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Fishing where the fish are – segmentation

The span of control for first line sales managers can now be is high as 12 or 15 sales people, so the amount of joint customer calls is greatly reduced.  So being able to control where the sales team are spending their time is key to making the team’s numbers.

This is a massive topic, and absolutely key for a sales manager to get right.  If the sales team are spending their time in the wrong places, with the wrong potential customers, how will you ever make your numbers?

In some companies, accounts have already been divided up in some way e.g. industry segment (IT, Oil & Gas), size (SOHO, SME, Enterprise) or geographical location, or a mixture of methods.  As a sales manager, if this hasn’t already been done, you have a tremendous opportunity to shape where the sales force spends their time and get them to “Fish where the fish are”.

But even if this work has been done at a high level, each sales person has been allocated 30/50/80/200 potential customers, so how many of those can they actually have a meaningful dialogue with?  How many potential contact points are there in each account, how many people have authority to buy your products/solutions/services?

So we need to do some more work on where we want the sales people spending their time, and this is where segmentation comes in.  Generally I like to develop a two-axis graph which means that specific accounts can be mapped into quadrants and visually it is very easy to see which accounts warrant more time being spent on them.  The question is “How do you choose the axes of the graph?”

The above example has customer attractiveness to us and the relative strength of our proposition, but there are many possibilities.  These are the high level criteria you want to use to segment the accounts and understand where your sales team should be working.  Obviously, you can change these and, in fact, the skill of this exercise is in getting these criteria right for your business.  So, for instance, I could have chosen “value to us (now)” and “potential business” and this would affect the results we would get.

Refining the method

The following table gives an example of factors you could include in “attractiveness to us”.As you refine this technique you may want to consider a number of sub-criteria for each axis, and to add more granularity you could weight each of the criteria relative to the others.  Our suggestion is to use just 2 or 3 sub-criteria per axis so that the method doesn’t become too unwieldy.  Again, we have found that running this as a facilitated workshop gives the best results, as an experienced facilitator who has used these models a number of times can get quickly to a reasonable set of criteria.

Finally, you will be able to map the accounts into the four quadrants and we can clearly see which accounts warrant our focus.  This takes some time and effort but the rewards are massive.  For a sales manager, or group of sales managers, to undertake this exercise is extremely worthwhile.  Just consider the results of your whole sales force calling on worthwhile accounts, how much time is currently wasted on winning business you don’t want or chasing business you cannot win.

So we have done some work in understanding our value to a customer and deciding which customer segments will yield the best results.  The next part of the process is to manage the pipeline of potential business using metrics that focus on more than the order value.
This entry was written by John, posted on February 14, 2012 at 8:24 pm, filed under Customer Focus, Sales Management, Sales Process and tagged , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.

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