Disintermediation initiated by consumers is often the result of high market transparency, in that buyers are aware of supply prices direct from the manufacturer. Buyers bypass the middlemen (wholesalers and retailers) in order to buy directly from the manufacturer and thereby pay less.

Source: http://en.wikipedia.org/wiki/Disintermediation

In his recent post, Dick suggests that the Internet will replace telemarketers.  Embracing the concept that power has shifted to the buyer, Dick points out how buyers today can use the Internet to gain information about a vendor’s products, pricing and reputation, cutting through the marketing puffery to narrow the vendor selection process to a handful that meets their needs.  Dick feels this will diminish the need for telemarketers, and result in the field sales force closing deals more rapidly with a knowledgeable buyer.

While I strongly agree with Dick’s premise, my conclusion is that the role of the telemarketer will expand, rather than contract and that the disintermediation that will occur will result in the loss of field sales jobs.

The chart below, from Parcus Associates, represents the steps in a buying/selling relationship.

Marketing’s role is clear in the “create awareness” and “identify needs” stages.  The question is, when it comes to closing the sale, is a field salesman needed?

Dividing the world into two groups, commodity and non-commodity; for a commodity sale, where the buyer has learned about the vendor’s products, pricing and reputation from the Internet, a telemarketer can close the deal.  Assuming that he/she has all the necessary information, some latitude in making decisions around the sale and a salesman’s ability to close, the telemarketer replaces the need for a field salesperson.  If a firm feels that their commodity-type product can only be sold through relationships, they will ultimately lose to the Internet/Telesales firm with the lower costs.

Dick will argue that specialty products with diverse applications, typical of many Business-to-Business sales will require a field sales force, either direct or through channels.  His rationale is that due to the long sales cycle, the technical nature of the sale and the relatively large dollar amounts involved, the buyer will only buy from someone they can see and trust.

Bunk!  In most of today’s high-tech sales, the salesperson opens the door and buys lunch.  The real selling is done by the pre-sales engineer talking to the technical people at the buyer.  The SE takes the buyers technical team through the features/advantages/benefits of the product, answering questions from the buyer’s team about their specific applications.  The salesman in these meetings usually nods, smiles and drinks another diet Coke.

When it comes time to “close” the multi-thousand dollar deal, the VP of Sales or some management representative appears on the scene, makes a last minute financial concession to the buyer, and closes the deal.  In this case the field salesman usually buys the dinner.

In the case of a high-value technical sale, the SE type information can be handled by highly trained technical telemarketers using WebEX or the equivalent.  Using a CRM system, the telemarketer can nurture the account, reaching out to them at the appropriate time and following them through the sales cycle.  When appropriate, the telemarketer can dispatch the management team to close the deal.

So instead of diminishing the role of the telemarketer, I see the Internet increasing their role, taking the place of an expensive field sales person whose participation in the sales process is being subsumed by a combination of Marketing, generating the awareness and leads, and in-place telemarketers and technical support personnel, who are in constant contact with the buyer.

What are your thoughts?  Do you see the death of relationship selling as I do?

5/19/2010

Telemarketing’s basic function is to provide “warm” leads to the sales force through the following process:

1- Marketing provides telemarketing with some form of an offer, along with a script, a promotional piece and usually a competitive analysis.

2- Telemarketing calls existing or potential customers by using either using its existing “customer list” or a list generated from an event such as tradeshows or seminars, to discuss the offer, along with why their product or service is the best.

3- If there seems to be interest by the customer, then telemarketing documents the required information and forwards the “warm” list to the sales organization.

4- Sales then strategize on a plan of attack and calls on the potential customers.

5- As part of their strategy, sales can provide a variety of activities such as product demos, testimonials, various presentations and eventually some form of a proposal.

In my previous posting, I talked about various Sales Models. Let’s look at the traditional Direct Sales Model process.

1- Marketing generates awareness, often by offers on the products/services for sale, through promotions around these offers and aimed at targeted markets.

2- As stated above, telemarketing or sales themselves develops “warm” leads.

3- Sales pursue the leads and develops a strategy for each account

4- On the customer side, when the customer has a need to be addressed, they generate inquiries to a number of potential vendors about their products along with some formal request via a RFI/RFP.

5-The customer “listens” to a selected subset of vendors.

6-The vendor does not control the situation but has a big influence on the client through activities such as providing information, competitive analysis, and their relationships.

Let’s now look at the Internet and its capabilities as related to telemarketing and sales functions and how it has changed them.

Fundamentally the consumer/buyer is now in controlm not the selling organization. Here is why.  First the potential buyer can do most of the research especially in areas such as product or service information, what other users are saying about the product/service, what the competition has to offer, and what market analysts are saying. These are usually provided by the telemarketing (functions 1, 2, and 5 from above) and some of the sales activity.

Second, the potential buyer eliminates many of the potential vendors from the final list without the vendors even knowing about it.

Third, the Internet or more specifically, social media is helping sort out all the marketing hype versus the reality of vendor’s offerings.

So is the Internet replacing telemarketing? Well the political answer is MAYBE. My Answer is a definite YES!

Given the criteria that I mentioned, if you look at the evolution of the sales model coupled with the Internet capabilities, it is obvious the telemarketing’s role is diminishing over time.   I say diminishing because there will be certain types of organizations or products and services that will benefit from telemarketing.

So, if you have a telemarketing function, are you looking at how it is being used now and how it will be used in the future and how it will interact and utilize the Internet capabilities?

RHL 5/14/10