Value-based account segmentation and coverageBy: 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.