Sales Growth. Baumgartner Thomas

insights and in applying them in the field. For example, an Asian telecommunications company discovered that about 20 percent of its marketing budget was being spent in markets with the lowest lifetime customer value. The company reallocated its marketing budget to the most lucrative part of its markets, which represented more than two-thirds of its opportunity. It did not stop there. It also recalibrated its customer acquisition goals. Targets were reset at the micro-market level based on the market potential rather than being spread equally across all markets. The result: targets rose 10 percent – and were met. What made this initiative so successful was the active collaboration of the marketing, sales, and finance groups in the pursuit of a clear, overarching goal.

The executives we talked to believe that assigning resources from their own sales organization based on previous demand patterns is quite literally yesterday’s game. At the chemicals and services company, one sales rep spent more than half her time 200 miles from her home office, even though only a quarter of her region’s opportunity sat there. This was purely because sales territories had been assigned according to historical performance rather than on growth prospects. After going through the micro-market analysis, the company realized the mismatch. Now, the rep spends 75 percent of her time in an area where 75 percent of the opportunity exists – within 50 miles of her office (Figure 2.3).7

Figure 2.3 Redesigned territories better match rep time with opportunity

      This might sound simple, but making this transition required painstaking work. Dedicated analysts were required to create opportunity maps for every sales rep in the company and to identify accounts for reallocation. There was of course a very real risk that the company could lose accounts that had deep relationships with reps being reassigned. Therefore, it designed detailed action plans to reduce attrition for each migrated account. The entire process took about six months, but reps now spend more time selling and less time behind the wheel.

      Some companies have used nontraditional sales techniques to exploit new micro-segments. One European integrated telecommunications provider saw a 35 percent increase in call center revenue after just six weeks of actively turning inbound service calls into sales. By analyzing customer data at a very detailed level and developing tailored value propositions, its customer service agents were able to make extremely targeted pitches when customers rang up for general service support (although sales were not attempted if the customer was complaining). Companies from the United States and Canada have seen similar results.

      Keep It Easy for the Sales Team

      Sales teams have neither the time nor inclination to delve into the data or worry about cross-functional resource allocation. For the micro-market approach to work, complexity must be minimized – the sales team needs simple and effective insights and tools.

      A North American logistics company had an overall goal to increase prices by 3 percent annually, but it knew that wide variation in growth and competitive intensity across its markets might make this difficult to pull off. To ensure it met this target, it developed a detailed micro-market pricing scheme and provided simple rules, based on the competitive dynamics of each segment: reps in high-growth markets were expected to raise prices and grow faster, and those in declining markets were allowed to reduce prices to prevent existing customers from leaving. These markets were identified at the city and zip-code level, and tailored strategies were developed by line of business, customer occasion, and customer segment.