In my earlier life, I had seven sales positions during the time from age 18 to 34. The last was selling for a hospital supplies distributor. I was given a territory that had about $10,000 in existing business, and 77 accounts. Every year for the next five years, my manager took accounts away from me. And every year my sales grew exponentially. In a world where a one-million-dollar territory was the gold standard, I had a million dollar a year increase. When I moved on after five years, I was down to 17 accounts and was generating $5 Million in annual sales. Those 17 accounts were large, strategically important, high potential accounts.
That was my first encounter with the truth that I later formulated into this rule: In B2B sales, you always do better narrowing your focus than expanding it.
Early on in my consulting career I had a client with a thriving business who manufactured automobile parts. His secret was narrowing the niche for his marketing efforts. He decided to specialize in body parts for one brand of car – say Mercedes Benz. To narrow it further, he narrowed it down to two models. And, to narrow it further, he selected a ten-year time frame. So, he sold body parts for two Mercedes Benz models manufactured from 1950 to 1960. He owned that market. When he produced a part, he would mark it up in multiples, not percentages.
That, and multiple other engagements over the past 30 years have brought me to the belief that, for a B2B salesperson, you are always better off focusing on fewer, higher-potential accounts. And, for a business owner, you are always better off narrowing your market rather than expanding it.
Here’s why. B2B Salesperson
For a B2B salesperson, one of the paths to exceptional performance is to be guided by the rule that you should invest your sales time where it will get the highest return on time invested. Think of a unit of sales time (the time you spend in a two -way conversation with a prospect or customer). You could spend that one hour on a customer that could generate $1,000 in revenue, or you could spend that same time on a customer who could generate $100,000 in revenue. Sales time is always better invested where there is the potential for the greatest return.
It’s far easier to leverage a successful purchasing experience for the customer to another opportunity. Instead of driving five miles to the next opportunity, I can walk down the hall. And it’s far easier for my good contact to recommend me to the next key person in another department, than it is for a smaller customer to recommend me to his competitor across town. Leverage was one of the key reasons why I was able to penetrate those 17 key accounts so fully.
Larger accounts are more sophisticated and generally require less ‘service’ time for the salesperson than smaller accounts who may be needy and constantly in need of extra time and attention from the salesperson. In addition, they generally make decisions on a more objective-based set of criteria, whereas smaller accounts are more likely to react emotionally. For a thoughtful salesperson, the sale is more attainable.
In our Selling System, for example, we teach a system for ranking and prioritizing accounts based on their realistic potential. Those who implement that system often report sales increases in the multiples. One client reported “a 73% increase in key account sales,” and another a ‘five-fold increase” for example.
For the business owner or chief sales officer
Focusing on a narrower niche allows you to specialize.in the internal operations of your business. It’s one thing to prepare an operational system that will accommodate any kind of customer but it’s much simpler and more effective to accommodate only one type of customer.
Leverage, like with B2B salespeople, is a major factor. By narrowing your market segment, it’s easier to leverage your marketing efforts. It’s easier to find the magazines your prospects read, the websites they visit, the conferences they go to, etc. Your use of testimonials is likely to be more valuable to someone in the same business. Your marketing dollars can be spent more precisely and bring multiple results. One of my clients, for example, instead of selling to everyone within a geographical territory, decided to narrow his marketing focus to three smaller niches. He was able to dedicate a salesperson to each of those niches specializing in that type of business. He created three catalogs and supporting web pages, one for each niche. His customers saw him as a specialist in their type of business, and therefore more credible and accessible than the everything-to-everyone competitors.
Some caveats
Nothing is quite as simple as it sounds, and this rule is no exception. There are some caveats.
For example, it works better if your product is not a one-and-done sale, so that there is always the opportunity for additional purchases within the account.
For the B2B salesperson, the rule applies if you have too many accounts to effectively penetrate them all. If you find yourself routinely at 2 PM being finished for the day with nothing more to do, then disregard saying “no” to small, low volume accounts. You need all the activities you can generate. Save your prioritizing on the bases of potential until you have more to do than you can do.
There is a downside. Larger accounts are more sophisticated and require a higher degree of organization on the part of the salesperson. While sales skills are effective in any size account, organization and preparation become more important.
And this is probably the largest obstacle: Salespeople are often comfortable with the status quo and unwilling to break out of their comfort zones. It’s easy to call on his/her friends, regardless of the size or potential, and those are often in smaller accounts. Breaking that habit is difficult. Penetrating a high-potential account is often a long-term strategy, while smaller accounts can generally make decisions much quicker.
All that being said, applying this rule to an existing sales territory or business can often multiply sales, be more fulfilling, and generate record profits. That’s why it is one of the top 25 lessons I’ve learned.
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