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Targeting – The Most Critical Tool for Growth during Tough Economic Times

Guest post by: Dr. Rick Johnson

Article Overview: Targeting is the process of selecting high potential customer accounts to receive intense sales focus. Goal setting translates that high potential into achievable numeric objectives, i.e. revenue and margin growth. Each Territory Manager should select a predetermined number of Target Growth Accounts (TGAs). Creating focus on this group of selected accounts doesn't mean a Territory Manager should ignore other accounts; he/she is always expected to service their entire territory. When making decisions regarding their time, however, they should always consider these selected Target Growth Accounts a priority.

Targeting – The Most Critical Tool for Growth during Tough Economic Times

Targeting is the process of selecting high potential customer accounts to receive intense sales focus. Goal setting translates that high potential into achievable numeric objectives, i.e. revenue and margin growth. Each Territory Manager should select a predetermined number of Target Growth Accounts (TGAs). Creating focus on this group of selected accounts doesn't mean a Territory Manager should ignore other accounts; he/she is always expected to service their entire territory. When making decisions regarding their time, however, they should always consider these selected Target Growth Accounts a priority.

The primary purpose of targeting and goal setting is to keep Territory Managers focused on the strategic objective of becoming the Supplier of Choice. The TGA program can be used as a flexible guide to successful growth through targeting, goal setting and action planning.

An effective targeting plan will reposition the outside sales force from being primarily transaction driven and self-sufficient to developing customer intimacy and using team-based selling. It's the evolution from being a Lone Wolf to becoming a Lead Wolf; it supports growth in profitability, growth in revenue and growth in market share!

An effective targeting plan becomes a "bottom-up" initiative" opposed to the typical top down forecasting seen in many organizations. The selection of Target Growth Accounts requires careful thought and substantial effort on the part of the territory sales person. Annual sales, margin and goals are established, and detailed action plans must be created for each of these accounts. For most Territory Managers, TGAs will contribute a substantial portion of total territory sales growth. This "big effort for big reward" means that the number of TGAs must be limited, and that sufficient time is allotted to succeed with each one. Most programs limit the total number of target accounts to ten or fifteen max.

An account action plan ensures that the Territory Manager is proactively pursuing sales growth and that there is a solid basis for expecting account goals to be met. By monitoring these action plans, both the Sales Manager and Territory Manager can manage activities rather than wait for results. The intention of planning and goal setting is to provide focus on TGAs. These are the accounts with the most potential for growth.

Managing the Targeting Program

A Sales Manager has many competing priorities. One of the most important is the need to manage the sales functions. The targeting and reporting program and the various activities which are a part of it are intended to help the Sales Manager improve their sales management skills and help each individual territory sales person achieve success.

The ultimate goal of the program is to improve the quality of the targeting, goal setting and action planning efforts of your salespeople. Its primary purpose is to provide focus, process and discipline that will enhance territory performance. This enhancement will lead to an increase in the sales, profitability and market share for each individual territory. The process itself becomes an effective sales management tool.

An initial territory meeting between the Sales Manager and the Territory Manager is the most important step in the targetting process because this is where the company's expectations of sales performance are defined. This meeting creates territory dialog that is essential for effective sales management, support and knowledge transfer. Each Territory Manager should prepare by organizing some key information for each of the target accounts selected.

Understanding the customer's market and business is necessary to develop a plan for growth. You need this intelligence to determine and allocate the necessary resources. You need to understand your customer's business in order to understand how to meet his needs, cure his pain and provide solutions which result in increased sales. Understanding his business involves knowing his markets, customers and competition. This requires serious discussions with numerous people in your customer's location. You should define the key players and your contact points in your customer management system whatever system you use.

Areas to explore include:

• What types of markets are they in?

• Are their markets growing or shrinking?

• What is their market share?

• Are they exploring new markets?

• What types of customers are they after?

• Who are their major customers?

• How do they generate new business?

• What is their large to small customer ratio?

• Who is their competition?

• What price or profit pressures are they experiencing?

This helps you get a better understanding of their business. By understanding their types of customers you will be able to determine the timelines from order to delivery. What is their ordering lead-time? What could be done to shorten the cycle time and perhaps determine what your customer's pain factors are?

Target Account Action Plans

• Each task in the plan includes three critical elements: a "deliverable" or result that the task will produce an owner responsible for the task, and a due date. Defining a clear deliverable ensures that you are not confusing motion with progress. You must be clear about what you are trying to accomplish in each step to be sure that the overall plan will produce the desired result. Deliverables are the difference between passive forecasting and active planning.

Definitive action plans are more than personal account visits once a month. They are more than introductions to upper management and they are more than a commitment to work with management to submit the lowest bid. Action plans must be precise, definitive and measurable. They could include tasks for getting specific customer information, introducing new product lines, entertaining key players, etc.

Do not make the mistake of putting all your energy into your largest accounts. This is especially true when you are getting the majority share of spend from that account. Remember, the targeting process should focus on the greatest potential for growth.

Instead of simply learning to "do what we have always done a little better," we need to become aware of and practice understanding that involves re-examining everything we do - including how we think about our customers and our role in their future.

This often means letting go of our existing knowledge and competencies, recognizing that they prevent us from learning new things.

This is a challenging and sometimes painful, but ultimately rewarding, endeavor.

Accountability --- Track Progress

Progress on target accounts should be tracked and specific discussions between the Territory Manager and the Sales Manager should occur on a regular basis. The Territory and Sales Managers should also discuss and update the action plans where appropriate. A Territory Opportunity Action-planning Discussion (T.O.A.D.) should occur on a regular basis (monthly is recommended) to monitor results and make the appropriate course corrections. Targeting for growth is not a complex process. It is built on best practice sales principles. However, commitment on the part of the Sales Manager and the Territory Manager is essential to success. The WIIFM (What's In It For Me) is simple: MORE MONEY. Effective targeting produces growth in revenue, profits and market share. Such growth increases sales incentive and enhances performance. Improved performance leads to more money for both the Territory Manager and the Sales Manager.

Nothing happens unless you execute. To effectively execute, you need a specific action plan for each target account.The action plan is the plan of attack - the steps that will enable the account to reach its objectives. This plan should develop naturally from the knowledge the Territory Manager gained from his research and customer contact. Of course, the plans for accounts with which you currently do business and have relationship equity may be more extensive than those for newer prospects. This action plan determines how to match your company resources to every opportunity that exists within that account. After the Territory Manager has selected the target accounts and collected critical profile information about them, it's time to quantify objectives. For each target account, the Territory Manager should now define goals for sales revenue, sales gross margin and potential product objectives. The first item to be considered is exactly where you stand as a supplier or potential supplier right now. That involves an exercise that quauntifies the actual potential for each target account. Total available market, less other channel supply that you do not participate in, equals Served Available Market (S.A.M.). This is the true potential revenue that you have the opportunity to go after. Just because the customer buys a total of $XX does not mean his total purchase is realistically available to you. We have now entered the age of multi-channel distribution. The S.A.M. should represent a large potential for increased penetration and growth with a high confidence level for success to warrant the focus necessary to meet your ob.ectives at each target account. You must understand and be capable of performing under this customer's requirements, or their "Rules of Engagement. Objectives should include forecast sales revenue, sales gross margin and sales by product line or vendor monthly/quarterly.

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Article Tags: critical tool, customer accounts, economic times, growth accounts, sales focus, target, territory manager



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