Not all accounts are equal. Some accounts and prospects represent greater sales opportunity, and once onboarded, are more likely to stick around as valuable customers. How do B2B sales organizations identify those diamonds in the rough that are more likely to purchase products and services? What are the characteristics of accounts that are more likely to become winning deals and long-time customers?
Segmentation of your Total Addressable Market (TAM) is an important step to prioritize and target your most desirable prospect accounts. In your go-to-market (GTM) strategy, you’ll need to first define your Ideal Customer Profile (ICP) to quantify TAM. A good start is to look at your largest and most satisfied customers. What makes them happy, profitable customers? Are they in a specific industry? Are they a certain size? Are their sales growing? Segmenting your accounts allows you to focus your sales resources, sales processes, and value proposition on the most attractive parts of the market with the best fit for the client.
There are different approaches to segmentation and different account characteristics that can be used. For example, firmographics (e.g., location, account size), customer account intent (e.g., customer brand awareness, customer website visits), and psychographics (e.g., customer values, attitudes) are all characteristics that can drive account segmentation.
Recently, SalesGlobe completed a full GTM assessment for a private equity-backed SaaS company with a mature product line who wanted to dramatically grow revenue. In analyzing their most successful clients, we identified characteristics that demonstrated value and potential. These characteristics were based on the client’s ICP. Other factors might be more appropriate to your organization depending on your unique situation.
An account’s value was demonstrated by the following attributes:
Based on analysis of an existing accounts performance, it was possible to assign scores. For instance, Pareto analysis determined that ~10% of accounts represented ~95% of the previous two years of bookings and over half of lifetime revenue.
To determine an account’s potential, we worked with the client to evaluate the following characteristics:
Obviously, open pipeline and subscription renewals are a strong indicator of an account’s potential. In the case of our client, those same ~10% of accounts represented ~90% of active pipeline / renewals.
Eventually, SalesGlobe needed to find a way to quantify the attributes in a manner that would allow us to compare accounts “apples to apples.” Working with the client, we weighted each attribute relative to its importance to identify valuable and high-potential accounts. For instance, recent two-year bookings were significantly more indicative of account value than lifetime revenue was. Open qualified pipeline and upcoming renewals were, not surprisingly, the most indicative of potential.
By analyzing each attribute’s performance, we were able to bifurcate the accounts into four groups. Each quarter received a score relative to performance. For instance, accounts with no open pipeline would receive a score of 0. Accounts with between $0 and $25,000 would receive a score of 2. Pipeline between $25,000 and $250,000 would receive a score of 5. Finally, accounts with greater than $250,000 open pipeline would receive a score of 8. See how scoring might be applied below.
Adding the scores of all attributes allows us to compare accounts on a relative basis. The parameter weights for Current Value and Potential Value should add up to 100%, respectively.
Once your accounts are scored according to their segmentation characteristics, you can compare them relative to one another. Existing accounts are plotted based on their respective current and potential value scores. Visually, you can plot them in quadrants that drives how you might approach them from a GTM perspective. We often recommend assigning accounts in the “Grow” and “Penetrate” quadrants to account executives to drive revenue.
For prospects, we used streamlined segmentation parameters based on the attributes that were available to our client and were predictive of future account success. Since we didn’t have information related to account value, we needed to quantify account potential. You may find in your implementation that identifying third party data sources might be beneficial to better understand your prospect accounts. In this instance, we used D&B data to derive the prospect’s industry and number of employees because those firmographic characteristics were predictive of existing strong customers.
See below for a brief description how the segmentation methodology can be applied. SalesGlobe often recommends assigning out high potential prospects to inside or potentially field sales while low potential might be situationally included in marketing campaigns. Your GTM strategy, sales coverage and capacity will inform how to approach.
Segmentation isn’t a one-time exercise. You will need to feed your segmentation machine to prevent the information from becoming dated and stale. SalesGlobe typically recommends refreshing the data at least quarterly.
In summary, understanding the characteristics of your most attractive accounts and prospects should be a fundamental aspect of your GTM strategy. Understanding the characteristics that make great and profitable customers has downstream impacts to how you market, sell, and support them. Think of your segmentation approach as being the difference between indiscriminately firing arrows in a general direction versus truly aiming a single arrow towards your bull’s eye.
SalesGlobe is a leading sales effectiveness and data-driven creative problem-solving firm. We specialize in helping Global 1000 companies solve their toughest growth challenges and helping them think in new ways to develop more effective solutions in the areas of sales strategy, sales organization, sales process, sales compensation, and quotas. We wrote the books on sales innovation with The Innovative Sale, What Your CEO Needs to Know About Sales Compensation, and Quotas! Design Thinking to Solve Your Biggest Sales Challenge.
Consulting with SalesGlobe.
Seasoned technology executive who works with clients to drive operational improvements, develop overall business strategy.