Is your industry growing faster than you? Are your competitors enjoying higher revenue growth rates than yours? Have your existing target markets matured, causing growth to stagnate? If the answer to any of these questions is yes, it’s time to look at how you’re allocating your people, time, and money. As a guide to the discussion, download our 10th annual workbook, How to Make Your Number in 2017. Turn to the Markets phase on pages 60 – 64 of the PDF.
Your corporate strategy must clearly identify the markets, accounts, and buyers your organization will focus on. Too often, CEOs believe they have effectively covered this ground—when in fact, their companies suffer from a mismatch between executive-level strategy and functional execution. Misalignment across functional strategies is the primary stumbling block to consistent growth.
This takes a heavy toll when companies launch products that don’t solve market problems, or when marketing is not aligned properly to support product launches. Moreover, sales dogfights over me-too products don’t inspire prospects to change their status quo. As a result, you miss your number.
Understanding Market Potential Normally, companies have a grasp on the overall addressable market and growth rate, together with the percentage that is penetrated today. Determining your growth rate compared to the addressable market’s growth rate is standard operating procedure. If you are not leveraging that level of data, you have not defined your overall market, which is a starting point for identifying your sweet spot within that addressable market.
The next step in defining the addressable market is evaluating your competition’s positioning. Start by listing all competitors under product or solution and market segment. Then delve into each competitor’s growth rate and market share. Assess the segments where they compete and you don’t. Often, companies that compete in both enterprise and SMB arenas have different competitors by segment. Taking stock of each competitor by segment improves your ability to position yourself against the competition within these segments.
Next, you need to answer three core questions:
1. What are the traditional and innovative routes to market?
2. What are the customer acquisition cost (CAC) and customer lifetime value (CLTV) by market segment?
3. Where is our growth coming from: market share gain, market expansion, or new market exposure?
The answers will provide clear direction for product, marketing, and sales teams as they develop their functional strategies to align with the corporate strategy.
If you don’t have a clear picture of your ideal customer profile, you’re not alone.
Account segmentation may be the single most undervalued business requirement in the market, despite considerable benefits:
- Improved return on marketing investments. Replace “spray and pray” with targeted campaigns.
- Prioritization of selling capacity. Stack ranked accounts based on highest closure rate, shortest sales cycle, and largest average sale price.
- Effective and efficient market coverage. Balance territories to best advantage.
- Accurate quota-setting. Give every sales rep a shot every year to make his or her number.
- In-depth analysis of CAC, CLTV, and the buyer’s journey. Determine the best go-to-market sales channel.
- Optimal talent mix. Assess what type of talent the organization needs to capture account potential.
Account segmentation goes beyond the traditional ideal customer profile, customer or prospect scoring, and potential by account or prospect. Top-growth companies know this, and refresh their data annually at a minimum; best in class update quarterly.
Analyzing the Buyer’s Journey
Modern marketers and product managers know that buyer’s journey analysis is the key to success. Mapping by segment, product, and channel answers these critical questions:
- Do customers and prospects understand our full portfolio and associated value propositions?
- What factors do buyers consider before they purchase our products or services?
- Where do buyers go to educate themselves? Whom do they talk to?
- How does our brand compare to competitors in the market?
- When we lose, what are the root causes?
- Is the decision to purchase made by a centralized or decentralized buying decision team?
- Does our buyer’s journey vary in length by segment, buyer persona, product or service, and sales channel?
Best-in-class marketing teams constantly leverage insights from buyer’s journey analysis to update campaigns, value propositions, and positioning statements.
Playing to Your Strong Suit
The more you know about your market, accounts, and buyers, the greater your return. Good market data provides the intelligence you need to focus strategic objectives in the right direction: market share gain, market expansion, or new market exposure. Without good market data, you’re putting the entire company at risk.
To go deeper in determining which markets to compete, download our 10th annual workbook, How to Make Your Number in 2017. Turn to pages 60 – 64 of the PDF. If you would like to spend some time with me on this subject, come see me in Dallas at The Studio, SBI’s multimillion dollar, one-of-a-kind, state-of-the-art executive briefing center. A visit to The Studio increases the probability of making your number because the sessions are built on the proven strength and stability of SBI, the industry leader in B2B sales and marketing.