Segmentation and Specialization: Putting Them … of its two primary markets, retail ... $52M Total Cash Compensation = Approximately 10 full time equivalents (FTEs) Accounts Old Sales

Segmentation and

Specialization:

Putting Them

Together for Sales

Productivity© Copyright 2015 The Sales Management Association. All rights reserved.

PAGE 2

© Copyright 2015 The Sales Management Association. All rights reserved.

SPEAKER

Scott SandsPartner and Practice Leader, Sales Force

Effectiveness

Aon Hewitt

Email: [email protected]

LinkedIn: slsm.gt/Sands

Aon Hewitt | Sales Force Effectiveness

Proprietary & Confidential 3

In order to return to predictable organic revenue growth, we need to re-

learn some of the most powerful sales management disciplines

Mergers and Acquisitions focus us on operational contraction, aka “synergies”

Recessions cause us to avoid any risk based on emotional responses

If Sales Leaders are going to be successful going forward, we have to drive organic

revenue growth

─ Spotting opportunity in the market

─ Making sales strategy actionable

─ Deploying the right types of talent in the right places

These next 10 chess moves will require courage

Courage and confidence will come from meaningful intelligence and a practical plan



Sometimes Sales Leaders are operating with insufficient information…

Size Technology HealthcareFinancial

Services

Manufact-

uringGovernment

Global

Regional

Core

Small



…that could support a reallocation of resources to better opportunities

Size Technology HealthcareFinancial

Services

Manufact-

uringGovernment

Global

Regional

Core

Small

Value

Effort

$$$ $



Case Study #1: RFID Technology Company

Situation:

This $2 billion global company had

stopped growing during what should

have been a strong period of

economic growth. Competitors were

beginning to overtake them

Leaders stated that the company

owned most of the share in the top

tier of its two primary markets, retail

and manufacturing

The company was seeking to invest

in more sales resources to grow and

cover the second and third tier of

accounts

Complication:

The company had little data on the

market and could not identify the

second and third tier of accounts

Sales strategy and deployment was

set at the local level… either

regionally or even at the country level

Sales roles were inconsistent around

the world and had little supporting

infrastructure for hiring or training

Resolution: The company purchased Dun & Bradstreet data in 40 countries

and determined it had less than 10% market share in the top tier.



Sometimes Sales Leaders are awash in data that is tough to decipher

Account Industry Init. Value Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Hours Result Sales

A Healthcare $ 500,000 100 80 60 40 280 Win $ 500,000

B Healthcare $ 600,000 20 40 60 40 40 20 220 Loss $ -

C Healthcare $ 750,000 100 80 60 40 280 Win $ 750,000

D Healthcare $ 1,000,000 100 80 60 40 280 Win $ 1,000,000

E Healthcare $ 400,000 20 40 60 80 60 40 300 Loss $ -

F Technology $ 575,000 100 100 200 Loss $ -

G Technology $ 225,000 40 40 40 120 Loss $ -

H Technology $ 250,000 80 80 60 220 Win $ 250,000

I Technology $ 400,000 80 80 60 220 Win $ 400,000

J Technology $ 300,000 40 40 80 Loss $ -

Total $ 5,000,000 120 120 120 180 120 200 160 220 260 260 280 160 2200 50% $ 2,900,000


K Healthcare $ 400,000 40 60 60 40 200 Loss $ -

L Healthcare $ 800,000 80 60 60 60 40 20 320 Win $ 800,000

M Healthcare $ 550,000 40 40 60 60 60 40 20 320 Win $ 550,000

N Healthcare $ 875,000 40 80 100 80 60 40 400 Loss $ -

O Healthcare $ 275,000 20 40 60 80 60 40 300 Loss $ -

P Technology $ 400,000 20 40 60 60 40 220 Loss $ -

Q Technology $ 500,000 40 80 40 160 Win $ 500,000

R Technology $ 650,000 80 80 160 Win $ 650,000

S Technology $ 200,000 20 100 120 Win $ 200,000

T Technology $ 350,000 20 60 80 Loss $ -

Total $ 5,000,000 120 160 160 160 140 180 200 200 240 240 240 240 2280 50% $ 2,700,000



Divining the right actionable information from the data takes work


A Healthcare $ 500,000 100 80 60 40 280 Win $ 500,000

B Healthcare $ 600,000 20 40 60 40 40 20 220 Loss $ -

C Healthcare $ 750,000 100 80 60 40 280 Win $ 750,000

D Healthcare $ 1,000,000 100 80 60 40 280 Win $ 1,000,000

E Healthcare $ 400,000 20 40 60 80 60 40 300 Loss $ -

P Healthcare $ 400,000 20 40 60 60 40 220 Win $ 400,000

Q Healthcare $ 500,000 40 80 40 160 Win $ 500,000

R Healthcare $ 650,000 80 80 160 Win $ 650,000

S Healthcare $ 200,000 20 100 120 Loss $ -

T Healthcare $ 350,000 20 60 80 Loss $ -

Total $ 5,350,000 120 120 120 180 120 200 180 160 220 200 240 240 2100 60% $ 3,800,000


K Technology $ 400,000 40 60 60 40 200 Loss $ -

L Technology $ 800,000 80 60 60 60 40 20 320 Win $ 800,000

M Technology $ 550,000 40 40 60 60 60 40 20 320 Win $ 550,000

N Technology $ 875,000 40 80 100 80 60 40 400 Loss $ -

O Technology $ 275,000 20 40 60 80 60 40 300 Win $ 275,000

F Technology $ 575,000 100 100 200 Win $ 575,000

G Technology $ 225,000 40 40 40 120 Loss $ -

H Technology $ 250,000 80 80 60 220 Win $ 250,000

I Technology $ 400,000 80 80 60 220 Win $ 400,000

J Technology $ 300,000 40 40 80 Loss $ -

Total $ 4,650,000 120 160 160 160 140 180 180 260 280 300 280 160 2380 60% $ 2,850,000



Case Study #2: Mid-Sized Software Firm

Situation:

This $1 company was experiencing

significant margin pressure as new

alternative solutions came to the

market

The head of sales decided to focus

the sales force on solution selling to

emphasize the business impact of

the software

The company invested in the newest

sales training trend for all 300 of its

sales reps

Complication:

The primary customer industry was

experiencing contraction,

competition and price pressure

Finding, hiring and training solution

sellers was an inexpensive

proposition, and in the first few

years did not yield expected returns

The buying cycle for companies in

the primary target industry was 3-5

years and did not offer many

chances to win

Resolution: Identify new buyers in new vertical markets with different

business problems that place more value on the software solution.



Traditional models for segmentation don’t help sales people tailor their

approaches to the selling process, skills, or messages

Large

Medium

Small



Segmentation on basic levels can be effective, but it takes courage to

declare that more headcount, new channels or higher pay is required

SegmentNew

ModelNew Sales Force

Strategic 1,000

Accounts

50 Strategic

Account

Managers

20 Product

Specialists

Core 17,500

Accounts

175 Territory

Sales

Representatives

30 Product

Specialists

Small 27,500

Accounts

50 Inside Sales

Representatives

$1.1B

Revenue

$52M Total Cash Compensation

= Approximately 10 full time equivalents (FTEs)

Accounts Old Sales Force

50,000

Accounts

56 Sales Managers

334 Territory Sales

Representatives

$1B

Revenue

$58M Total Cash

Compensation



What can or should we use for segmentation?

Revenue

Sales Potential

Account Share

Growth Rate

Profitability

Credit Rating

Industry

Buyer

Buying Process

Buying Criteria

Channel Preference

Purchase Frequency

Sales Cycle Length



Case Study #3: Advertising & Media Company

Situation:

A legacy directories company had

declining revenue (as much as 10%

per year)

The company fielded a large,

generalist sales force with significant

tenure

Sales reps were paid low base

salaries with an aggressive

commission plan

The company’s cost of sales was

very high relative to the market and

desired operating expense levels

Complication:

Sales people were executing

against at least three different

strategies

Turnover in the sales force was

very high

The sales force was highly resistant

to change

The company lacked data on

current customer and prospect

sales potential

Resolution: The company constructed a formula to calculate customer value

based on advertising spend research, created specialist hunter/farmer roles,

raised pay and shifted accounts across channels.



New models for segmentation focus on sales potential, buying criteria,

and other elements that inform channel strategy and sales rep approach

Account FTESales Volume

(D&B)SIC Code

Effective Sales

Volume (X)

A 90 $4,000,000 8020 $4,000,000

B 160 -- 8020 $8,000,000

C 200 $12,000,000 6050 $12,000,000

D -- -- 6050 $16,000,000

E 300 $40,000,000 6050 $40,000,000

Account Effective Sales

Volume (A)

Industry

Spend

Current

Spend Factor

SBA Spend

Factor

Final

Spend Factor

(Y)

A $4,000,000 5% 3% 7% 7%

B $8,000,000 5% 4% 6% 6%

C $12,000,000 4% 2% 5% 5%

D $16,000,000 4% 9% -- 9%

E $40,000,000 4% 2% -- 4%

Account % Addressable

(Z)Current Spend

Addressable

Spend (X*Y*Z)

Total

Addressable

A 80% $120,000 $224,000 $224,000

B 80% $320,000 $384,000 $384,000

C 80% $240,000 $480,000 $480,000

D 80% $1,440,000 $1,152,000 $1,440,000

E 80% $800,000 $1,280,000 $1,000,000

Effective Sales Volume (X):

Priority 1: D&B Sales Volume

Priority 2: Headcount * $50,000

(estimated spend per employee)

Priority 3: Industry average, based on

organization SIC code and D&B Sales

Volume

Final Spend Factor (Y):

Priority 1: Small Business Association

Spend Ratios

Tier I: < $5M = 7%

Tier II: < $10M = 6%

Tier III: < $15M = 5%

Priority 2: Greater of Current Spend

Factor or Industry Spend Factor, based

on SIC code (cap at 100%)

Total Addressable (Z):

Priority 1: Greater of Current Spend (no

cap) and Addressable Spend (cap at

$1M)

1

2

3



How many sales roles exist in your company?

10 100 1,000 10,000

10

100

Number of Sales Employees

Nu

mb

er

of

Sale

s R

ole

s



There are hundreds of sales roles in the best surveys with significant

differences

Source: Radford Global Sales Survey



Skills, Knowledge

Focus

Cadence

Initiative

Responsiveness

Teamwork

Cost

Productivity

Specificity and Correlation of Incentives

Execution of Strategy

Conflicts with Generalization of Sales



Case Study #4: Global Chemical Company

Situation:

A large global chemical company had

a fairly generic sales force

The company had historically been

engineering focused, due largely to

top leadership

To achieve the next level of growth,

the firm wanted to build a stronger

and larger sales force

Complication:

The company was losing share in

some of the most profitable and

fast-growing verticals

Sales people felt marginalized and

the employee value proposition

was not strong enough to attract

the best talent

Customers were beginning to

express very different needs (with

different margins)

Few sales people had experience

in or would focus on key verticals

Resolution: The company architected a new sales career path and

development program that portrayed growth and development over 20

years… but each role had a specialist charter.



Visually Identifying Hunting and Farming Performance in Sales

2014 Retention Upsell New 2015

100%

73.4%

27.7%

3.1% 104.2%



Summary of Key Behavioral Differences

More Important for Hunting

Behavioral Flexibility

Resilience

Competitive

Communicating with Impact

Influencing

Knowledge of Selling Techniques

Self Confidence

Polished Image

Seeks Variety

More Important for Farming

Strategic Thinking

Analyzing Problems

Team Orientation

Deep Product Knowledge

Planning and Organizing

Focus on Client Service

Taking Ownership

Resolving Conflicts

Responsiveness/Reliability



A career path made up of multiple sales specialties helped turn the sales

function into a sales profession

Sales

Field Direct

Professional

Inside Technical Virtual Dedicated

1

2

3

4

5

6

7

DSS

Support

SE Mgr

ISR

-T

SupportSupportSupport

Alli. Mgr

TSR

SE Dir

Architect

GAD

IS Sup

IS Mgr RSM

VP Sales

SDGAD

GAVP

Hunter Farmer

Leadership

Indirect

ISR

-C

CA

M-T

CA

M-C

SE

-T

SE

-C

NB

D-T

NB

D-C

AM

-T

SA

M-C



Note: The ADEPT-15 personality model is based on the latest research in personality

psychology is built from the well accepted Five-Factor Model (FFM) of personality

along with additional leading concepts in workplace practices and research.

Aon Hewitt’s Personality Model



I am open to handling a situation

in a new way, especially if it

makes things easier.

How does it determine which item pairs to administer?

I will sometimes push myself to

do better than what others think

is more than enough.

Ambition Flexibility

It knows how people with different personalities will respond…

Adaptive Algorithms



Style Profiles for Hunting & Farming

AdaptationImportant for Both

AchievementExternal Motivation

InteractionDominant & Gregarious Emotional

Resilient & Optimistic

TeamworkLasting relationships

TaskInternal Motivation & Detail

Focused

Hunting Farming

Thank You!


PAGE 26

Please remember to speak into the

microphone - we're recording!QUESTIONS


Scott SandsPartner and Practice Leader, Sales Force

Effectiveness

Aon Hewitt

Email: [email protected]

LinkedIn: slsm.gt/Sands

Documents

Segmentation and Specialization: Putting Them … of its two primary markets, retail ... $52M Total Cash Compensation = Approximately 10 full time equivalents (FTEs) Accounts Old Sales