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SELL THE DIFFERENCE: Establishing your Unique Solution Value

Exclusive McKinsey Interview: Finding the Mountaintops in Your Markets

Posted by Bob Apollo on Thu 19-Jul-2012

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Homayoun Hatami of McKinsey is one of the co-authors of the widely acclaimed “Sales Growth - Five Proven Strategies from the World’s Sales Leaders”. I shared some of the key findings from the book in one of my latest blog articles - and recently enjoyed the opportunity to catch up with Homayoun and learn more about his experience of using micro-segmentation to uncover market hotspots.

Micro-segmentation is one of the key strategies in the book, and something Homayoun and his colleagues explored in more detail in "Selling into Micromarkets" in the July-August 2012 edition of the Harvard Business Review. In my interview with Homayoun, I was particularly interested in learning more about how micro-segmentation can be applied to complex B2B markets with lengthy buying cycles.

I have never been much of a believer in using conventional demographics in isolation to describe and segment markets. It’s increasingly obvious that other factors - structural, behavioural, environmental and situational - are often much more influential when it comes to identifying the prospects that are likely to be most receptive to your offerings.

Selling and marketing to the mountaintops, not the valleys

Marketing to the Mountaintops

It seems to me that markets should not be defined by their boundaries, but by their topology (for example, the specific characteristics of the most attractive sales opportunities). Rather than wasting our energies marketing and selling into the valleys of depressed demand, we should be looking for the mountaintops where our most promising prospects can be found.

As Homayoun explains it, a systematic focus on these intelligently-chosen micro-markets can help to dramatically raise a sales person’s chances of getting in front of the right opportunities, and of converting those well-qualified opportunities into successful sales.

This much more granular approach (which can often involve drilling down to tightly defined zipcodes, neighbourhoods or other non-demographic characteristics) lets sales people look beyond broad segment averages to identify the pockets of real opportunity. This kind of micro-segmentation can help to make sales people much more productive by focusing them on the most attractive opportunities at the account level.

How should companies set about identifying these micro-markets? There are detailed examples in both the book and the article of how companies are using big data to uncover lucrative new hot spots - and the key seems to lie in the intelligent use of analytics to project a picture of future opportunity, and not just historical reality.

Blending analytics with experience

But relying on analytics alone - no matter how powerful your data or your ability to crunch the numbers - isn’t enough. Homayoun observed that the best results come where companies are able to bring together analysts who understand the data with experienced sales people who understand the sales environment.

In fact, the most effective applications of micro-segmentation come about when organisations hide the underlying complexities of the data and instead provide simple sales plays and messages in the form of target market definitions, pricing and messaging guidelines and actions that both marketers and field-based sales people can easily act upon.

You see, it’s not just about identifying the mountaintops of opportunities in your markets: it’s about identifying with the issues, concerns and motivations of the prospects you will find there, and of equipping your sales people to engage and qualify those prospects by delivering messages and having conversations that really matter to them.

Tailoring messages for resonance

In many ways, I regard this as one of the most important lessons of the exercise. The companies that had truly mastered micro-segmentation were able to develop tailored messages that were tuned to the observed characteristics of each micro-cluster of market opportunity.

Rather than delivering the same message to every prospect, the sales people were equipped and enabled to identify these most promising prospects, to qualify them effectively, and to deliver targeted, highly relevant messages that were most likely to make that type of prospect want to learn more.

Of course, the top-performing sales people in any organisation do a lot of this instinctively, and they immediately understand the advantages of this approach. But the real benefits came from equipping their middle-ranking sales colleagues to systematically and thematically do a better job of engaging with more of the right sort of prospects.

First-level managers are key to success

It turns out that first-level sales managers have a critical role to play in supporting these initiatives - but that should come as no surprise to any sales leader who has tried to introduce a new initiative to their sales organisation. Micro-segmentation is not something to be undertaken lightly. Are the results worth it?

Undoubtedly yes. Companies that have successfully mastered this micro-segmentation strategy have been able to drive sales productivity improvements of between 20-40% - sometimes more. But do companies have to have access to realms of big data and a team of analysts who design rockets as a hobby to take advantage?

Rocket scientists optional

My opinion is no. In every company I come across, whatever the size, there’s usually a wealth of unexploited insights, much of it in the heads of the front-line sales people, and patterns that are waiting to be recognised in even the flimsiest CRM systems. Every company has the potential to apply micro-segmentation with enormous profit in their business.

But first, they must stop thinking about segmentation as a set of boxes to dump prospects into and instead look for the mountaintops where their most promising opportunities are waiting to be discovered.

One more thing...

If, as I hope, you're interested in comparing your current sales and marketing strategies with the best practices of some of today's top-performing organisations, you might like to invest 10 minutes in completing our on-line self-assessment. I'd be surprised if the exercise did not help you to identify at least one opportunity for improvement.

Topics: Harvard Business Review, McKinsey, Scalable Systems, Intelligent Targeting