reps’ typical 25-mile territory radius; this typically resulted in coverage of four or five counties. Then, the company determined the growth potential based on a list of 15 drivers, using industry knowledge as well as interviews with customers and reps. Drivers included cost of input, cost of capital, local demographics, etc. The company measured the impact of each driver by analyzing how it had affected growth historically. Third, the company estimated market share in each market and what lay behind market-share differences between markets, which included drivers such as rep coverage, pricing by channel and product, and marketing spend. Finally, sales leaders prioritized the growth pockets based on opportunity for growth. It realized that 60 percent of the fastest-growing counties had inadequate rep coverage, while there were slow-growth territories that were over-resourced.
The company rapidly reallocated resources between territories and focused on those with the most growth potential (Figure 2.1). The head of sales then translated the micro-market insights into specific sales leads and the results were impressive: a tenfold increase in prospects in some micro-markets and a narrowing down of realistic prospects in others. Figure 2.2 shows the scale of the variation.6 In industries I to N, for example, the company calculated that there was an enormous missed opportunity, whereas industries A to D were already close to their full potential.
Figure 2.1 Micro-market analysis reveals pockets of growth
Figure 2.2 Micro-market lens fills the pipeline with otherwise hidden opportunities
Look beyond Sales
Translating detailed analysis into insights is not a novel idea in itself. Nor is it sufficient for capturing micro-market growth ahead of competition. What turns insights into sales is how the front line is managed in the micro-market. The sales executives we interviewed stressed the need for appropriate resource allocation and actionable tactics for sales teams or retail stores to fully exploit the new opportunities.
These sales executives also work very closely with other parts of the organization to capture the most lucrative customer opportunities in micro-markets. This means realigning sales, marketing, and sometimes even noncommercial resources such as customer service or supply chain. Of course, not all resource allocation decisions are at the discretion of the head of sales, so cross-functional collaboration is critical to extract the full value of the micro-market pockets of growth.
Marketing plays a substantial role both in generating micro-market insights and in applying them in the field. For example, an Asian telecommunications company discovered that about 20 percent of its marketing budget was being spent in markets with the lowest lifetime customer value. The company reallocated its marketing budget to the most lucrative part of its markets, which represented more than two-thirds of its opportunity. It did not stop there. It also recalibrated its customer acquisition goals. Targets were reset at the micro-market level based on the market potential rather than being spread equally across all markets. The result: targets rose 10 percent – and were met. What made this initiative so successful was the active collaboration of the marketing, sales, and finance groups in the pursuit of a clear, overarching goal.
The executives we talked to believe that assigning resources from their own sales organization based on previous demand patterns is quite literally yesterday’s game. At the chemicals and services company, one sales rep spent more than half her time 200 miles from her home office, even though only a quarter of her region’s opportunity sat there. This was purely because sales territories had been assigned according to historical performance rather than on growth prospects. After going through the micro-market analysis, the company realized the mismatch. Now, the rep spends 75 percent of her time in an area where 75 percent of the opportunity exists – within 50 miles of her office (Figure 2.3).7
Figure 2.3 Redesigned territories better match rep time with opportunity
This might sound simple, but making this transition required painstaking work. Dedicated analysts were required to create opportunity maps for every sales rep in the company and to identify accounts for reallocation. There was of course a very real risk that the company could lose accounts that had deep relationships with reps being reassigned. Therefore, it designed detailed action plans to reduce attrition for each migrated account. The entire process took about six months, but reps now spend more time selling and less time behind the wheel.
Some companies have used nontraditional sales techniques to exploit new micro-segments. One European integrated telecommunications provider saw a 35 percent increase in call center revenue after just six weeks of actively turning inbound service calls into sales. By analyzing customer data at a very detailed level and developing tailored value propositions, its customer service agents were able to make extremely targeted pitches when customers rang up for general service support (although sales were not attempted if the customer was complaining). Companies from the United States and Canada have seen similar results.
Keep It Easy for the Sales Team
Sales teams have neither the time nor inclination to delve into the data or worry about cross-functional resource allocation. For the micro-market approach to work, complexity must be minimized – the sales team needs simple and effective insights and tools.
A North American logistics company had an overall goal to increase prices by 3 percent annually, but it knew that wide variation in growth and competitive intensity across its markets might make this difficult to pull off. To ensure it met this target, it developed a detailed micro-market pricing scheme and provided simple rules, based on the competitive dynamics of each segment: reps in high-growth markets were expected to raise prices and grow faster, and those in declining markets were allowed to reduce prices to prevent existing customers from leaving. These markets were identified at the city and zip-code level, and tailored strategies were developed by line of business, customer occasion, and customer segment.
Конец ознакомительного фрагмента.
Текст предоставлен ООО «ЛитРес».
Прочитайте эту книгу целиком, купив полную легальную версию на ЛитРес.
Безопасно оплатить книгу можно банковской картой Visa, MasterCard, Maestro, со счета мобильного телефона, с платежного терминала, в салоне МТС или Связной, через PayPal, WebMoney, Яндекс.Деньги, QIWI Кошелек, бонусными картами или другим удобным Вам способом.
