How Sales Reps look at their book of business is critically important. In the episode Tim take on Account Segmentation at the individual contributor level and challenges the notion that more accounts are always better and take you though looking at not just the 80/20 rule but at how by focusing on fewer accounts and going deeper helps your business grow.
Transcript from “Account Segmentation for the Individual Contributor
Tim Kubiak 0:06
Welcome to bow ties and business, where a fashionable nerd and knowledge me regardless of what your career is just starting, steady, or stalling. Join me in a collection of business and thought leaders are experts in their field as they share their decades of firsthand real world experience from the ground floor, the executive suite, and every corner of the business world. Hi, welcome to bow ties in business. I’m your host, Tim Kubiak. Thanks for joining us today. As always, you can find us on our socials and also on the website. We’ll link to them all in the show description. Today, we’re going to talk a little bit about account segmentation. And we’re going to do it at an individual level. Now, what do I mean by account segmentation? Looking at your book of business, both customers and prospects and determining, frankly, whether you should keep them, drop them or give them to one of your peers? Yeah, I hear ya, you’re screaming, it’s blasphemy. They’re all mine. book sales, in some cases is a land grab. But you have to look at are you spreading yourself too thin to get the maximum effort. And the maximum results across too many accounts?
Unknown Speaker 1:17
Tim Kubiak 1:17
it’s nice to have a stable of 500 people who might buy from you. And you’re right, if the second 400, someday phone something in and you actually take the time to get back to them and turn them into a customer. Yay for you. But the reality is, we see all too often when we work with clients, how many people have so many customers and so many prospects, they don’t have a plan to work, they don’t have a plan to touch. So we’re going to begin at the beginning. And we’re going to say segment your accounts into two categories. Very simple. Those that are buying and those that have not bought. Now notice I said buying. So the next part of the decision is how long is not bought made somebody and inactive customer. There’s no general rule of thumb, because every business is different. If it’s if you’re in an industry, where you sell consumables customers should be buying regularly, you should look at the non buyers as lost accounts. Now, if you’re selling project based things where you know, it’s an 18 to 24 month sales cycle, and then there’s upgrades added on the additions, but you’re not seeing those pieces, you should take a little more critical eye to it as well. So once you’ve done that, and once you have account, everybody jokes, it’s the 8020 rule for a reason how close to your business does that 8020 rule happened, meaning 80% of your business comes from 20% of your customers. Just take a second step back, take a look and be honest with yourself. Then, beyond that 80% in the buying category, look down the list. Let’s say you have 50 customers on that list beyond the 80% how many of them buy one regularly. In two, that you’re their primary choice for a competitor doesn’t get their order first. And you’re not just kept on the hook for futures, tough things. I had an old sales VP that had a brilliant phrase, he said, We don’t mind taking the rough with the smooth, but we’ll never take the rough with the rough, which meant when we got garbage only deals from people. And we never got the juicy deals, the easy to transact deals or the profitable parts of it. Eventually, we would turn that business away. And we were polite about it. But we also recognized our own value. And that value was that we could do really hard things good things in the parts of the world that were difficult, that were sticky in a legal compliant manner. We could deliver products in short timelines. But if those were the only projects you ever gave us, eventually we started saying, hmm, thanks, we’re not gonna bid. We’re happy to have the rough with the smooth but we don’t want the rough with the rough. And sometimes people would get butthurt and go away and you go, how dare you not do business with me. But the reality is, is you have to guard your time. And if all you’re doing is complicated, difficult, ugly parts of the deal. And you know, they’re clean, good purses, they’ll walk away. So as you look at your business, how many of them are giving you first position and maybe they’re just not frequent buyers, that’s okay. They’re okay to keep. You may want to find a more efficient way to service them, but you also have to have them on a plan. And then the second part of it is look at all the people that haven’t bought from you. Now, traditionally, I’ve used the six month rule, customer has a place in order in the industries I’ve worked in, within six months, they’re not really a customer, there may be a prospect and you need to determine what they’re doing. And in that one looking at your account segmentation because that is the theme here, right? How many of them buying from a competitor. And are you second or third position? A good rule is, if you can’t get yourself into second position on an account that buys a moderate amount, now we’re not talking a Goliath, we’re third positions, 10s of millions of dollars, a quarter or a year, we’re talking your average enterprise size account. Right? If you can’t get yourself into a second position, you probably should not burn a lot of cycles on that account.
Next thing you look at is look at your number of prospects. Be honest with yourself, salespeople love to lie to themselves, they’d love to tell themselves how great they’re going. But of those prospects, how many are strategic to your business? How many of them if you made a sale to would change the profile and the shape of the business you’re doing? And then what are you doing to pursue those accounts, having names under your name in a CRM, or a database does nothing to grow your business. In fact, a lot of times I find it’s distracting. So often, we’ve worked with reps over the years, who will have literally hundreds and hundreds and hundreds of accounts under their names. They haven’t talked to them, and months, some cases, years. And occasionally they get an email, they want to quote, they send an email out, maybe they buy something, it’s not doing any good, right? It’s just a distraction. So become more focused, become a specialist in a way, right? Not just in your industry, but in your customers business, and understand where you can impact them the most. And then that’s where you need to put your time, believe it or not, by cutting down your customer list. More often than not, you will grow your business, you’ll get more wallet share, you’ll find more projects, I’m not saying cut it to bare bones, I’m not saying go from 100 active customers to five. But if those five are names that everybody that would be listening to this No, and you have a market leading product, and you don’t have a market leading position with them, then that might be the exception to the rule. But generally speaking, look at that at 20%. In that 20% look at the top number of customers and or opportunities that you can go after that make a difference to your business. Look at top prospects that set you up for the future, you don’t just want to cash the checks today, you want to build the business for the future. So if there are projects, even in the lower active customer list, it’s okay, keep a few of those. And then have an honest discussion with your sales director, your sales VP about the rest of it. Everybody hates the idea house accounts, maybe you can convince them to give you a junior person to work those accounts for you and help develop them. And if they turn into something, you can step in and take the lead again, not a bad idea. However, you don’t want to dilute what you’re doing. So now that we’ve talked about account segmentation, the next thing you want to do is look at what your customers are buying and look at their buying trends. Are they buying across the range of your portfolio? are they buying a few key products? And again, you know your business, you know, your offer set? If it’s one to five things, and you’re selling 50 or 100 things? Are you missing the opportunity to capture wallet share? If by spreading yourself so thin before were you not positioning ancillary offers support and services that could grow that and service that customer. Make sure you have an understanding again, plan for it. You have to have an account plan, not the kind your manager asks you for one for yourself. So would you go into these accounts and you begin these conversations, you know what they need, or potentially could use and benefit from have that conversation will go a lot deeper in upcoming episodes and some of our trainings, on account segmentation, and territory management and all of those things. This is really just to get you thinking to do it, step back, take a look. Figure out where to spend your time where you’re going to get your best return on your time and build a plan to get there. Thanks for listening today. Talk to you next week. Thanks again for listening. And we hope you’ve enjoyed this episode. We put out fresh content every Tuesday. If you like what you heard, please subscribe. Tell your friends and sharing your own social media accounts. Want us to see what you have to say. It’s a BYOB kind of party. Bring Your Own bow tie. So hashtag bring your own bow tie. our listeners are important to us. After all you would create this content for with that in mind. We’re doing a mailbag episode once a quarter. If you have suggestions, ideas or questions you’d like answered, email set mailbag Bow Ties in business.com. This show is produced, edited and research by Courtney Kubiak with the help of her rescue dogs tequila rose and Roni