If you spend much time around salespeople, it won't take long before you hear them griping about the issue that is the profession's biggest trouble spot: disagreement over the market potential of a group of accounts or a territory.
Consider just a few examples.
A regional sales director says: "The Pittsburgh territory is vacant again. This is the fifth vacancy in two years. In exit interviews, the people who leave imply they don't have enough market potential to succeed."
A salesperson says: "My quota is 10% higher than last year. I've already maxed out the potential within my accounts. How am I supposed to get the growth I'm expected to deliver?"
A district sales manager says: "These district sales rankings are unfair. My district's market potential is below average and is spread across a huge geography - how can I compete with districts in easier-to-cover, more lucrative markets?"
These concerns, and many others, can be moderated with actionable measures of account or territory market potential.
Consider how market potential estimates helped a business within GE that leases over-the-road trailers to trucking, retail, and manufacturing companies. The business had ambitious revenue growth goals, and sales leaders wanted to focus sales efforts on the most attractive opportunities. By using customer profile characteristics (such as fleet size and composition, company size, and industry) to predict customer potential, the sales force experienced a 33% increase in qualified leads in one year. GE also used the information to redeploy several sales territories into more lucrative markets. This allowed the business to grow sales productivity by 7 percent and give back a budgeted $2 million for additional headcount — the productivity improvements allowed the sales organization to meet growth goals without adding people.
Smart sales forces know that market potential is the keystone for both strategic and tactical sales force decision-making. Market potential adds insight to sales planning. For example:
•Sales force strategy and scale. If you know market potential by account segment, you can scale and deploy sales resources appropriately against opportunities and can develop segment-appropriate value propositions and sales processes.
•Sales force deployment. If you know potential geographically, you can decide where to add sales headcount to capture unrealized opportunity, and where to reduce headcount without sacrificing coverage. And you can create territories that give everyone fair opportunities to succeed. This keeps salespeople engaged and allows the company to hire and retain top sales talent.
Market potential also enables better tactical sales force decision-making. For example:
•Targeting. If salespeople know account potential, they can allocate their time to better leverage opportunities.
•Coaching and performance management. If sales managers know account potential, they can coach salespeople on the best strategies for driving revenue growth. And they can better assess salespeople's performance, provide appropriate feedback, and rank salespeople on metrics that depend on the salesperson, not the territory.
•Incentive compensation, goal setting, and recognition. If sales leaders know account potential, they can design incentive compensation plans that reward salespeople for true performance, rather than for a lucky territory. They can set territory sales goals that are challenging, attainable, and fair to all. And they can select the most deserving salespeople for award trips and recognitions.
Many sales forces do not have estimates of local market potential readily available, and developing them requires work and creativity. Some approaches include:
•Buy existing data. In some industries, such as airlines and pharmaceuticals, data companies sell information on sales of all competitive products by account or local market.
•Deduce the data. If you can't buy competitive sales data, you can likely buy or find data that is good market potential surrogate. A greeting card company used U.S. Census Bureau data to estimate the potential of each retail store nationwide by looking at population and average household income within a 3-mile radius. A company that sold insurance and financing as part of a bundled service offering on retail sales of motorcycles used customer demographics, competitors, the presence of local credit unions, and the onset of spring weather (which triggered an increase in motorcycle sales) to predict territory potential.
•Build the data. You can conduct primary market research to create market potential data. A seller of contact lenses surveyed ophthalmologists across the country to determine the size of their practices and their need for the company's products. You can ask the sales force to conduct market research. A medical imaging company asked its salespeople to collect data on the type, manufacturer, and acquisition date of installed equipment at every hospital and imaging center in their territory.
Knowing local market potential significantly improves sales force decision-making. And estimates of potential — even imperfect ones — are better than no estimates at all. Sales organizations that are willing to invest to develop measures of account or territory market potential will see pay offs through improvements in productivity and higher sales and profits.
No comments:
Post a Comment