Technology companies are years ahead of any other industry when it comes to leveraging data to inform key decisions in their Go-to-Market model. This trend is likely due to their high-margin, high-growth rates, and rapidly advancing products creating fiercely competitive dynamics. To thrive in this type of environment, tech-sector executives need to evolve their sales and marketing functions faster than their peers. The pace at which tech companies evolve their Go-to-Market model it is as though Moore’s Law applies to their sales and marketing functions as well.
This blog explores some of these emerging best practices and how healthcare companies can leverage them. Let’s start with developing a data-driven fact base to inform the allocation of sales and marketing resources. This foundation can be achieved through bottoms-up account and prospect segmentation.
What Is Account and Prospect Segmentation?
In short, account segmentation allows you to understand which accounts in your market are going to generate the most revenue over the shortest period, for the purpose of prioritization.
Account segmentation is a “bottoms up” approach to market segmentation. Market segmentation tells you the size of the market and where your bets should be placed (i.e., geographies or products). Account segmentation stack ranks each account or prospect in the market based on the expected value to the company.
Quantifying the potential and propensity-to-buy for each account will increase your sales and marketing return on investment. This is done by aligning your best resources with your best accounts. With accurate account segmentation, the executive leadership team will be able to provide intelligent strategic guidance to the entire organization, especially the sales and marketing functions.
How Is It Different from Our Current Approach?
Overwhelmingly, the majority of companies we work with in the healthcare sector view their accounts and prospect potential with a singular variable. For example, many medical device companies will simply look at bed count within a Hospital or Health System as a proxy for potential. Alternatively, payers may use number of employees as a proxy for group size; both scenarios will result in the largest (by volume) accounts being prioritized. The flaw in this approach is two-fold:
1) It is likely that your competitors are also targeting these largest accounts.
2) They are not applying any modifications based on the account’s propensity-to-buy their products or services.
For additional questions you should be able to answer regarding your account segmentation strategy, please download SBI’s Best-in-Class Account Segmentation Questionnaire.
What Is Propensity-to-Buy (Ptb) and How Is It Determined?
Propensity-to-Buy (PtB), as the phrase suggests, is the likelihood of an account purchasing your products or services. SBI recommends determining your PtB factors using a combination of “art” and “science.” Identifying these factors can be done through cross-functional expert panels with your product, marketing, and sales team members. Once a direction is given, it’s time to test their hypotheses through regression analyses to determine which factors are statistically relevant. This is done by appending various 3rd party data sources to your customer data and identifying trends in which elements are most present in your won accounts. Identifying these factors helps you develop your ideal customer profile (ICP). When you’ve established your ICP, you simply apply this algorithm to prospects to score them based on their fit to your ideal customer profile.
How Do We Implement in Our Company?
Once you’ve determined your ideal customer profile, and have used this algorithm to score your accounts and prospect universe, plot these accounts against the expected opportunity to help inform your coverage model:
For information on calculating opportunity, see “Purchase Segmentation – The Key to Revenue Growth.”
Why Should We Implement in Our Company?
Segmentation helps sales leaders and organizations maximize return on the commercial investment. This is done by aligning the best resources to the best opportunities. Or in a start-up environment, applying the process will make the best use of your scarce resources. Developing this fact base also supports additional Go-to-Market initiatives, including:
- Improved territory alignment and balance and quota assignments which reflect intelligent market opportunity and sales potential and/or opportunity.
- Appropriately align resources based on account score and potential. This includes key metrics like account assignment ratio to sales representative capacity, as well as account-based marketing efforts, where appropriate.
Refer to Drive Double-Digit Revenue Growth by Interlocking Compensation Design & Territory Alignment to understand the impact of misaligned sales territories. To further understand how your account segmentation compares to best-in-class, download SBI’s Best-in-Class Account Segmentation Questionnaire.