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
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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
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Sometimes Sales Leaders are operating with insufficient information…
Size Technology HealthcareFinancial
Services
Manufact-
uringGovernment
Global
Regional
Core
Small
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…that could support a reallocation of resources to better opportunities
Size Technology HealthcareFinancial
Services
Manufact-
uringGovernment
Global
Regional
Core
Small
Value
Effort
$$$ $
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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.
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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
Account Industry Init. Value Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Hours Result Sales
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
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Divining the right actionable information from the data takes work
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 $ -
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
Account Industry Init. Value Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Hours Result Sales
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
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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.
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Traditional models for segmentation don’t help sales people tailor their
approaches to the selling process, skills, or messages
Large
Medium
Small
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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
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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
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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.
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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
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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
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There are hundreds of sales roles in the best surveys with significant
differences
Source: Radford Global Sales Survey
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Skills, Knowledge
Focus
Cadence
Initiative
Responsiveness
Teamwork
Cost
Productivity
Specificity and Correlation of Incentives
Execution of Strategy
Conflicts with Generalization of Sales
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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.
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Visually Identifying Hunting and Farming Performance in Sales
2014 Retention Upsell New 2015
100%
73.4%
27.7%
3.1% 104.2%
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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
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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
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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
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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
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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!
© Copyright 2015 The Sales Management Association. All rights reserved.
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© Copyright 2015 The Sales Management Association. All rights reserved.
Scott SandsPartner and Practice Leader, Sales Force
Effectiveness
Aon Hewitt
Email: [email protected]
LinkedIn: slsm.gt/Sands