Sales growth has to be achieved one seller at a time, starting with a territory plan that identifies the opportunities for growth in each territory and then develops a strategy to capitalize on those opportunities. By territory I mean that group of potential customers for which the seller is responsible. This could be a geographic territory, a set of accounts, one big account with multiple BUs, or a set of resellers. And by customer I mean any entity that could buy which could be a large enterprise, a set of SMBs in a segment, governmental and educational institutions, etc.
In other words, you want sellers to look for growth in all the right places. The key then is to most appropriately define what is meant by “the right places”. Quite simply these are the customers with the greatest potential to spend enough to make it worthwhile, for whom you can create superior value and whose buying process you can access. Sellers should focus on customers that have high potential to buy in the future – not those that have bought a lot in the past – and on customers that are relatively easy to access – where the degree of difficulty is low.
So how do you determine the potential to buy in the future and the degree of difficulty in turning that potential into reality?
Let’s start with how to determine potential. The easy way is to assume customers that bought a lot last year will again buy this year, or assume that really big customers will buy a lot. But last years sales or the size of the target customers may say very little about future purchases. Customers that spent big last year may not spend again this year. Penetrating the biggest customers may be time consuming and difficult, and they may have more pressing needs on which to spend their resources.
To determine the potential to buy, sellers need to understand the business drivers impacting the customers in their territory, and how those drivers translate into demand drivers for what they sell. Customers are driven by a variety of factors which in turn determine how they spend resources to achieve their objectives. Sellers should then focus on the customers that are responding to these drivers in a way that could create the need to buy what they sell in sufficient quantity to make it worth pursuing. Customers will only value what you offer if these demand drivers in effect.
Here’s an example. A process-control software company targeted food processors because of a new set of regulations issued by the FDA (a business driver), then were surprised when sales didn’t increase. Their software would help customers meet those new regulations – i.e., address the business driver. But this seemingly obvious business driver didn’t turn out to be a demand driver. Many of their target prospects simply outsourced their manufacturing, or were willing to suffer the consequences of being out of compliance, which were quite minimal. In either case, many of their prospective customers made a decision about how to address the business driver that did not create a need to buy software. Thus, they didn’t value the software resulting in no sales.
To determine the potential of a customer, sellers should analyze the demand drivers. These are often the result of strategic decisions made by the customer early in their investment process. These decisions usually fall into one of three buckets. First, they decide not doing anything about the business driver either because other drivers are more pressing or they don’t see a way to cost-effectively do anything about it. Second, they decide to address the driver, but they decide on an approach that doesn’t create the need to buy something like you sell. And finally, they decide to address the driver, and do it in a way that creates the need for what you sell.
The “right places” then are those customers that have made that last decision, or those in which the seller can influence this decision process in a way that results in that third decision, rather than a decision to do nothing or solve the problem in a way that doesn’t require buying anything – and could spend enough to make that effort worthwhile.
Here’s another example – a new firm was spun out of an established company in the medical device market. The new company provided surgical services to healthcare facilities. Two business drivers created the opportunity for this company – the rapid rise in demand for outpatient surgeries and the rapid rise in facility operating costs. These two drivers turned into demand drivers for their services only if a healthcare facility had decided that outpatient surgeries were critical to their growth strategy and that outsourcing was great way to reduce operating costs. At the time, there were plenty of facilities that were not pursuing outpatient surgeries or outsourcing. From a seller perspective, the “right places” were not just big healthcare facilities, but more specifically ones that had made strategic decisions that then created these two demand drivers.
The other variable to consider in choosing the “right places” is degree of difficulty. A customer may have high potential or need, but to realize that potential, the seller needs to gain access to and participate in their decision-making process. If it’s too hard or time consuming, then pursuit may not be worth it. So the “right places” are those that are relatively easy (although it’s still hard) with few barriers to entry.
The degree of difficulty will be on the easy side of the scale if the customer can readily see the value that you could create for them, if you have relationships that enable you to gain access to the decision-making process, if there is no entrenched competitor with strong sponsorship, if there are no strategic barriers, etc. It gets a lot harder when value can’t be succinctly articulated, there are few access points, there’s an entrenched competitor, there are strategic barriers like approved vendor lists, etc.
As an example, a very competent salesperson was assigned to penetrate 2 large banks that were not currently customers. In theory there was plenty of potential, but the degree of difficulty turned out to be extremely high. One bank had made a strategic decision to use an approach to addressing their need that just didn’t fit the seller’s approach. The other bank, had a well-established approved vendor list. No one sold anything until making that list, which was a rigorous process.
The bad news – at the end of the first year, no sales. The worse news – the salesperson was ready to quit. But the good news – the first bank agreed to reconsider their approach and the second bank added them to their approved vendor list. The better news – sales soared in the second year. The first year was spent reducing the degree of difficulty. Potential could then be realized in the second year. That’s a tough investment for many sellers to make, but one that paid off big in this case.
So to find growth in all the “right places”, sellers need to analyze their territories to determine where there is the highest potential and the lowest degree of difficulty. These become the targets in the territory to be proactively pursued. Customers that have high potential but high degree of difficulty, can be pursued if their potential spend makes it worth the effort, you have a strong value proposition, and you can find a way in, perhaps through a partner or networking. Customers with less potential by low degree of difficulty should be monitored but can be a trap for sellers. These customers may be best served by a different sales channel. And finally customers with low potential and high degree of difficulty should be marketed to in case something changes.
The next question – are sellers left to figure out where the “right places” are in their territories, or does some other entity, like Sales Enablement or Marketing, collaborate with sellers or just do it for them? However it’s done, looking for sales growth in all the right places is one of the best ways to improve both sales effectiveness and results.