Sales coverage is one of the most strategic decisions a sales leader needs to make. The goal is to design a coverage plan that serves the needs of your customers and optimizes customer acquisition costs. You also need to ensure the best channel is used to penetrate each account and maximize the lifetime value.
As 2019 planning season kicks off, you will want to ensure your coverage model is optimized. There are an endless number of questions you can ask yourself and your team to get to the optimal model, in our experience here are the top 3 you should focus on.
3 Key Questions to Answer as Part of 2019 Coverage Planning:
1. Do You Clearly Understand How Each Segment of Your Total Addressable Market Wants to Be Served?
The biggest mistake we see here is thinking about this from an “inward-out” point of view, vs an “outward-in” point of view. Let me explain, outward-in means you understand the market, their needs and how they want to be served and align your sales motion to that. Inward-out means you know what has worked in the past and align your sales team based on outdated coverage principles.
The easiest way to get an outward-in point of view is to complete a buyer survey and buyer interviews. Download the SBI Buyer Interview Questions Tool to view an example buyer interview guide you can use to complete your buyer interviews. This should be a mix of current customers and prospects with the goal of understanding what is most important to them during their buying process.
After completing buyer interviews on a recent client engagement, we designed the coverage stratification pyramid below. When we talked to some mid-size customers and prospects it became clear that they did not value the face to face interactions they were currently getting and valued a quick response time much more. An inside sales motion would provide more frequent touches and quicker responses, so we aligned that tier of customers / prospects to the inside sales team. Leveraging this approach will ensure you align your coverage model to how the buyer wants to buy; inside or field sales, direct or indirect sales motion, etc.
2. Do Each Customer and Prospect in Your Total Available Market Have Account Potential Assigned to It?
Your account segmentation needs to be refreshed before you begin talking about 2019 coverage. Account potential is the estimated amount a prospect or current customer can spend with you.
Why is this important? Without a potential calculation for each prospect and customer you are not able to allocate your resources to the market opportunity. Most companies use Revenue as a proxy for potential, but this can result in coverage blind spots. Understanding where your potential lies will allow you to over staff sales resources on your top accounts and under staff sales resources on your bottom accounts.
3. For Each Go-To-Market Channel and Segment, Do You Understand The Customer Acquisition Costs (CAC) and Customer Lifetime Value (CLTV)?
By now, many companies have implemented some degree of CAC and CLTV calculation. However, the mistake we often see is just calculating one CAC and LTV for your organization. How can strategic coverage decisions be made if you don’t compare different channels and segments? For example, referring to the stratification pyramid shared above, what is the CAC and CLTV for each tier?
As a rule of thumb, the CAC and CLTV should be the highest at the top of the pyramid (strategic accounts) and both should decrease as you move down the pyramid (tier 2-tier 4). Remember that the ratio is more important than the CAC and CLTV numbers in isolation. Each tier needs to be optimized to ensure the ratio falls within the 3x-5x CLTV:CAC range. Lastly, it is equally as important to understand the CAC and CLTV for each channel – direct and indirect and optimize the ratio as you explore coverage options.
Sales coverage is one of the most strategic decisions a sales leader needs to make. The questions above are 3 of the most critical that need to be answered and understood before you can design your coverage model for 2019. Click here for some additional steps to follow to arrive at the right coverage model.
Download the SBI Buyer Interview Questions Tool to view an example buyer interview guide you can use to complete your buyer interviews. This should be a mix of current customers and prospects with the goal of understanding what is most important to them during their buying process.
[If you need help designing your 2019 coverage model bring your team to engage with a hand-picked team of experts at SBI’s Studio.
Located in Dallas, TX, our facility offers state-of-the-art meeting rooms, lounge, full-service bar, and a studio used to tape our TV shows. SBI provides the location and facilitators, all at a compelling price point.
As a guest of The Studio, you’ll get unlimited access to SBI’s CEO, Partners, and a handpicked team of experts. Together we’ll focus on developing an action plan for your needs by getting a month of work done in just eight hours. It’s an amplified experience that you can only get in one place: The Studio. I hope you join us.