Value-based account segmentation and coverage

By: Gary Tubridy Sales Coverage, Sales Growth, Sales Leadership, Sales Productivity, Sales Strategy

A recent post listed the bold moves sales executives are making to grow sales in 2013. The first two steps relate to segmenting and covering accounts on the basis of what THEY value. This post expands on that thinking.

Most account segmentation boils down to grouping according to size: global, national, regional and SMB.  More sophisticated models introduce sales potential. But in an era when cost pressure is up, there is another dimension to consider; what are customers looking for from their vendors? Do they seek the low cost provider or a partner who will help run their business more efficiently and more profitably? One that will help them execute a new and better strategy?

Segmentation models that do not account for this value dimension can lead to dangerously wrong coverage decisions. Consider the huge account that simply wants the best possible price every time. They do all their business through RFPs and always take the lowest bid. These accounts are little more than “RFP bullies” that demand steep discounts on the strength of sheer size. Attempting to supply insight to improve their business operations is a waste. Such accounts deserve nothing more than the lowest cost resource it takes to submit a RFP or bid. You need not ignore such accounts, but don’t get fooled by their size…you can’t make profit on volume when there are slim margins on each unit sold.

On the other hand, there are accounts that assign great value to the insight they get from select vendors on how to get a competitive edge through the smart use of products and services. If a supplier can help them take meaningful cost out of a process…money they can apply to other investments…they are comfortable paying a premium for the combination of products and intellectual capital delivered. These accounts should be covered with expensive Account Managers and Specialists in return for a consistent flow of business at an attractive margin.

This is not to suggest that sales leaders should be thinking about which customers to “fire”. All customers have value. But to maximize the profit in each customer relationship, give careful thought to balancing the need for both coverage efficiency and effectiveness.

What are you doing to give accounts the coverage that they deserve? Learn more about sales coverage or contact us at the Alexander Group.

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Gary Tubridy

Gary Tubridy is a senior vice president of the Alexander Group and the general manager in charge of the firm’s management consulting business. Gary’s consulting work is focused on increasing marketing and sales effectiveness with particular emphasis in technology and medical products industries. Gary has deep expertise in diagnosing sales management issues and helping clients execute action plans to improve results. His research is focused on best practices of leading sales organizations in North America with particular emphasis on sales force transformation and the role of sales leadership. He leads the Alexander Group executive events series and hosts the Operations and Executive Forums. He is one of three founding stockholders of the Alexander Group.

Gary has been with the Alexander Group for over 35 years. Prior to that, Gary was in sales with the IBM Corporation. Gary holds a B.A. from Brown University and an MBA from the Graduate School of Business at Columbia University.