credibility is strongly related to a customer’s intention to engage in future business. Thus, findings from this study suggest that the consultative selling activities of salespeople can play a key strategic role in customer retention. But to do this, salespeople must be perceived as credible consultants.
Credibility is a function of a customer’s perception of expertise and trust. As such, enhancing the level of a customer’s trust and perception of expertise with a salesperson can ultimately enhance sales revenue. Thus, a salesperson should not only continuously work to enhance their level of expertise and trustworthiness, but should also actively engage in impression management with customers to manage customer perceptions of expertise and trust.
In sum, through their impression-management efforts (i.e., development of power perceptions and communicating in customer-focused ways), salespeople can enhance their credibility with customers. This credibility may very well be the cornerstone to developing long-lasting and more profitable exchange relationships with customers.
Dr. Annie H. Liu is a professor of marketing at Loyola Marymount University in Los Angeles. She teaches business-to-business marketing and high-tech marketing strategy. Her research focuses on how to enhance customer value, build switching costs and increase share-of-business. She has conducted research and training for corporations and governments, and guided executives on marketing strategies in the United States, Asia and Europe. She can be reached at firstname.lastname@example.org.
Professor Leach is on the faculty of Loyola Marymount University in Los Angeles, where he teaches courses in professional selling, sales management and salesforce strategies. His research focuses on how to provide effective sales training, gain a better understanding of buyer and seller relationships and how to retain profitable customers. He can be reached at email@example.com.