article | February 17, 2016
Which Markets Should You Compete In?
SBI recently spoke with Rick Haviland, the President at MarketSource. MarketSource is the world’s most successful sales and marketing outsourcing company. The company has helped more than 200 companies generate over $6 billion in revenue. The topic of conversation was selecting the right markets to compete in. Why is this an important step in your overall strategy? Because without clearly defined markets, functional departments inside the company will make the decision individually. And this will result in conflicting priorities. So, how does Rick tackle this issue? And what advice can he give his peers in similar situations?
It starts with market definition. At MarketSource, they define their markets primarily by vertical industry. Why? Because they have built themselves around industry and channel subject matter expertise. And their offering is specific to their customer’s business and their verticals. So it makes sense to look at their markets in this way.
Additionally, Rick touched on what makes a market attractive. The first two dimensions considered are the potential spend, and account scoring within the market. They look for healthy markets with healthy accounts. Rick looks for an area where there’s a high degree of complexity in the sale because he knows that’s their sweet spot.
Equally important is understanding what makes a market unattractive. In the case of MarketSource, they know they must avoid certain markets. For example, heavy regulation is less than desirable to them for a number of reasons. Additionally, if face to face interaction isn’t important or if the product sells itself, these are warning flags. Rick understand what works and what doesn’t for his organization. This allows him to keep his resources focused on only the markets that matter.
Next Rick spoke to us about the size and growth rate of his markets. How are these determined? “We take a pretty straight forward, simple approach to it,” explains Rick. “What we look at is the potential spend of accounts within a market. Then we look at the revenue and income health of those accounts within the market.”
Another piece to the puzzle are critical success factors. These are the things customers demand from you to be great at in order for them to give you their business. And they will vary from market to market. So, how has MarketSource determined what their buyers want in the markets they serve?
“First and foremost, we ask them,” states Rick. His team spends a lot of time talking directly with clients. Additionally, the conduct an annual voice of the customer survey. Why? To ensure they understand their requirements, willingness to pay, and desired business outcomes. The end goal is to ensure MarketSource’s value drivers and differentiators are in line with the buyer’s critical success factors.
Additionally, Rick considers why people outsource in general. The organization needs to be able to deliver on all of the possible reasons. Ultimately they talk to their customers, look at the general space they play in and determine what it takes to be successful.
To wrap up our conversation, Rick simplified his plan for others to replicate. First, pick and choose your new markets. Second, complete an account segmentation effort for both current and potential target markets. This will provide confidence and visibility into what you need to determine where to invest time and money. Which, will result in you making your number.
At the end of the day, sales and marketing leaders need an accurate number. This is the responsibility of the company’s President. Because making the number requires having a number that’s obtainable. And a key input into assigning out a revenue target is market selection. Get this wrong, and you will miss your number.
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