A private sale is direct cooperation between a seller and a prospective buyer without the involvement of the public. This interaction occurs in an isolated manner whereby no prior advertisement of the meeting is availed for the members of the public or brokers to join the forum. The parties engage in the negotiation voluntarily for the mutual benefit of their business interests (Betancourt et al., 2017). The private sales strategy can occur on private business premises or internet forums. Therefore, it is worth noting the benefits that accrue in a private sales strategy to a business or an individual and its efficiencies.
Benefits to the Company
The private sales strategy has several benefits to a company that is effective in improving its economic returns. This technique enhances the retention rates of customers to a business firm. Studies show that strategies that encourage customers’ social connectedness may lead to high incidences of churn from the company (Ascarza et al., 2018). It includes both formal notifications by the consumer to the company about termination of their engagements or informal discontinuation of business with the company. An individual is highly likely to churn from a company when their friends stop transacting with the same company (Kumar et al., 2015). Therefore, the private business strategy enhances customer retention due to reduced communication between customers who may negatively influence each other to churn a company.
Additionally, the private sales strategy promotes an effective relationship between the client and the managers of the company. The private nature of the interactions enhances the communication necessary for instituting a new client base. The managers get an effective platform to sell the company’s products to the consumer (Arslan, 2018). There is also ample time to discuss the prices of commodities as the private nature of this model reduces competition from similar products by other organizations. Hence, this technique is ideal for acquiring and sustaining the loyalty of customers.
Benefits to the Consumers
The private sales strategy has significance to the customers of the organization. First, the customers feel privileged to be part of the interaction due to its interpersonal nature. The client is appreciative of the VIP treatment provided by the customer in this model. The loyalty of an individual to the company is enhanced (Paparoidamis et al., 2019). Second, this strategy improves the satisfaction of the customer with the services provided by the business. The consumer is given ample time to ask any questions to the management. There is also adequate time to negotiate for prices of commodities.
The Efficiency of the Private Sales
This venture of marketing is an efficient strategy for the organization. First, it allows for the organization to control the price of the commodities. The management can use the private forum to convince the customer to buy the company’s products at the set prizes. This strategy reduces competition from other companies with similar goods or services, giving it an upper hand in setting the prices (Trivedi et al., 2017). Second, the retention of customers in the business is improved due to high customer satisfaction. Consumers feel privileged due to the specialized treatment provided by the company (Kumar & Shanthini, 2020). Increased retention of customers ensures a continued market for the services and the products of the company.
Furthermore, an adequate private sales strategy enables the company to analyze the profitability that individual customers bring to the organization through a profit-based loss function. Consequently, the company utilizes the results of this analysis to channel its retention programs to the most loyal customers, increasing the returns’ profitability. Therefore, this strategy is a valuable way that companies can adopt for minimizing costs.
References
Arslan, B. (2018). The interplay of competitive and cooperative behavior and differential benefits in alliances. Strategic Management Journal, 39(12), 3222-3246.
Ascarza, E., Neslin, S. A., Netzer, O., Anderson, Z., Fader, P. S., Gupta, S. & Schrift, R. (2018). In pursuit of enhanced customer retention management: Review, key issues, and future directions. Customer Needs and Solutions, 5(1), 65-81.
Betancourt, R. R., Chocarro, R., Cortiñas, M., Elorz, M., & Mugica, J. M. (2017). Private sales clubs: A 21st century distribution channel. Journal of Interactive Marketing, 37, 44-56.
Kumar, G. V., & Shanthini, B. N. (2020). Influence of motivational factors on employee retention among the sales managers in the private sector insurance companies in Chennai City. Sumedha Journal of Management, 9(1), 64-78. Web.
Kumar, V., Bhagwat, Y., & Zhang, X. (2015). Regaining “lost” customers: The predictive power of first-lifetime behavior, the reason for defection, and the nature of the win-back offer. Journal of Marketing, 79(4), 34-55.
Paparoidamis, N. G., Tran, H. T. T., & Leonidou, C. N. (2019). Building customer loyalty in intercultural service encounters: The role of service employees’ cultural intelligence. Journal of International Marketing, 27(2), 56-75.
Trivedi, M., Gauri, D. K., & Ma, Y. (2017). Measuring the efficiency of category-level sales response to promotions. Management Science, 63(10), 3473-3488.