If you’ve been following recent SBI content on annual planning, you may have already seen some key takeaways from SBI research on how CEOs are shifting their focus to selling to the existing customer base to accelerate revenue growth. Market trends are showing signs of accelerating demand, and for companies to take advantage of this, there needs to be robust account segmentation in place.
However, many organizations may underestimate the effort and dedicated resources required for account segmentation to effectively serve their go-to-market (GTM) strategy. In the lead up to a sales kickoff (SKO), companies should begin their preparations with account segmentation as early as four months ahead. The details of what a successful account segmentation should look like—as well as the follow-up steps—were covered in a recent webinar by SBI Senior Partners, Tony Erickson and Eric Estrella.
According to Erickson, account segmentation is key to helping GTM leaders figure out the rest of the plan leading up to the SKO.
“Getting that done allows you to understand, ‘How should I be rethinking my routes to market’. If cross-sell will continue to be the way that your business needs to be making its number in the next year, then that might change your route to market compared to how you historically planned,” he said.
Of the seven necessary steps in the four months leading up to SKO, the webinar focused on the details of the first four: account segmentation, routes to market, coverage plan, and organizational structure and design.
Estrella said that the necessity of account segmentation comes from the fact that in selling to existing customers, not all accounts are the same—some may have a higher propensity to buy more, while some may have a higher propensity to buy faster. Thus, the output of account segmentation serves as a comprehensive fact base to guide more strategic GTM decisions.
SBI’s account segmentation model for clients covers the following areas:
“A proper segmentation is more detailed than a typical TAM/SOM/SAM analysis, and it allows you to get down to the logo level,” said Erickson, detailing how organizations could be using their resources more effectively by looking closely at the whitespace potential in different accounts.
Based on SBI methodology, best-in-class account segmentation should rate accounts based on their Propensity-to-Buy (PtB), whether they fit the Ideal Customer Profile (ICP), and how much they can spend (i.e. account potential). This helps organizations understand which accounts to focus on to achieve results. Account segmentation can be broken down into five steps:
Organization can leverage the ROAD (Retain, Opportunistic, Acquire, Develop) model to better visualize the spending and potential of their existing customer base, which will inform decision-making on how to allocate resources and what approach to take for different accounts—whether it calls for Customer Success (CS) resources or hunter-type sales roles. Identifying the optimal resources and approach for each segment could drive increased sales and service efficiency.
Once the foundational analysis from account segmentation is in place, GTM leaders can then look at their existing organization structure and design to determine what changes might be needed. This also involves ensuring that teams have the right coverage plan for the prioritized accounts and sufficient headcount and capacity to capture market opportunities.
“We’re not suggesting that you need to re-org every year. However, you need to look at your organization every year and make sure that you’ve got the right market coverage and capacity, and that you’re structured in a way that effectively serves market demand,” Erickson added.
Headcount cost and capacity modeling then becomes an important step here. GTM leaders can estimate sales productivity based on CRM inputs and determine the headcount required to sufficiently reach high-value segments and meet sales targets.
Lastly, the webinar also highlighted the different types of organization design models, of which most organizations typically employ a hybrid of at least two types:
Estrella stressed that the importance of this step lies in determining the area that an organization needs to specialize in, which could vary according to different circumstances. However, companies should avoid trying to implement too many at the same time, which will be confusing both to customers and internally.
To summarize the high-level message of the conversation, Estrella had the following key takeaways:
Don’t miss all the important details discussed in the webinar; you can still watch the webinar replay here: Driving Sales Effectiveness Through Account Segmentation and Coverage Strategies.