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Christian Homburg, Michael Müller, & Martin Klarmann
When Should the Customer ReallyBe King? On the Optimum Level of
Salesperson Customer Orientation inSales EncountersIn today’s age of relational selling, a key challenge for salespeople is to determine the degree to which theircustomer-oriented behaviors drive sales performance. Therefore, this study analyzes whether a salesperson’scustomer orientation in sales encounters has an optimum level with regard to sales performance and customerattitudes. Using triadic data from a cross-industry survey of 56 sales managers, 195 sales representatives, and 538customers, the authors provide strong empirical support for a curvilinear, inverted U-shaped effect of a salesperson’scustomer orientation on sales performance, whereas the effect of customer orientation on customer attitudes iscontinuously positive. Moreover, the findings reveal that the optimum level of customer orientation with regard tosales performance is higher for salespeople selling individualized products, in firms pursuing a premium pricestrategy, and in markets with a high degree of competitive intensity.
Christian Homburg is Professor of Business Administration and Market-ing, Chairman of the Department of Marketing, University of Mannheim,and Professorial Fellow, Department of Management and Marketing, Uni-versity of Melbourne (e-mail: [email protected]). MichaelMüller is managing director, Oskar Widmer GmbH, Germany (e-mail:[email protected]). Martin Klarmann is Professor of Marketingand Innovation, School of Business and Economics, University of Passau(e-mail: [email protected]).
Second, because of today’s importance of developing
long-term customer relationships, the utility of using finan-
cial sales performance as outcome variable in sales research
has been questioned (e.g., Hunter and Perreault 2007). In
particular, scholars fear that this may be a wrong measure in
a relational selling context because it neglects long-term
customer reactions to a successful sale. Therefore, in this
study, we also consider customer attitudes as outcomes of
customer orientation. Here, the existence of an optimum
level is specifically not expected.
Third, scholars have criticized that the concept of sales-person customer orientation has remained somewhat vague
and imprecise (e.g., Schwepker 2003). Perhaps for this rea-
son, instead of studying the concept as a whole, recent
research has focused on specific behaviors and traits that
can be considered customer oriented according to the origi-
nal definition. Examples include a predisposition to meet
customer needs (Brown et al. 2002), the tendency to build
personal relationships with customers (Donavan, Brown,
and Mowen 2004), and an employee’s customer need
knowledge (Homburg, Wieseke, and Bornemann 2009). In
line with this development, this study focuses on sales-
person customer orientation in the context of sales encoun-
ters because sales encounters represent a supplier’s mostimportant points of contact with a customer in a business
relationship (e.g., Verbeke and Bagozzi 2000).
Conceptual Background
Customer Orientation in Sales Encounters
When Saxe and Weitz (1982) introduced the concept, they
characterized salesperson customer orientation as commit-
56 / Journal of Marketing, March 2011
ment to understanding and meeting a customer’s needs and
interests and ensuring long-term customer satisfaction.
Against this background, we define “salesperson customer
orientation in sales encounters” as the degree to which a
salesperson identifies and meets customer needs and inter-
ests in the different stages of a sales encounter.
This definition calls for further specification with regard
to the different stages of a sales encounter. Typically, five
major stages are considered (e.g., Jobber and Lancaster
2006): (1) the need identification stage, (2) the presentationstage, (3) the objections stage, (4) the negotiation stage, and
(5) the closing stage. In each stage, a salesperson can
behave more or less customer oriented. Thus, as Figure 1
depicts, customer orientation in sales encounters can be
thought of as a construct with five dimensions, each corre-
sponding to one specific stage in the encounter.
First, in the need identification stage of a sales
encounter, a key challenge for salespeople is to understand
a customer’s requirements precisely. Thus, “identification
of customer requirements” is the first dimension of cus-
tomer orientation in sales encounters. We define it as behav-
iors aimed at identifying the customer’s interests, goals, and
other product-related needs.Second, in the presentation stage of a sales encounter,
customer orientation manifests by offering products that
correspond to specific customer needs while clarifying the
customer’s benefits (Dwyer, Hill, and Martin 2000). There-
fore, “presentation of customer solutions” is the second
dimension of customer orientation in sales encounters. We
define it as communication behaviors that focus on the
products and services that meet customer needs.
FIGURE 1Dimensions of a Salesperson’s Customer Orientation in Sales Encounters
Stages of a Sales Encounter Dimension of Customer
(Jabber and Lancaster 2006, p. 250) Orientation in Sales Encounters Definition
Need and Problem Identification
Presentation and Demonstration
Dealing with Objections
Negotiation
Closing the Sale
Behaviors aimed at identifying the customer’sinterests, goals, and other product-relatedneeds
Communication behaviors focusing on theproducts and services that meet customerneeds
Behaviors aimed at stimulating customerobjections and disagreements and finding an
integrative solution
Behaviors aimed at achieving an agreementin sales negotiations by finding a compromisebetween the interests of the supplier and theinterests of the customer
Behaviors that emphasize the use ofinformation in the closing stage of a salesencounter
Identification of customerrequirements
Presentation of customer solutions
Collaborative handling ofobjections and disagreements
Implementing a customer orientation requires a lot of
time (e.g., Saxe and Weitz 1982), and this applies to all its
dimensions. For example, regarding the first dimension
(i.e., the identification of customer requirements), gaining
insights into customer preferences is a lengthy process
(Franke, Keinz, and Steger 2009). In addition, adapting
sales presentations to the needs of the customer instead of
using a “one-size-fits-all” style presentation (the second
dimension) requires more preparation time. Likewise, finding
integrative solutions or compromises in conflicts between
buyers and sellers instead of relying on persuasion and/or
pressure “involves the expenditure of considerable time and
effort” (Weitz and Bradford 1999, p. 247).
These time requirements may affect financial sales-
person performance because they are associated with impor-
tant opportunity costs. Salespeople wanting to increase their
customer orientation need to reallocate how they spend
their time. They are required to spend more time per cus-
tomer, which reduces the total number of customers they
can serve at all. Thus, increasing customer orientation
means shifting resources from customer acquisition to cus-
tomer retention, which does not necessarily improve perfor-
mance (e.g., Reinartz, Thomas, and Kumar 2005). In addi-
tion, in the remaining customer relationships, salespeople
must spend relatively more time on acquiring information
and adapting their offer and less on traditional selling activi-
ties, such as promoting and persuading (Weitz and Bradford
1999). This may also result in fewer sales opportunities and,
thus, reduced salesperson financial performance.
In addition, customer-oriented salesperson behaviors
result in offerings that are adapted to the specific needs of
the customer. As Joshi (2010, p. 94) notes, salespeople are
“preeminent among the individual-level drivers of product
modifications within organizations.” Consequently, sales-
person customer orientation is likely to be associated with
complexity costs for the selling organization. For example,Tuli, Kohli, and Bharadwaj (2007) find that for firms offer-
ing their customers comprehensive product solutions, over-
coming organizational complexity is a key challenge. In
particular, to maintain the required flexibility for offering
customized products, the efficiency of these organizations is
reduced (Gilmore and Pine 1997). Such additional com-
plexity results in “higher customer service costs and thus
lower customer profits” (Niraj, Gupta, and Narasimhan
2001, p. 7). Thus, it reduces salesperson financial perfor-
mance.
Optimal level of customer orientation in sales encoun-
ters. Salespeople wanting to increase their customer orien-
tation need to focus on fewer customers, and their offeringswill be more expensive to produce. Coupled with diminish-
ing returns of customer orientation, this indicates that the
relationship between customer orientation and sales perfor-
mance is shaped in the form of an inverted U, implying the
existence of an optimum level. Accordingly, we hypothesize
the following:
H1: The relationship between a salesperson’s customer orien-tation in sales encounters and his or her sales performanceis curvilinear in the shape of an inverted U.
Optimum Level of Salesperson Customer Orientation / 59
Effects of customer orientation in sales encounters on
customer attitudes. Other than with regard to sales perfor-
mance, we expect that the effect of customer orientation on
customer attitudes is continuously positive. With regard to
attitudes toward the product, it is highly likely that the supe-
rior value of products and services sold by customer-ori-
ented salespeople results in more positive customer evalua-
tions (e.g., Woodruff 1997). Several empirical studies
support the existence of a positive relationship between cus-
tomer orientation and customer attitudes toward the offering(e.g., Brady and Cronin 2001; Goff et al. 1997).
In addition to enhancing product evaluations, customer-
oriented behaviors are likely to reflect well on the sales-
person. We expect that customers appreciate salespeople
who they perceive in sales encounter as being responsive to
their needs. Again, several studies support the existence of a
positive effect of salesperson customer orientation on cus-
tomer attitudes toward the salesperson (e.g., Brady and
Cronin 2001; Ramsey and Sohi 1997).
Thus, there is reason to expect a positive relationship
between salesperson customer orientation and both types of
attitudes. At the same time, there is little to suggest that
increases in salesperson customer orientation are associatedwith any significant costs in terms of customer attitudes.
Consequently, it seems unlikely that situations arise in
which customer attitudes deteriorate as a result of increases
in salesperson customer orientation. Thus, we hypothesize
the following:
H2: The relationship between a salesperson’s customer orien-
tation in sales encounters and customer attitudes toward
the salesperson is continuously positive.
H3: The relationship between a salesperson’s customer orien-
tation in sales encounters and customer attitudes toward
the supplier’s products is continuously positive.
Effects of Customer Attitudes
Consistent with previous research (e.g., Crosby and
Stephens 1987), we expect that customer attitudes are
strong drivers of overall customer satisfaction. Thus, we
hypothesize the following:
H4: The relationship between a customer’s attitude toward the
supplier’s products and customer satisfaction is continu-
ously positive.
H5: The relationship between a customer’s attitude toward the
salesperson and customer satisfaction is continuously
positive.
Similarly, because customer satisfaction is positively asso-ciated with outcomes such as increasing share of wallet
(e.g., Keiningham, Munn, and Evans 2003), we predict the
following:
H6: The relationship between customer satisfaction and sales
performance is continuously positive.
These relationships are well established in sales research.
Thus, in Table 1, we provide only a brief summary of the
decisions as risky in terms of whether the product meets
their requirements and the magnitude of adverse conse-
quences when buying the wrong product (e.g., Dowling and
Staelin 1994). Thus, we expect that customers’ perceived
risk is greater for important products. In particular, with
important products, the adverse consequences of buying a
wrong product, such as monetary losses due to replacement
costs or, in business-to-business settings, due to production
downtimes, are more substantial (McQuiston 1989). As a
result, to reduce perceived risk, customers have a higher
need for information and assistance.
Thus, customers buying important products are more
likely to value customer-oriented behaviors in the course of
a sales encounter. For example, in the need identification
stage, customers are likely to show more appreciation for
any efforts aimed at understanding their specific needs. In
the presentation stage, customers are likely to respond more
positively to offerings adapted to their specific needs. Here,
customer-oriented salespeople may be able to reduce per-
ceived risk by offering additional services, such as specific
guarantees. Likewise, a collaborative approach to handling
disagreements will be more valuable because it can be inter-
preted as nonopportunistic. As a consequence, the optimumlevel of a salesperson’s customer orientation is likely to be
higher with important than with unimportant products.
Thus, we hypothesize the following:
H7: The optimum level of a salesperson’s customer orientationin sales encounters with regard to sales performance ishigher if a supplier’s products are of high rather than lowimportance to the customer.
Product individuality. In many industries, suppliers have
begun offering their customers highly individualized solu-
60 / Journal of Marketing, March 2011
tions, in which products are customized to meet the cus-
tomers’ specific needs (Tuli, Kohli, and Bharadwaj 2007).
In this kind of selling environments, customer-oriented
salesperson behaviors play a crucial role in determining the
success of a solution supplier’s products. In particular,
salespeople are essential to understanding the specific cus-tomer needs and ensuring necessary product modifications
(Joshi 2010). This is particularly so because customers may
not be aware of some of their needs (Simonson 2005).
However, many solutions that salespeople offer are still
ineffective in this regard, even though customers demand a
better understanding of their needs, especially with regard
to their own businesses (Tuli, Kohli, and Bharadwaj 2007).
Thus, in environments in which highly individualized prod-
ucts are offered, increasing salesperson customer orienta-
tion is still a highly valuable strategy.
This situation is different for standardized products.
Verbeke et al. (2008) find that a salesperson’s general men-
tal ability (and his or her ability to understand specific cus-tomer needs) is more strongly related to sales performance
in situations in which highly individualized products are
sold. Moreover, for more standardized products, Verbeke et
al. argue (p. 55) that “customers may perceive the develop-
ment of highly complex and creative business solutions as
inadequate.” Thus, with standardized products, customer
orientation seems to be much less valuable. This leads to
the following hypothesis:
H8: The optimum level of a salesperson’s customer orientationin sales encounters with regard to sales performance ishigher if a supplier’s products are individualized ratherthan standardized.
Supplier’s price positioning. We expect that the opti-mum level of a salesperson’s customer orientation in sales
encounters varies depending on the supplier’s price posi-
tioning. From a customer’s point of view, a supplier’s gen-
eral price level indicates the quality of its products and,
accordingly, the equivalent value a customer receives (e.g.,
Rao and Monroe 1989). Consequently, if a supplier’s price
level is substantially above the market average, customers
expect additional benefits in return for accepting higher
prices.
InvestigatedRelationship Expected Effect Basic Rationale for Hypotheses
•In this context, a positive attitude toward the salespersonand toward a supplier’s products represent two majorantecedents of overall customer satisfaction.
•Empirical support for positive impact.
Customer satisfaction Æsales performance
Continuouslypositive (H6)
•Customer satisfaction is a strong driver of customer loyalty.•Thus, increasing customer satisfaction is associated withincreasing willingness to pay, positive word of mouth, andfuture purchases.
•These benefits are reflected in salesperson performance.•Empirical support for positive impact.
As a primary information source for the customer, sales-
people must be able to justify higher prices. On an overall
basis, a salesperson’s customer-oriented behaviors in the
single stages of a sales encounter may strengthen a cus-
tomer’s benefit perceptions. For example, through the defi-
nition of customer requirements and the presentation of
appropriate customer solutions, salespeople may be able to
create an equivalent value for the supplier’s higher prices.
However, if a supplier’s price level is below the market
average, salespeople probably rely on lower prices in their
argument, and as a consequence, a lower level of customerorientation in sales encounters may be sufficient to achieve
a desired outcome. In other words, we expect the additional
benefits of higher levels of customer orientation in sales
encounters to be more substantial if a supplier’s prices are
above rather than below the market average. Thus, we
hypothesize the following:
H9: The optimum level of a salesperson’s customer orientationin sales encounters with regard to sales performance ishigher if a supplier’s price positioning is above rather thanbelow the market average.
Competitive intensity. Finally, we expect that the opti-
mum level of customer orientation in sales encounters ishigher in highly competitive markets than in less competi-
tive markets. In highly competitive environments, cus-
tomers have greater relative market power (Appiah-Adu and
Singh 1998). Accordingly, customers most likely have
greater demands in highly competitive markets, for exam-
ple, with regard to product quality and service levels. More-
over, in highly competitive markets, the quality of products
and services of different suppliers is often similar, thus
complicating differentiation.
As a consequence, in highly competitive environments,
salespeople are pressured to be a means of differentiation—
for example, by establishing a relationship with the cus-
tomer that is perceived as valuable in itself (Yim, Tse, andChan 2008). Therefore, we expect that high levels of a
salesperson’s customer orientation in the single stages of a
sales encounter are more beneficial if competitive intensity
is high. If competitive intensity is low and salespeople can
more easily differentiate from competition, for example, in
terms of the quality of a supplier’s products and services, a
lower level of a salesperson’s customer orientation in sales
encounters is likely to be sufficient. Against this back-
ground, we hypothesize the following:
H10: The optimum level of a salesperson’s customer orienta-tion in sales encounters with regard to sales performanceis higher in highly competitive markets than in lesscompetitive markets.
Methodology
Collection of Triadic Data
To test these hypotheses, we conducted a large survey
among sales managers, sales representatives, and cus-
tomers. In the first step, we asked chief executives who
cooperate regularly with the University of Mannheim
whether they were interested in participating. In this way,
Optimum Level of Salesperson Customer Orientation / 61
47 companies from different industries were contacted. As
incentives, they were offered an individualized report of the
study results (including benchmark analyses) and a consult-
ing workshop. Of these companies, 12 that mainly operate
in business-to-business markets in six different industries
(financial services, logistics, health care, machine building,
chemicals, and information technology) agreed to partici-
pate (a response rate of 25.6%), most with multiple business
units. Overall, 33 business units participated.
In these business units, we conducted two separate sur-
veys among the sales managers and the sales representa-
tives. After informing them about the goals of our research,
we mailed questionnaires with a request for completion
within four weeks. We obtained usable responses from 56
sales managers (a response rate of 84.9%) and 195 sales
representatives (67.2%).
In the second step, we obtained the contact data of, on
average, ten randomly selected customers per participating
sales representative, which allowed us to survey multiple
customers per sales representative. After informing these
customers by mail about the goals of the study, we contacted
them by telephone to obtain their responses to our survey
questions, which resulted in usable responses from 538 cus-tomers. Table 2 presents the respondents’ characteristics.
Data from the three sources were matched using code
numbers. Because the unit of analysis in this study is the
individual salesperson, we matched the data at the sales-
TABLE 2Sample Composition
%
A. Industries According to Salespeople SurveyedFinancial services 32Logistics 22Health care 14
Machine building 2Chemicals 17Information technology 13
B. Sales Experience of Salespeople Surveyed<5 years 145–10 years 3111–15 years 2116–20 years 1921–25 years 526–30 years 5>30 years 5
C. Number of Customers Served by Salespeople1–10 2011–20 1621–50 22
51–100 17>100 25
D. Length of Relationship Between Supplier andCustomer<2 years 52–5 years 86–10 years 1111–20 years 2621–30 years 1631–50 years 20>50 years 14
business processes (C) 4.89 .61 .71 .56 –.13 .26 .3
Notes: SP = salesperson data, and C = customer data. N.A. = not applicable because the construct is measured through a single indicator, anvariance extracted (AVE) cannot be computed.
for low and high levels of the contextual variable. Table 4
presents the results.
Table 4 shows that for each moderator, optimum levels
of customer orientation differ strongly between groups. To
test whether these differences are statistically significant, we
first used a Chow test to test the null hypothesis H0: Blow =
Bhigh
(i.e., the equality of the vector of regression coeffi-cients Blow in the group with low values of the contextual
variable and the corresponding vector of the high-values
group Bhigh). As Table 4 shows, the Chow F-statistic is
highly significant for all moderators. Thus, regression coef-
Optimum Level of Salesperson Customer Orientation / 65
ficients differ significantly between subgroups, which indi-
cates that the optimum levels of customer orientation differ
as well.
Second, using a Wald test (Muthén and Muthén 2006),
we tested more specific constraints; that is, we forced the
optimum level COoptlow of salesperson customer orientation
in the low-values group of the moderator to be equal to theoptimum level COopt
high in the high-values group (H0:
COoptlow = COopt
high). Table 4 shows the resulting chi-
square test statistics. They are significant for all contextual
variables, except product importance. In summary, these
Customerorientation (SP)
x1(linear term)
Attitude towardsalesperson (C)
h1
Quality ofservices and
processes (C)x3
Salespersonexperience (SP)
x2
(SP) Salesperson data(C) Customer data
Customersatisfaction (C)
h3
Salesperformance (SP)
h4
Attitude towardproducts (C)
h2
Customerorientation (SP)
x1 ¥ x1(quadratic term)
FIGURE 3
Results of Model Estimation
*p < .05.**p < .01.Notes: Completely standardized coefficients are shown. n.s. = not significant. The continuous lines indicate the effects of the major variables,
and the dotted lines indicate the effects of control variables used in the model.
g 41 = .21*
g 13 = .46**
g 23 = .40**
g 11 = .24** g 42 = .31**
g 41¥1 = –.28*
g 2 1
= . 2
6 * *
g 1 1
¥ 1
= –
. 1 0 n
. s .
g 21¥1 = –.02n.s.
g 33 = .37** b43 = .24**
b 3 2 =
. 4 5 *
*
b 3 1 = .2 2 *
*
TABLE 4Impact of Moderator Variables on the Optimum Level of a Salesperson’s Customer Orientation in
Sales Encounters
Moderator Variables
Product Product Supplier’s Price Competitive
Importance Individuality Positioning Intensity
Parameters Low High Low High Low High Low High
Optimum level of a .25 1.25 .13 2.52 .18 1.63 .22 1.99
Control Variable (Salesperson Data)Salesperson experience –.00 –.00 .02
Control Variables (Customer Data)Costs of changing the supplier d .08*** .00 .11***Size of customer firme –.05 –.09*** –.10**Number of alternative suppliers .27** –.07* .09Length of firm relationship with supplier –.00 –.00* –.01Length of respondent relationship with salesperson .00 .01 .07**
*p ≤ .10.**p ≤ .05.***p ≤ .01.aMeasured through two Likert-scaled items (a = .75) asking customers to state their plans to expand the business relationship with the supplier.bMeasured through a single item (five-point scale) asking customers to state how much lower competitor prices would need to be (in percent-age of the current price of the supplier) to make them change the supplier.cMeasured through two Likert-scaled items (a = .83) referring to positive word-of-mouth (WOM) behavior.d
Measured through four Likert-scaled items (a = .65) referring to four different aspects of costs for changing the supplier (contractual obliga-tions, individualized products, specific investments, and costs for ending the relationship).eMeasured with closed-ended question (12-point scale) asking for the revenues of the customer firm.Notes: Unstandardized coefficients are shown.
TABLE 6Descriptive Analysis of Costs of Salesperson Customer Orientation in Sales Encounters
Salesperson Customer Orientation in Sales Encounters
Optimum Level of Salesperson Customer Orientation / 71
Item Used in Study
Item
Reliabilitya Original Item Source
•I summarize for my customers the majorbenefits of our offer in a non-obliging way tofacilitate their buying decision.
.36c “I try to influence a customer byinformation rather than bypressure.”
Saxe and Weitz (1982)
3. Outcomes of Salespeople’s Customer Orientation
Salesperson Performance (Salespeople):
seven-point scale: “much worse” to “much better”How do you evaluate your sales performance in comparison with your colleagues, based …
•on the achieved sales in the last 12 months? .79 “Compared with other salespeopleworking for your company, howwould you evaluate your over-all performance?”
Oliver and Anderson(1994)•on the achieved orders in the last 12 months? .80
•on the achieved total contribution margin inthe last 12 months?
.55
Customer’s Attitude Toward the Salesperson (Customers):seven-point scale: “totally disagree” to “strongly agree”
•I consider my account manager at company Xto be very customer-oriented.
.60 “In general, I am pretty satisfiedwith my dealings with thissalesperson.”
Ramsey and Sohi(1997)
•Overall, I have a very positive opinion about myaccount manager at company X.
.96 Newly developed N.A.
•Overall, I am very satisfied with my account
manager at company X.
.88 “I am satisfied with the level of
service this salesperson hasprovided.”
Ramsey and Sohi
(1997)
Customer’s Attitude Toward a Supplier’s Products (Customers):seven-point scale: “totally disagree” to “strongly agree”
•The products and services of company X are ofhigh quality.
.69 “This is a high quality product.” Miyazaki, Grewal andGoodstein (2005)
•The products and services of company Xextensively meet our requirements.
.81 Newly developed N.A.
•Compared to other suppliers, the products andservices of company X are very good.
.50 “The quality of this product isvery good.”
Miyazaki, Grewal andGoodstein (2005)
Customer Satisfaction (Customers):seven-point scale: “totally disagree” to “strongly agree”
•We are very pleased with the products andservices of company X
.61 “We are very pleased with theproducts and services ofcompany X.”
•On an overall basis, our experience withcompany X has been very positive.
.85 “On an overall basis, ourexperience with company Xhas been very positive.”
Homburg and Stock(2004)
•On an overall basis, we are very satisfied withcompany X.
.92 “On an overall basis, we aresatisfied with this company.”
Homburg and Stock(2004)
APPENDIX
Continued
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