Earlier this month, I wrote about customer segmentation and tiering and highlighted how in uncertain or down markets, sales leaders essentially demote some accounts to reduce the cost of sales. Plus, customer tiering improves sales execution. However, before looking at sales execution, let’s contrast the linear tiering with the 4-box alternative.
Contrasting Tiering Frameworks
Linear tiering prototypically looks like a triangle where the vertical progression signifies an increasing level of importance and sales engagement per account. Alternatively, sales leaders may consider the 4-box approach where each box represents an account persona.
Examining the illustrative 2×2 matrix (above) as an example:
- Strategic Partnerships – this is most akin to traditional high touch accounts. These accounts are uniquely important to the sales organization given their size, strategic fit and growth potential.
- Land & Expand – this designation represents a business development approach where sellers focus on significantly growing the relationship. These accounts may have a larger opportunity and a smaller share of wallet.
- Protect & Defend – contrary to the land & expand persona, account management is the focus of these accounts. Sales organizations often have a good relationship and a significant share of wallet. There may not be a lot of upside potential so the sales engagement is focused on cross-selling and up-selling while also guarding against losing the customer to the competition.
- Efficient Engagement – this is similar to lower touch accounts in the linear tiering model. These are often SMB customers that are best served by inside sellers.
For each of these account personas, sales execution and deployment should be refined to improve outcomes. For example, the “land & expand” accounts should be engaged by business development sellers who are trained and rewarded to secure new business. These sellers often have a more leveraged pay mix and compensation plans that include measures like new contract value. Business development capacity is driven by the number of opportunities they can manage at any given time.
Conversely, “protect & defend” customers should be supported by account management sellers. These sellers focus on relationship management and incremental growth where account planning focuses on reselling and cross-selling. Account managers often have a less leveraged pay mix with compensation linked to total revenue measures. Account manager coverage is driven by matching the operational workload demand of the accounts with the capacity of the sellers.
Ultimately, sales leaders have options when it comes to tiering their customers. Both approaches – linear or 4-box – can focus on and improve sales execution while managing the costs of sales.
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