Further Segmentation Opportunities

For companies having multiple divisions with independent sales forces, and/or those using value-added resellers (VAR's), it may be helpful to take a step back and decide who you want calling, and where. While this seems fundamental, sales organizations tend to evolve over time, and they sometimes get out of touch with a changing reality. A fresh look—a "clean sheet of paper" approach—can be helpful in stepping away from the trees and looking at the forest.

One account we worked with sold engineering software, and over time had developed an extensive reseller channel. They shared with us their desire to migrate their direct sales force from departmental technical sales to Fortune 1000 enterprise sales. After better understanding their direction, we attempted to segment their territories and markets and how they were being covered. We ultimately came up with a grid (see Chapter 17 and Figure 17-1) with the key demarcations they wanted:

1. Sales below $10,000 should be handled by their Telesales group.

2. Transactions with F1000 companies should be sold by their direct sales force.

3. Transactions with non-F1000 companies below $50,000 should be done by resellers.

4. Non-F1000 transactions over $50,000 should be handled jointly.

After defining these thresholds and where they wanted people to be calling, we asked the firm's sales executives what their coverage looked like currently. They sheepishly admitted that they had the small company/ small transaction quadrant covered jointly, transactions over $50,000 with small companies were rare, and virtually none of their direct salespeople were capable of executing an enterprise sale to the F1000. Further investigation uncovered the roots of the problem:

1. Their traditional salespeople were comfortable leading with product and talking to engineers, but were unable to relate to business people.

2. Their compensation plan provided an override on business sold by resellers in the direct salesperson territories. Some direct salespeople were making a great living by doing nothing more than overseeing the efforts of their assigned partners, and hadn't closed any business of their own in over a year.

The executives realized that in order to achieve the desired coverage, it would be necessary to train their salespeople to make higher-level calls, and that the compensation plan had to change. Due to their concern about the potential loss of many of their direct salespeople, we suggested a 12-month weaning period, during which the override would be phased out. This approach allowed the pipeline on larger accounts to be built. Turnover was minimal, and a high percentage of direct salespeople who were either unable or unwilling to make the adjustment to large account enterprise sales voluntarily joined reseller organizations—a favorable outcome for all concerned.

This situation was discussed, and an approach to resolving it was completed, in about an hour. We don't claim to be geniuses, and in fact, none of the concepts came close to being rocket science. But we think the example underscores the fact that most sales processes evolve over time and that a fresh look is often a good idea. (And in many cases, inviting in an outsider for a new perspective turns out to be productive.)