Have you ever thought that you might have too many customers (don’t say this out loud)? Maybe a better way to ask the question is: does your company have too many marginally profitable customers and too few resources to serve them all effectively? Problems with sales deployment have clear symptoms: excessive “windshield time,” sales people bumping into each other in the field, not enough time with high value customers, etc. Every go-to-market strategy claims to focus on the right resources spending more “quality time” with the right customers and prospects. But over time even the best model will deteriorate because markets, accounts and sales people are constantly changing. When this deterioration sets in, it’s often easier for companies to continue sending the sales force into the field in predictable but increasingly inefficient ways, particularly since the commonly assumed alternative – blowing everything up and starting from scratch — seems too daunting.
If this situation sounds all too familiar, the good news is you don’t have to “blow it all up.” In fact, you already have the data in-house to systematically identify and address the problem. Just because you’ve already completed a customer segmentation exercise (e.g., by industry, buying pattern, product or service preference) doesn’t mean that you’ve determined the best way to deploy your resources. Many organizations fail to quantify the value of individual accounts — something we believe is necessary to optimize resource deployment. This may seem like a challenging and resource-intensive task and frankly, it can be. But it can also be relatively easy to accomplish if you take the right approach. The purpose is not to create a P&L with perfect cost allocation for each customer; rather it’s to yield valuable insights by getting a better sense for the economics of serving different types of accounts. Once you have that data by account “type” you can apply it broadly to ensure your limited resources are deployed more effectively. Here’s how you might go about doing this in your business.
If you already have a good understanding for sales and sales growth by account, start by combining these data with insights from local and regional sales leadership on where opportunities exist to sell more to your current customers. Simply sending out a list of accounts with associated locations and having sales managers indicate the additional dollars that can be earned from those accounts is sufficient. Supplement this information with data on prospects (locations or companies not currently served), estimating the value and acquisition cost based on sales history (using data from serving existing customers in the same segment or that have other similar characteristics). There are many resources available where you can gather useful data for this purpose (e.g., Hoovers or D&B, marketing resources like salesgenie.com, industry associations, market intelligence from your own sales force). Once you’ve collected and combined this information you should have a pretty good picture of the market.
At this point you only need to think about bringing together two key variables a.) revenue contribution (if margins don’t vary much by customer) or gross margin contribution (if they do), and b.) future potential (new and existing accounts). Once you have these data at the location level you can start to determine the focus of your sales efforts (see below for an example).
You can overlay this picture with a service model to determine resource requirements at the account and location level. For example, accounts in each of the four categories above might demand a different call frequency (or resource investment) from a mix of field and inside sales resources. Most companies have norms for servicing different account types that are based on the experience they’ve gained over years of operation. Use the information you’ve gained in the market (even if it’s anecdotal) to develop the servicing approach that works for your business. Note that more granular lines could be drawn to create finer levels of distinction for varying levels of contribution and potential.
The challenge is often where to draw the lines between service levels. Too many calls will result in over-investment and reduced margins, while too few inhibit you from achieving your sales goals. It’s worth pointing out that there are different types of accounts that may not fit neatly into this model (e.g., national adccounts) that have special service requirements. However, those kinds of adjustments can be made by sales management at the time of implementation and throughout the business cycle. It’s no surprise that even with a great go-to-market approach good sales management practices, keen insights and good judgment are still needed.
To be even more precise, roll these data up from the account level to give you high level resource requirements by territory. In the graphic below you’ll notice that we’ve actually mapped each opportunity and color-coded accounts based on service requirements.
One of the key benefits in taking this step is to allow managers to see the geographic dispersion of accounts, and where it might make sense to draw territory boundaries. In some circumstances using an inside resource may well be the best solution for an area (e.g., one or two counties within an existing territory), even though you have some high-value accounts located in that area. Of course, you might still need to make that occasional in-person sales call depending on the situation (e.g., expectations by a key national account).
In conclusion, making use of the data you already have in a more integrated way can highlight where you are over- or under-invested. Even if you don’t have the resources to affect a substantial organization redesign, this information will allow you to make incremental improvements that are grounded in a solid fact base. We recommend that every sales organization go through this process every one or two years to build the infrastructure (tools, processes and accountabilities) that can allow functional leadership to repeat the exercise as often as you refresh the sales strategy. If you accomplish this task every couple of years it can be enough to propel you ahead of the competition with a measurable increase in your return on sales investment. That’s an accomplishment worth shouting about.