given our disparate backgrounds. The sales operations team’s task is to set up clear foundations for how we work, how we use the data-mining tools that we have, how we provide and receive information, and how we manage it efficiently. In the future, we expect the team to be a flagship learning organization.
How important is all the process alignment for growth as well as for effectiveness and efficiency?
It’s extremely important. We make an enormous effort to understand where the best opportunities are for us, and we have extensive knowledge across our markets on which customers are more likely to win projects, where the next hotspots will be, etc. This information is critical. We need to move from this being an individual effort – such as someone working really hard in North America to understand which project we should focus on – to a collective effort. We will have more impact by looking at opportunities globally, and then we can allocate resources appropriately or find new opportunities ourselves.
Chapter 2
Mine Growth beneath the Surface
We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time.
The old cliché is that you can’t see the forest for the trees. In finding new sources of sales growth, the more relevant analogy is the reverse: by looking at the forest of average data, it’s easy to miss where growth truly lies. For example, it is widely known that US manufacturing is in a state of decline. In 2008 alone, manufacturing GDP fell by $44 billion. But if you disaggregate that number, you will find that there were healthy pockets of growth that amounted to almost $32 billion – four times India’s total growth that year.4 The hidden pockets of growth in your industry may lie in your own backyard.
In the previous chapter, we showed how sales leaders can get ahead of competitors by capturing growth based on trends and investing ahead of demand. This chapter takes a look at sales executives who unearthed growth by undertaking micro-market analysis, identifying which markets have the highest growth potential, and aligning their resources to capture them.
A global chemicals and services provider increased the growth rate of new accounts from 15 percent to 25 percent in just one year. The big breakthrough, a sales executive told us, was adopting a more granular view of the market. Instead of looking at current sales by region, as it had always done, the company developed a new and far more revealing view by examining share within customer industry sectors within specific US counties. This deeper level of analysis revealed that although the company had 20 percent of the overall market, it had up to 60 percent in some micro-markets, while in others, including some of the fastest-growing segments, its share was as low as 10 percent.
Sales leaders used this insight to turn the planning process on its head. Instead of relying solely on historical data to allocate resources, they included forward-looking opportunity data at a much finer level of analysis. They adjusted how the sales force was deployed to exploit the growth opportunities and ensured that reps were equipped to win in the opportunity hot spots they had discovered.
The sales leaders we interviewed across a range of sectors agreed that taking this sort of granular approach to growth is essential in deciding where to compete and in translating market insights into actions. The most successful sales leaders were extremely proactive in mining the growth that lay right beneath their feet in what seemed to be mature markets. Many have delivered impressive results thanks to this micro-market approach to growth, even under the strain of the recent financial crisis. At the core of this approach to find growth ahead of competition, leading sales organizations do three things:
1. Find the pockets of growth. Using micro-market analysis, companies can identify where opportunity lies at a very granular level based on a combination of market characteristics, including competitive intensity and market attractiveness.
2. Look beyond sales to mine growth. To maximize the benefits of micro-markets, leading organizations recognize they need to involve functions beyond sales.
3. Keep it easy for the sales team. Micro-market strategies by their very nature are heavy on the analytics, so it’s important that sales teams on the ground don’t get bogged down by the detail and can simply harness the information in the most effective way.
The company had 20 percent of the overall market but only 10 percent in some of the fastest-growing segments.
Find the Pockets of Growth
Granularity is a word traditionally used more by scientists than sales leaders, yet it cropped up time and again in our conversations. Companies that have capitalized on micro-markets have taken a geological hammer to all their market and customer data; they break larger markets down into much smaller units, where the opportunities – prospects, new customer segments, or micro-segments – can be assessed in detail.
Portugal Telecom has wielded this hammer in several key markets, including Brazil. Former CEO Zeinal Bava explained in 2011: “To me, there’s no such thing as an effective countrywide strategy. We break the country down into customer segments and then look at different geographies. São Paulo city is very different from São Paulo state, for example… You have to walk away from the averages and map out the markets. If you are the leader in a specific market, it might be sufficient to offer customers one month [subscription] for free. If you’re number four, you might have to give them three months. When we rolled out 3G, we started in areas where the average revenue per user and spectrum availability supported the business case and service quality underlying the investment.”5
It quickly becomes clear that a broad-brush approach will not lead to the most lucrative hot spots and could leave you wasting resources where growth is significantly below average. Leading companies are taking differentiated approaches to driving revenue growth based on this type of granular information.
In Europe, a consumer telecommunications company reexamined its 15 sales regions and split them into approximately 500 micro-markets based on a variety of characteristics such as shopper population density and store catchment areas. Sales leaders were surprised to see that when viewed at this level of detail, these markets actually varied by a factor of four in terms of shopping activity, economic growth, and wealth. Focusing the microscope on its store penetration in each micro-market and looking at the relative share of stores compared to competitors showed similarly wide variations.
It became apparent that there were deep pockets of opportunity in places with attractive populations and limited competition, but the company did not have the right store footprint or formats to access this untapped demand. There were also places where competition was intense but there were fewer unserved customers than the company had initially believed. It had treated many of these markets in similar ways due to the lack of granular, micro-level segmentation. The head of channels realized quickly that it was time for a much more differentiated approach if the company was to grow revenue profitably.
The company aggregated its 500 micro-markets into four categories. In the most underserved markets with the lowest density of retail stores (both its own and those of competitors) the company focused on developing different store formats to make store economics more attractive and establish a foothold before its competitors. Ultimately, the telecommunications company saw 5 to 10 percent more in-store visits by optimizing its store footprint. It also shaved total store costs by 5 percent by eliminating, resizing, or refocusing less profitable locations.
A broad-brush approach will not lead you to the most lucrative hot spots.
The chemicals
US Bureau of Economics; Moody’s Economy.com.
“Interview with Zeinal Bava,”
