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Navel-Gazing & Sales Segmentation Strategy

Sales segmentation is a 'vital first step' in building a platform for more profitable and efficient sales strategies, according to a study by IDC. Their research indicates that for companies who make the investment in thoughtful, and thorough, data-based sales segmentation policies and practices, the payoff will be substantial.

"Simply put, the goal of sales segmentation is to identify the unique needs of groups of customers and to efficiently serve those needs," said Lee Levitt, director of IDC's Sales Leadership Board.

"Some customers require extensive hand-holding and large account teams. Other customers expect specific industry expertise from their account manager or account team. Smaller accounts must be served efficiently by territory account managers covering 30-50 accounts or by channel partners."

Feedback from IDC survey research participants shows that customer buying dynamics and support requirements vary by segment, and an effective sales segmentation strategy will identify both the specific segment requirements and the investments necessary for success.

"Effective segmentation strategies must consider the scope and quality of data necessary to conduct useful segmentation analysis and the range of investments required to serve accounts across segments," continued Levitt.

"The management practices necessary to effectively manage the people deployed around the world on sales and support teams, the magnitude of the 'upside' in properly segmenting and serving customers, as well as the ability to effectively measure the ROI of those investments, are also crucial elements needed for a successful strategy."

IDC's second new study in its series of best practices in sales improvement processes analyzes the importance of share of wallet (SOW) as a critical sales element. IDC believes SOW provides a fundamental measure of opportunity and upside, providing actionable information on where to invest sales assets more accurately than perhaps any other single measure.

With precise SOW information, sales executives can identify both the magnitude of specific opportunities and the resources and activities necessary to capitalize on those opportunities.

As IDC defines it, SOW is much more than a simple measure of share of spend for a specific budget line item. It encompasses both data (customer buying history, historical and forecast account spend, and the representation of relationships between business units) and an analytical and prescriptive process (information gathering, account planning, customer interaction, opportunity analysis, and resource allocation).

Implemented effectively, this broader application of SOW provides the road map to growth in revenue, profitability, and customer satisfaction on an account-by-account basis. However, IDC doesn't mention who will likely be tasked to perform this vital segmentation at a typical company -- perhaps that's the ultimate issue to consider.

Based upon my own experience, it's rare to find an individual or group of people that are recognized -- and respected -- as the company policy thought-leader on segmentation strategy and associated business processes. The problem is often centered on the fact that even in the largest of sales, marketing and customer care organizations -- they lack a qualified 'customer advocate' within their talent pool.

The sad truth -- there is rarely a designated champion who clearly articulates the customer's collective needs, and then selectively groups those weighted needs into logical clusters of common interest. In contrast, most customer-facing organizations are still way too internally focused. Essentially, these corporate navel-gazers are flying blind, and at increasingly higher speeds.

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