Relationship Selling: Its Effects On Salesman Performance In Service Industry

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Relationship Selling: Its Effects On Salesman Performance In Service Industry


Abstract


The purpose of this study is to investigate the effect of relationship selling on salesman performance in the Nigerian banking industry. The study was conducted through the use of a structured questionnaire with questions tailored towards ascertaining the relationship selling and sales performance in service industry with particular emphasis on Union Bank Plc. 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. It was empirically discovered that that that relationship selling has a significant effect on clients’ retention in the banking industry, and the banking sector fosters some level of significant peculiarities in the usage and strategizing with relationship selling.


Table of Contents


  • Pages
  • Title Page
  • Certification Page
  • Dedication
  • Acknowledgement
  • Abstract Page
  • Table of Content

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Justification/Significance of the Study
  • 1.7 Scope and Limitation of the Study
  • 1.8 Definition of Terms
  • References

Chapter Two:

Literature Review

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Literature
  • 2.3 Theoretical Framework
  • 2.4 Empirical Literature
  • 2.5 Limitation of the Study/Gap to be Filled
  • 2.6 Relationship Selling In Nigerian Service Industry
  • 2.7 Conclusion
  • References

Chapter Three:

Research Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 The Study Area
  • 3.4 Study Population
  • 3.5 Sample of the Study
  • 3.6 Method of Data Collection
  • 3.7 Validity of Research Instrument
  • 3.8 Reliability of Research Instrument
  • 3.9 Methods of Data Analysis
  • 3.10 Ethical Consideration
  • 3.11 Field Experience
  • 3.12 Limitations of the Study
  • References

Chapter Four:

Data Presentation and Analysis

  • 4.1 Introduction
  • 4.2 Background of the Respondents
  • 4.3 Results and Discussions
  • 4.4 Test of Hypotheses
  • 4.5 Discussion of Results

Chapter Five:

Summary, Conclusions and Recommendations

  • 5.1 Summary
  • 5.2 Findings
  • 5.3 Recommendations
  • 5.4 Conclusions
  • 5.4 Suggestions for Further Research
  • Bibliography
  • Appendix

Chapter One


Introduction

1.1 Background of the Study

For any company wanting to be successful in business, it is of the utmost importance to be able to identify and validate the salesperson characteristics and behaviors predictive of high performance in selling. In line with this thinking, a vast number of studies have been conducted in relation to selling behaviors, their individual and organizational antecedents, and salesperson performance (e.g. Franke and Park 2006;Guenzi, De Luca and Troilo, 2011; Plouffe, Hull and and Wachner, 2009).

Salesperson goal orientations have been found to be among the key drivers of various salesperson behaviors and selling performance. They refer to the individual differences in goal preferences in achievement situations (Dweck and Legett, 1988; Kohli, Shervani and Challagalla, 1998) and can be divided into two major classes, namely learning goal orientation which involves seeking to develop competence by acquiring new skills and mastering new situations, and performance goal orientation which involves seeking to demonstrate and validate one’s competence to others(Dweck and Legett, 1988). During the last two decades, their key antecedents and outcomes have been established in the context of selling (see Sujan, Weitz and Kumar, 1994; Harris, Moven and Brown 2005;Ahearne, Lam, Mathieu and Bolander, 2010).

However, a closer look at the salesperson goal orientation studies reveals some keygaps and inconsistencies in the goal orientations performance relationship. First, goal orientation studies have produced mixed findings related to the relationship between learning orientation and performance, ranging from clear positive relationships (e.g. Vande Walle, Brown, Cron and Slocum; 1999) to no relationship (e.g.Kohli et al. 1998). Further, several studies have found that contrary to theory, performance orientation explains salesperson performance better than learning orientation (e.g. Porath and Bateman, 2006). Some studies have suggested and also provided evidence to support the idea that the interaction between time and goal orientations might resolve these inconsistencies (Ahearne, Lam, Mathieu and Bolander 2010). Kohli et al. (1998) argued that learning orientation might not affect or might even hamper selling performance in the short term, but increase performance in the long term by enabling salespeople to develop their skills. The gaps in findings and the related propositions indicate that the largely unexplored question of the effect of salespersons’ selling experience on goal orientations should be studied more closely.

Secondly, studies have to date mostly concentrated on the direct key antecedent sand outcomes of goal orientations. Scholars have recently called for new studies on selling that examine alternative types of relationship, including mediation and moderation, for a better understanding of the interrelations between selling behavior sand the mechanisms how they affect performance (see Plouffe, Hulland and Wachner2009). As goal orientations concern the mental framework that individuals use to interpret and respond to achievement situations (Dweck and Legett, 1988) and relate closely to learning, it is likely that they can affect selling behaviors not only directly but also through interaction, for example by helping salespeople adapt their selling style more effectively. Ignoring these potential indirect effects can lead to underestimation of various goal orientations’ role in selling performance indicating the need to study the topic more closely. Further, prior studies have found only little evidence of moderators of adaptive selling this far underlining the relevance of the taken perspective (see Franke and Park, 2006).

This study seeks to fill the identified gaps in research on selling goal orientation by creating new understanding of nexus between relationship selling and salesman performance in the Nigerian service industry with particular emphasis on the banking sector.


1.2 Statement of the Problem

Salespersons are widely considered as a dynamic power in the business world and their efforts has a direct effect on the various and different activities of organizations. They introduce the products of organizations to their customers. In the opinion of customers, the salespersons are representatives of the organization. The survival of service firms like banks depends on their interaction with the environment. Providing high quality service and rely solely on expertise is not enough in the banking industry, especially in the highly competitive country where the banking services abound. It is very difficult for bank marketers to use the service knowledge, as the only weapon (Wong et al, 2008). Customer satisfaction and adaptive selling behaviors are very important variables relating to banking services affecting the salespersons’ performance directly or through customer orientation (Singh, 2012).

Banks are to provide good services for their clients and this effort is summarized in the performance of their salesperson. The more competitive and uncertain the environment is, the more the importance of investigating the salespersons’ performance and its improvement will be (Keillor and Parker, 2000). Therefore, this study is to investigate the factors affecting the performance of salespersons. According to previous studies, the salespersons’ performance is a function of job satisfaction, adaptive selling behaviors, customer orientation and service history (Kotler and Keller, 2006; Singh and Das, 2013). Some studies have examined the impact of job satisfaction, customer orientation and adaptive selling behaviors on sales performance (Frank and Park, 2006; Bloes, 2001; O’Hara et al, 1991), but few studies have examined the impact of selling experience (O’Hara et al, 1991; Siguaw and Honeycutt, 1995; Singh and Das, 2013).

The purpose of this study is to fill this gap in the literature of relationship selling and salesman performance and by extension to investigate the moderating role of selling experience and job commitment on these relationships. By investigating the effect of selling experience on these relationships, we can get to some clues about the relationship between sales performance and key affecting factors that provides useful implications for managing and improving the performance of salespersons.


1.3 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:

  1. To understand the practice of relationship selling and effects on sales performance in the Nigerian banking industry.
  2. To show the effect of relationship selling on clients retention in the industry.
  3. To understand the peculiarities of banking sector in usage and strategizing with relationship selling
  4. To evaluate the moderating role played by sales experience in linking relationship selling and sales performance in the Nigerian banking industry.
  5. To show the effects of relationship selling on general performance of banks in terms of market share improvement

1.4 Research Questions

The following questions would be put forward to help the achievement of the objectives of this research work:

  1. What is the level of practice of relationship selling and effects on sales performance in the Nigerian banking industry?
  2. What is the effect of relationship selling on clients’ retention in the industry?
  3. What are the peculiarities of banking sector in usage and strategizing with relationship selling?
  4. What are the moderating role played by sales experience in linking relationship selling and sales performance in the Nigerian banking industry?
  5. What are effects of relationship selling on general performance of banks in terms of market share improvement?

1.5 Research Hypothesis

  1. H01: Relationship selling has no significant effect on clients’ retention in the banking industry.
  2. H02: The banking sector possesses no form of significant peculiarities in the usage and strategizing with relationship selling.
  3. H03: Sales experience plays no significant moderating role in linking the relationship selling and sales performance in the Nigerian banking industry.
  4. H04: Relationship selling has no significant effect on the general performance of banks in terms of market share improvement.

1.6 Justification / Significance of the Study

This study will be relevant in so many ways. Firstly, it will be relevant in the sense that it will provide the basic understanding of the concept of relationship selling and organisational performance with particular emphasis on the Nigerian banking industry. This understanding will help all stakeholders in financial market to make good policies regarding marketing and selling their product or services. To this end, it will be beneficial to the following interest holders:-the researcher, the general public, the academic world, small-scale business owners or managers and the government.

The research work will give the researcher an in–depth understanding on the concept of relationship selling and salesperson performance.

The dynamics of relationship selling and salesperson performance is a field which seems elusive thus; it is not understood by many. This research work will enlighten people on the concept so that both customers and marketing executive alike can explore and make their relationship better off in the Nigerian banking industry.

This research work will definitely add to existing body of knowledge. It can also serve as a reference material and topic for further research work.

The government will also benefit from this work as various government agencies or regulatory bodies such as the Central Bank of Nigeria, Securities and Exchange Commission amongst other can ensure that the interests of the entire Nigerian populace are protected through various forms of relationship selling.


1.7 Scope and Limitation of the Study

As regards geographical scope of this work, the work will be centered on the Nigerian economy with particular emphasis on the banking industry. The banking industry as used here refers to any economic activity that is carried on by firms licensed to transfer funds from the surplus unit of the economy to the deficit unit of the economy.

In terms of context, this work will attempt to consider the factors and other matters that pertain to relationship selling and salesman performance in the Nigerian banking industry. Thus, other unrelated activities of the Nigerian banks might not be reflected completely unless they have a bearing on the research objectives.

In the course of this study, it is very possible that there would be certain constraints or limitations. One of such limitations include the fact that due to scope of the research work, the researcher might be limited pertaining the depth of literature and other concerns that relates to the banking industry as the researcher would have to concentrate on matters that bother on bank bankruptcy.


1.8 Definition of Terms

Personal selling:

Oral presentation that takes place between a salesman and one or more potential customers with the objective of closing the sale.

Relationship selling:

All selling activities directed toward establishing, developing, and maintaining successful relational exchanges between the salesperson and the customer –either an organization or an individual–, and,in turn, between the selling and the buying companies. Also, this approach requires the ongoing satisfaction of the customer needs, both those related to the product as well as the interaction.

Sales performance:

Sales performance is the measurement of the number of sales that an employee makes for a business. Sales performance looks at the amount of sales made versus the amount of customers an employee comes in contact with.

Service industry:

The service industries involve industries pertain the provision of services to businesses as well as final consumers.

Sales management:

Involves planning the selling program and implementing and controlling the personal selling effort of the firm.

Salesforce assessment:

Involves determining whether or not sales objectives were met and whether account management policies were followed.

Interpersonal skills:

Refer to mental and communication algorithms applied during social communication and interaction to achieve certain effects and results


Chapter Five


Summary, Conclusions and Recommendations

5.1 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.


5.2 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 that relationship 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.


5.3 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 positive attitudes towards relationship selling, and prepare salespeople to effectively satisfy customer needs. Likewise, training should provide salespeople with the necessary knowledge in terms of products and competition. Product knowledge should emphasize the benefits and utilities off e red to the customers. Competitor knowledge is to be used in a professional an ethical manner, and not to criticize competition without any objective reason.

Sales training should also provide salespeople with the necessary skills and abilities so that they are able to distinguish different types of customers, identify their buying motive, and effectively analyze their needs. All these skills could be taught through role-playing where the salesperson acts consecutively as the customer and as the sales person. These exercises can be complemented with interactive training 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 the satisfaction of long-term customer needs is a priority in the company. Accordingly, managers should implement a behavior-based control system, where the activities carried out by salespeople (e.g., through customers evaluations) are considered when evaluating their performance.

Moreover, managers should try to communicate with their sales people, assisting and guiding them in accurately viewing their day-today sales activity from a relational perspective; then they should not reward them on a 100% commission based on the sales made, but evaluate their various activities, not just the outcomes achieved (sales volume). We do not imply that companies should avoid incentive programs, rather they could use a combination of base salary plus incentive pay in the form of commissions, bonuses or both based not only on the sales performance but on how well long-term objectives such as customer satisfaction have been achieved.


5.4 Conclusions

The changing dictates of the contemporary selling environment has recently challenged the transactional selling approach. Firms at the vanguard of strategic thinking have without delay adopted the relational selling model in response to these shifts. Despite this, skewed competition, lack of trust, poor customers’ knowledge and internal marketing, high rate of customer turnover, low technical development and the like in Nigeria has totally challenged the adoption of the relationship selling model.

The implication of this is that the African continent especially Nigeria offer sample viable venture opportunities to prospective investors. The transactional selling framework has constantly dominated our selling philosophy as a result of the afore-highlighted factors. To dislodge the dominance of the win/loss selling approach, it will make great professional sense if sales units of the banking industry in Nigeria can move towards more credible itinerary to restore trust through promises fulfillment, reduction of customers’ perceived risk and uncertainty, sincerity and commitment. This cannot materialize if organizations refuse to organize internal marketing orientation training for their employees.

It will equally make great sense if the Nigerian banking industry will devote more time to seek and understand the needs and wants of the customers instead of undue emphasis in quota realization. Consistency in price administration, quality, service delivery, attitude, energy and vitality are critical factors that will facilitate the implantation of the relationship selling tradition in Nigeria banking industry.

Finally, if government 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 competitive environment in no time.


5.4 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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