In our last post of this series, we will focus on elements of sales strategy. Specifically, we will address:
- Customer and Opportunity Segmentation
- Resource Mix
- Territory Alignment
Customer and Opportunity Segmentation
When customers ask me what approach they should take to customer segmentation, I am reminded of Jalal Soroosh, Accounting Professor at Loyola University in Maryland. Whenever I asked Jalal a question (which was very often), he would start his answer by saying “It depends.” At the time, I often times found myself frustrated by that reply, but as I reflect on what he was teaching me, the approach applies very much to sales strategy and customer segmentation, as well. What segmentation approach an organization takes very much depends on the goals of the firm. So, it all comes back to intent.
For example, if the firm’s goals are to be a market leader, and the growth plan is to broadly acquire new clients who can purchase any of the firm’s offerings, that will drive one approach. If, on the other hand, the firm’s goals are to lead by building long term relationships where clients purchase multiple and/or specific firm offerings, the approach may be very different (as would the needed roles and compensation programs). Assuming that there is an overarching strategy that aligns with the sales approach, here are some things to consider with regards to customer segmentation:
- Of the firm’s current and previous customers, what is the mix of products/services they buy?
- How often do customers buy?
- How much do they buy?
- What causes fluctuations in the purchasing levels? What can the firm do to impact these in ways that will benefit the customers and the firm?
- What do customers see as the most valuable things we do/offer (this needs to come from the customer, not our perception of what they would say)
- Where does the firm make the most profit? Does this align with the organizational goals?
- Is there alignment between where the firm makes the most profit and what the sales force sells most?
- What trends are emerging that will impact the firm’s customers, and the customers of those customers? How will those trends impact any of the above answers?
(I should also highlight the critical importance of connecting this, and other parts of the sales transformation, to the organization’s strategic marketing plan. Too many times I have seen muted business impact because the sales and marketing approaches are not aligned).
Answers to these questions will help to clarify where the biggest and most profitable opportunities lie.
A firm’s sales resource mix would flow from the decisions made around the following variables:
- Organizational goals and overall strategy
- Sales Strategy and Segmentation
- Critical Role Analysis and Role Excellence Profile
Options for building the sales force include:
- Inside sales team (permanent employees or contract resources)
- Outside direct sales team (permanent or contract)
- Strategic or Key Account Managers
- Sales Management
While there may be other parts of the sales team, the above categories are most common.
The answer to the mix questions is, of course, “It depends,” so here are some things to consider that may help an organization make good decisions:
- Where does the nature of the client relationships require a more hi-touch approach?
- Where do the greatest opportunities lie for increased revenue and profit growth?
- Where do the low volume potential, but still profitable opportunities lie?
- What is the geographic spread of previous, current, and potential ideal clients?
- From a sales and service standpoint, what are the complexities and nature of the relationships the firm needs to have with the clients to ensure flawless sales and service execution?
- How long is the current and projected sales cycle, and what are the elements that allow the firm to create, build, and nurture long term, profitable relationships (assuming that is what the firm desires)?
- Where are the new areas of opportunity (Blue Oceans) that the firm may want to pilot?
Much of how an organization designs sales territories is flushed out in what was addressed in our previous sections and will flow from the strategy and resource mix. A few additional things to consider:
- What is the firm’s desired/required percentage of selling time for sales professionals (regardless of the role)?
- Based on the nature of the business, relationship and goals for the role, how many current and prospective accounts can an individual sell to and service flawlessly.
- What are the benefits of a vertical versus geographic approach to territories (or, is a blend a good answer, or does it make sense to be geographically based, with key account managers to handle large vertical accounts?)
My hope is that through this series, you gain insights not only into best approaches when building a high performing sales organization, but also what questions to ask in consideration of the organizational goals. Good selling on your path to a sustainable sales force transformation.