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Getting the right sales coverage model for your organization is a critical component in laying the foundation for a strong sales strategy.

Alexander Group’s research shows that coverage models impact top-line growth, bottom-line profitability and customer engagement. In this video, Ted Grossman and Rachel Parrinello, principals and technology industry leaders at Alexander Group, discuss how companies with best-in-class coverage models think about sales coverage, including the key factors leaders should consider before designing their coverage models, how to execute on that design, and what key coverage archetypes are currently being deployed in the industry.

For this research, Alexander Group collected and codified coverage models from over 70 tech client engagements. The database includes XaaS, Hybrid and Consumption models. Research shows that some models are more prevalent than others, however, there are clear factors that inform which model is best for any individual company and customer segment. Watch the video and read the transcript below to learn more.

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Full Transcript:

Humza Malik: My name is Humza Malik, and I’m a consultant with Alexander Group’s Analytics and Research practice. Welcome to our video on mapping direct selling roles within tech coverage maps.

We know that coverage is an important topic. And one of the first strategic considerations that companies should evaluate is their direct versus indirect coverage. In this video, we’ll be focusing on direct coverage. With me, we have Ted Grossman, leader of our Technology Practice and Principal at The Alexander Group, and Rachel Parrinello, Principal, Technology Research Fellow, and Compensation Leader across the firm.

In this video, we are going to be focusing on direct coverage topics, including the key factors and considerations for sales leaders when designing their coverage models, as well as key coverage archetypes.

Ted, when you think about companies who have the best-in-class coverage model designs, what are they doing? How are they doing it?

Ted Grossman: Well, first of all, they’re recognizing the importance of coverage. If you can get the right resources at the right time in front of the right people at the right cost, then your top line and your bottom line will be [positively] affected. Specifically, your topline will be positively affected [in terms of improved] close rates or impact sales cycles, and even sales price.

But what are companies doing that do this well? Well, for one, they are taking into account all the factors that can impact coverage. And that is really three or four different dimensions here.

The first dimension is customers. What are the individual buying needs of your different customers and customer segments?

Second, you need to think about it in terms of process. Where in the customer engagement model are we talking about? Are we trying to get [customers] to understand who we are? Are we qualifying whether they are good accounts for us and good opportunities? Is this about [new logo] selling or is this about an up-sell or cross-sell, or is this about a renewal? You have to think about the coverage model across those different motions; that’s the process piece.

Third, you have to think about your product portfolio. How wide and deep is that product portfolio? The wider it is, the more need for specialization. But again, you have to balance that against cost, which is the fourth dimension; you don’t have an infinite amount of dollars. The best companies are taking a very, very thorough approach to understanding what all the inputs and factors are and then building a design around that.

Humza Malik: You mentioned building the design around those [dimensions]. How should sales leaders be thinking about designing their coverage?

Ted Grossman: First of all, you’ve got to go segment-by-segment. You have to think about your different customers and the coverage model might need to vary by customer type. Are they large companies? Small companies? Are they a specific vertical and have specific needs?

Additionally, we always take the approach (especially in the tech industry) of looking at the entire customer engagement model, which we call ILAER – Identify, Land, Adopt, Expand and Renew – and understanding that all of these motions are important to ultimately maximizing the revenue you can get out of a particular customer. Once you consider that, then you have to consider what kind of jobs to layer into the identify stage, the land stage, the adopt stage, etc. The first job consideration is the role of the core seller, who is going to take ownership of driving revenue of the account. Is it going to be one person, two people, or more? Once you decide that, once you understand who’s accountable, then you can start asking yourself what other resources you need to cover each of these segments in order to optimize the engagement model with the customer.

That’s how get to the design – there’s a very set way of doing it. Once you have the design and you know what jobs you have and where they sit in the segments and across what processes, then you can begin sizing them, determining what the actual territories are, understanding what your talent requirement are, etc. But it’s really about converting those inputs into something that you can look at across both the segmentation model and the different ILAER motions.

Rachel Parrinello: One of the important steps when you are outlining your ILAER motions is to get detailed within those motions about specific sub-motions. For example, Expand actually includes selling the same product to your current buyer (a type of “up-selling”), “cross-selling” new products to your current buyer, as well as selling into new departments. You may have different roles focusing on different parts of that Expand sub-motion.

Humza Malik: Thank you. AGI has produced insights on direct selling coverage trends, and we’ve done that by collecting and codifying over 70 different coverage maps from client engagements, across pure XaaS, Hybrid, and Consumption companies. Rachel, let me ask you, can you please define the key coverage archetypes and outline some of their unique use-cases?

Rachel Parrinello: Yes. We have developed these archetypes theoretically as well as from our project engagements. What was neat about this research is that we were able to quantify it.

The first model is what we call single account ownership. In this model, the account executive owns all of the ILAER motions. Now, this doesn’t mean they’re the only resource, they may have other resources supporting them throughout the different motions. But they are the general manager if you will, and they own all the different ILAER motions.

On the other side, what we have is the bifurcated account ownership model. This is the typical hunter/farmer model. You have an AE who owns Land only, and then they hand off that account and relationship to an account manager who will oversee Adopt, Expand, and Renew. That AM may not be the only resource; they may be supported by other resources such as a Customer Success Manager or Product Specialist. But that is the basic model of a bifurcated ownership model.

The next two models are what we call 1) cooperative and 2) teamed account ownership. We tend to bundle those together, but they are slightly nuanced in difference. In a cooperative ownership model, we have an Account Executive responsible for Land and Expand, while another resource will own Renew and Adopt, and that’s typically a Renewal Rep or a CSM role. We call this “cooperative” because post-Land, the AE needs to be working alongside the renewal rep or the CSM to make sure they maximize the total revenue within that customer base and also drive customer satisfaction. In the teamed account ownership model, again you have two resources teaming together postLand, but in this case, you would have an AE or AM teaming on the “expand” motion.

Those are the typical models that we see; there are pros and cons to each of them. But these are all accountability models – you are balancing accountability of how much specialization you want versus the breadth and needs of the customer.

Humza Malik: Thank you for that commentary, Rachel. From our database, we found that the most prevalent coverage map type was single account ownership, which is utilized by about 61% of companies. We found that 26% of companies use teamed or cooperative models. And we saw that 13% of companies were using bifurcated models – like you mentioned, most often for specific use-cases.

Thank you, Rachel and Ted, for your expert commentary. If you would like to learn more about direct selling and coverage, please visit our website and contact us.

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