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Brandon Mills
Manager,
ZS Associates
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Jason Bell
Associate Principal,
ZS Associates
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John DeSarbo
Principal,
ZS Associates
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Kyle Heller
Associate Principal,
ZS Associates

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How High-Tech Leaders Can Capture the Untapped 'Big Middle'

Posted by John DeSarbo on Fri, Nov 10, 2017

shutterstock_111059693-1.jpgThis post is the first in a four-part series on how high-tech companies can improve coverage of the “big middle” market segment.

While many high-tech companies are busy chasing large enterprise and SMB customers, one segment of the market—companies with $100 million to $1 billion in annual sales, referred to as the “big middle”—often gets lost in the shuffle. According to ZS analysis, there are about 30,000 such companies in the U.S., spending more than $150 billion each year on technology and making up about 21% of total IT spending. Unfortunately, many high-tech companies struggle to sell to and serve this attractive market segment.

Our recent survey of 86 sales and marketing executives at U.S.-based high-tech companies found that when it comes to the go-to-market strategy for the big middle, there’s definitely room for improvement. Only 28% of the executives surveyed described their companies as “leaders” that have very high proficiency in big middle go-to-market planning. Thirty-five percent of surveyed executives believe their companies are “laggards” that have significant go-to-market planning challenges for this market segment.

The recent ZS research yielded insights that can help sales and marketing executives address these challenges and capitalize on the big middle opportunity. Here are the key findings from the recent ZS survey, and how high-tech companies can improve coverage of the big middle segment:

  1. IT spending in the big middle is highly concentrated. Of the total big middle IT spending in the U.S., 72% comes from just five industries, and 50% of IT spending in the big middle comes from companies based in just eight states. High-tech companies that are able to zero in on the high potential customers and prospects in this segment can allocate their sales and marketing resources to optimize coverage. Companies that don't segment the big middle across both industries and geographies often take a suboptimal “peanut butter spread” approach to resource allocation that leads to coverage gaps in some areas and unnecessarily high cost of sales in others.

  2. Utilize channel partners to create and fulfill big middle opportunities. More than 75% of high-tech companies surveyed utilize a hybrid sales strategy including a mix of direct and indirect sales channels to cover the big middle. However, many companies that have adopted hybrid sales strategies often haven’t clearly defined vendor and partner roles. Even if roles are defined clearly, in some cases big middle channel strategy is out of sync with customer channel preferences. Partners are utilized solely to fulfill orders that are generated by the vendor, even when customers would prefer to primarily engage the partner. As a result, vendors rely too heavily on costly direct channels, often a field-based direct sales force that is spread too thin and cannot cover the big middle effectively. Understanding how and where to utilize channel resources effectively to reduce overdependence on costly field sales resources and better align to customer preferences is crucial.

  3. Don’t rely on the sales team for data and analytics. Industry leaders leverage the marketing department for sales enablement, lead generation and qualification, and data management and analytics, to a much greater extent in the big middle. Sales teams that struggle to cover the big middle effectively are often hindered by “role pollution.” A sales reps is asked to be a “jack of all trades” and spend an inordinate amount of time mining datasets to find new opportunities, sifting through unqualified leads and developing material they need to engage new prospects instead of focusing on the work that they’re good at: acquiring customers and closing sales. 

  4. There’s no “one size fits all” approach. Big middle customers’ buying behavior and channel preferences often vary significantly based on their level of IT expertise and the complexity of the transaction. More complex purchases require a greater level of demonstrated expertise, which are better served by field sales reps, while low-complexity purchases can be more easily handled by channel partners, inside sales or e-commerce channels. Understanding how your target customers learn about, shop for, purchase and consume technology is critical when defining your big middle go-to-market strategy.


By following these guidelines, high-tech companies can better sell to and serve the big middle and capitalize on the enormous potential of this large and growing market segment.

For the full findings and analysis, check out “High-Tech’s Missed Opportunity: Tapping Into the Big Middle,” and stay tuned for the next post in our series, where we’ll discuss how adjustments to the field sales role could better position companies to reach the big middle.


RELATED CONTENT 

WHITE PAPER: High-Tech's Missed Opportunity: Tapping Into the Big Middle

BLOG POST: Breaking the 'Channel Laziness' Cycle


 

Topics: channel partners, channel sales, Sales data, High Tech, big middle

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AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
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