November 22, 2012 at 7:00 AM
Today’s post is the first of three directed to Sales Operations leaders. Resource allocation is critical to success for sales. Customer/prospect segmentation is a key first step in making wise allocation decisions. You might have the best propeller-heads available performing segmentation analysis. But if you can’t drive segmentation into the field you’re wasting much of your company's expense and effort.
How it Begins
The word has come down - sales costs need to remain flat next year. But, of course, at the same time revenue needs to increase by 8%.
Sitting with the Regional Sales VP, the scowl returned to his face. “This region has – by far – the most growth potential. If anything, I should get additional resources. You don’t know what you’re talking about.” That’s the third time he’s said something along these lines in the past ½ hour. The meeting was just about over and there’s still little common ground.
The third of four regional stops to nail down 2013 budgets for the Sales EVP and the CFO. Each of the RVP’s has been saying the same thing. They alone have the most opportunity and need more headcount, not less. You sigh heavily as you think what a long week this has been.
Between A Rock & A Hard Place?
As a sales operations leader, how often have you had similar meetings? With tight budget allocations, the tug of war begins and you feel like the rope.
It’s a tight spot you’re in. How do you balance this all and make the right decisions for the organization? With all the data potentially at your disposal, it’s easy to get bogged down in the minutia.
At 30,000 feet, you need to have answers to some key questions locked and loaded. Otherwise, these budget meetings could be counterproductive.
- What is the realistic untapped revenue potential within your existing customer base?
- What is the revenue opportunity from prospects?
- Where exactly are these greatest potential customers and prospects?
- How do you operationalize this to make sure that resource allocation has solid ROI?
Many marketing purists focus on the mechanics of segmentation work. Is the segmentation based on data that predicts revenue opportunity? Have all the right variables been run through a multi-regression model appropriately? Has the prospect data source been carefully selected to ensure reliable output?
Data analysis and propeller-heads won’t deliver revenue. The sales team on the street delivers the revenue.
Operationalize Your Customer / Prospect Segmentation
It’s one thing to use the output from a segmentation effort to help decide on resource allocations. Put the talent where the money is. Good segmentation will enable you to determine which of the four RVP’s is right.
But you need to help them deliver the revenue. Good segmentation will also give you the following:
- Exactly which customers have up-sell and cross-sell potential?
- How much potential is there by each customer?
- Exactly which prospects have the best opportunity to buy from you?
- How much is that for each opportunity?
You have to deliver this data down to the sales rep level. Then you have to design a plan that reps, managers, directors all follow to maximize the up-side.
Make it Pay Off
Take the following steps with any segmentation work:
- Educate Sales Management along the way – Show them how the segmentation was done in layman’s terms. Help them see clearly the application to their business and their revenue.
- Bring them Insight - Feed them tidbits of the segmentation results. What’s available in the market? What industry segments have the greatest potential? What geographies are under-penetrated? When you do this, you can gather their feedback and gain their trust that this is valuable stuff. You make it real while validating what you are finding.
- Show them the Money – Earn their trust in the results then tell them what you’ll do for them. Slice the data down to a rep level. Deliver the estimated up-sell potential for all customers by territory. Provide all prospects with estimated opportunity value by territory. Attach a scoring that indicates how closely these prospects look like your best customers.
- Execute the Plan – Build a consensus with Sales management on how they can execute on the plan. Here are some things that have to happen in this plan:
- Sales Managers have to hold their reps accountable for this upside potential. Make a review of prospects identified part of their weekly one-on-one sessions.
- Don’t let sales reps re-prioritize the list of current customers or prospects on a whim. You’ve gotten sales management to see the value in the segmentation data – get them to stick with the plan.
- Heading into 2013, use this information to set quotas. Higher potential, high quota uplift at the rep level.
- Broadcast Success – Keep track of prospects that land. Keep track of up-sell and cross sell results. If you have a CRM, this should be relatively easy with canned reports. Tell everyone.
- Keep Score – What gets measured, gets managed. Track how reps are each doing within their book of business against total potential. Share of market data will also be very useful to their managers in performance management and review time.
Posted by Patrick Seidell