Total solutions

Delivering value to a company‟s customers is an important factor in order to build profitable relationships (Kotler, 2008, p. 191). Customer value is currently regarded as a strategic focus point for firms which are increasingly focusing on selling “customer value” rather than products. Therefore, gaining knowledge and a deeper understanding of value of a company‟s offerings and how the value of this can be leveraged is regarded as being of great importance.

Highly competitive business environments, where sources of competitive advantage in products and processes are easily imitated by competitors, are making it difficult for companies to differentiate based on merely technical competencies. Pursuing low price strategies, which in many cases can lead to a strong market position, are not appropriate for all companies particularly those trying to pursue a non-price-based differentiation strategy.

(Matthyssens & Vandenbempt, 2008) Instead companies are required to offer total solutions that match customer needs and that provide room for keeping profit margins (van der Haar et al., 2001; Berghman et al. 2005). This is particularly considered to be a successful concept in industries that primarily rely on personal selling (Dunn & Thomas, 1986).

A total solution is often described as project or systems selling or a turnkey project where the company is responsible for supplying an entire plant. Briefly stated, it is a package or integrated system of products and services which is designed for the needs of a customer and that creates more value for customers than if they were to buy separate components only.

(Cova & Salle, 2007; Galbraith, 2002) Service support, personal interaction and know-how that are included in this package are today regarded as core differentiators in business relationships and are major sources of customer value. In addition, these complementary services ensure the operation, maintenance and finance of the entire system during its lifetime.

The intangible nature of solutions combined with tangible offerings also make them harder to copy. Whereas suppliers that focus on components specialize on few activities in which they attempt to become superior, system suppliers assemble components and are responsible for providing a selection of technologically advanced components that solve a certain problem.

(Davies et al., 2007; Matthyssens & Vandenbempt, 2008) Suppliers of total solutions are often involved with customers at an early point in the process and are thereby able to influence the development of their customers‟ requirements and are simultaneously able to

offer additional value in a number of ways (Jha et al., 2009). Ideally, solutions are also supposed to produce financial benefits for the supplier in the sense that they are present during an extensive time period and therefore should be profitable in the long term (Bonney &

Williams, 2009).

The greater possibilities of differentiation in systems selling compared to product selling consequently result in greater freedom in pricing (Mattson, 1973). Furthermore, solutions are regarded as a means of establishing barriers to competing operations and creating new, long-term, sustainable and profitable growth opportunities and increasing sales by extending products and markets (Bonney & Williams, 2009; Ahmed & Shepherd, 2000). The greatest challenge in delivering solutions is to create an organization that supports this in a proper and efficient manner (Galbraith, 2002). In order to be able to deliver the best possible solution to customers, a provider of solutions is required to build both on customer relationship and advanced technology (Andersson et al., 2004). Technical competence consists of the knowledge and experience that the organization possesses regarding its products and services in order to provide effective solutions (Ahmed & Shepherd, 2000).

The organization within a firm generally has to be able to combat four main challenges regarding a change in the orientation and mindset of the company, a change of the structure and process within the organization, a requirement for new competencies and skills and finally, the execution of the transformation process in the organization including developing new performance indicators and pricing models in order to create a business that focuses on providing customer solutions. The greatest challenge, however, lies in the ability of the firms to make the organization and the product-structure customer-centric from having been product-centric and to handle the changed relationship with customers. This development requires a high level of information flow from the customer to the supplier as well as a high level of technology development and innovation. The concept of creating total solutions for customers requires a high level of knowledge, experience and thinking in order to make the components work together which means that companies are increasingly requiring highly qualified staff that has the ability to support this interaction. Furthermore, solutions cost more to develop, require a close interaction with customers and have longer sales cycles which therefore require a different sales approach.

Integrated solutions are in need of four capabilities within the organization; system integration capabilities, financing capabilities, operational service capabilities and business consulting capabilities. Business consulting services are often regarded as being the most important ones due to their ability to provide the platform for creating long-term customer relationships that allow the company to identify opportunities to create value in the future. Companies tend to primarily sell solutions to companies with which they already have a relationship where trust and commitment between the two parties exists and where there is room for an increased interdependence. This relationship allows the company to lock both parties in a beneficial, long-term commitment where the supplier is able to charge higher margins and generate future follow-up contracts as well as be aware of the customers‟ on-going operations. This in turn creates a barrier for competition and offers great economic returns since the company does not have to participate in competitive bidding processes. (Andersson et al., 2004; Cova

& Salle, 2007; Ahmed & Shepherd, 2000) A key success factor in marketing projects to new and present customers in the first stages is references which allow customers to gather more information about suppliers‟ offerings (Cova & Salle, 2007; Cova & Holstius, 1993). System integration capabilities, on the other hand, refers to the ability of an organization to provide proficiency in the technical integration of its offered components as well as the capability of the firm to identify valuable business, process and organizational integration opportunities (Ahmed & Shepherd, 2000).

Personal selling is an integral part of selling both components and projects. Selling solutions to a certain extent requires different competencies in the sense that the selling teams need to be composed of people from different functions including commercial managements, technical design and project management. This allows the company to supply a solution that solves the customer‟s entire problem (Brady et al., 2005). In order to be successful in selling solutions, salespeople must be sensitive to the developments that occur in both internal and external environments. This includes identifying and understanding a customer‟s problem as well as their entire business and operational context. Thereafter the company must provide an appropriate response that in turn provides profits. (Bonney & Williams, 2009)

Salesperson autonomy has been recognized as an important source of encouragement to provide a sense of ownership and choice for employees completing tasks in sales offices.

Salespeople that are provided with this independence to control different situations are proven to be more likely to recognize new opportunities while promoting and selling solutions.

However, a too decentralized organization may lead to that the dispersed sales offices do not gain enough information from each other. Being disconnected and not receiving adequate feedback and suggestions may consequently lead to that new opportunities are not recognized since the salespeople are not completely informed about how to select and most efficiently take advantage of opportunities available in the market. This lack of structural integration and information from the rest of the organization can also result in that the salesperson is not able to provide the right solution to the customer‟s problem. A moderately linked networked of sales offices is recommended in order to encourage a useful flow of information and knowledge. (ibid) Keeping everyone within the organization up to date about changes and new technologies and knowledge is regarded as being of utter importance to facilitate the above mentioned issues and requires effective communication. Compensation schemes and reward systems in order to promote successful solutions selling should be taken into consideration when re-focusing the company‟s orientation from being product-centric to solution-centric. (Ahmed & Shepherd, 2000) Sales representatives‟ ability to recognize sales opportunities and effectively satisfy current customers may also be hampered by the existence of too much workload, time pressure and a considerable number of tasks (Bonney &

Williams, 2009; Amabile et al. 1996). Effective measures to keep the management updated about whether the new strategic repositioning is working or not are important and can help to avoid issues and problems in the new organizational orientation (Ahmed & Shepherd, 2000).