General Sales
Last Updated: Nov 13th, 2003 - 21:32:35
You have good products;
you have good salespeople, so why aren’t you selling more?
There may be any number of reasons for lackluster sales, but one
area many companies take for granted is: understanding if their
salespeople are selling to the right customers. Are you spending
the most time and money on those target customers with the highest
business (or revenue) potential? Or, are you unintentionally handicapping
yourself by having your salespeople waste their efforts on accounts
with little or unknown business potential, or accounts where you’ve
already captured the majority of the market share.
Stratification of your target market is one of the
most important things you can do to maximize the results of your
entire sales organization. Stratification means segmenting your
current and prospective customers into groups in order to most efficiently
utilize your resources. The foremost advantage of stratification
is that it ensures the highest return on every dollar you invest
in your sales and marketing efforts by matching the highest amount
of money you spend to accounts with the highest business potential.
Ask yourself, “do we stratify accounts, and if so, what criteria
is this stratification based on?”
There are several ways to stratify accounts within
your target markets: by total revenue, number of employees, or industry
segment. These stratification criteria may be good as an initial
base, but it may not include the most critical information you want
to know about your potential customers - "how much revenue
potential is in each account?" One of the most effective criteria
to use in segmenting your target market is the revenue potential
for all of your products and services within each company. This
doesn’t mean basing it on how much you sold to that account
last year, nor is it based on how much revenue you think you can
win. Instead, it is the total potential revenue that a company “can”
invest in your products and services. Example: If your company sells
semiconductor chips, stratify your accounts based on how much those
accounts spend annually on semiconductor chips comparable to the
chips your company offers (Company A spends $500,000, Company B
spends $20,000). There are many ways to find this information, however,
we believe one of the most accurate ways is simply to talk to your
target customers and ask them!
Why stratify accounts based on revenue potential?
Unlike other criteria, focusing on revenue potential allows you
to:
- Gain a true indicator of how much revenue potential
is within each account. Not just what you “think”
is there.
- Determine the best approach for selling into
each account to achieve the greatest return on your investment.
Does the business potential warrant outside representation, direct
mail, or maybe a phone sales representative?
- Measure the impact and performance of your salespeople
on each account. For instance, if an account has revenue potential
of $100,000 and your salesperson has currently won $10,000, is
that acceptable, or do they need to improve their performance?
- Primarily focus salespeople on accounts with
a higher level of potential while utilizing other less expensive
marketing efforts such as direct mail or e-mail campaigns on lower
potential accounts.
- Sales territories are now on a level playing
field. Many salespeople complain that their territory is not as
good as others. This gives you a quantitative measurement to see
exactly how much potential is in each person’s territory
and how much market share they are winning.
Many organizations place account stratification
very low on their priority list. They sacrifice the long-term potential
revenues for a few dollars right now by focusing their salespeople
on any prospect, regardless of business potential. The problem with
this approach is the enormous waste of time and energy salespeople
spend on accounts with limited potential, or accounts where they’ve
already gained the majority of the market share. Companies that
see little value stratifying accounts also wonder why they aren’t
gaining market share, revenues, profits, or the highest return on
their investment. In the meantime, their salespeople are frustrated
because they’re “running on the hamster wheel”
and not making the commission dollars they’ve dreamed about.
Conclusion
Which path has your sales organization taken? Are your salespeople
spending their days chasing deals, or are they strategically selling
into qualified accounts to foster a long-term business partnership.
If you’re looking for long-term success in areas like revenues,
profits, and customer and employee satisfaction, direct your attention
to stratifying accounts the right way.
About Brooks Dreyfus Consulting:
Brooks Dreyfus was founded by two partners to help companies sell
more effectively to middle market accounts through the use of inside
sales. Rather than outsourcing key areas of your company or spending
millions of dollars on technology in the hopes of increased productivity,
Brooks Dreyfus creates a systematic methodology for customers to
use as the foundation for improving their situation.
Whether you know you need help or you feel that
your business is in good shape, Brooks Dreyfus can improve your
company's position regardless of industry, size or type.
Contact Information:
Brooks Dreyfus
Consulting
1434 Via Vista
San Mateo, CA 94404
Phone 650-358-0871
kdreyfus@brooksdreyfus.com
jbrooks@brooksdreyfus.com
© Copyright 2003 by SalesVault.com
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