This post is the second in a four-part series on how high-tech companies can improve coverage of the “big middle” market segment.
In a recent Harvard Business Review article, ZS co-founders Andy Zoltners and PK Sinha discussed the importance of improving sales force allocation. “Salespeople can work smarter, not harder, by dividing their time more appropriately among customers and sales activities. Sales effort allocation has a large impact on sales and profits,” they wrote. Sales reps often waste money by investing time in the wrong activities and by focusing on the wrong accounts. Focusing on accounts with the most potential is critical. Making sure that your sales force is spending time on the right things will help high-tech companies improve performance by better targeting the valuable yet elusive mid-market segment: companies with $100 million to $1 billion in annual sales, known as the “big middle.”
When it comes to sales force allocation, high-cost field salespeople often spend too much time on prospecting and trying to qualify leads, as opposed to advancing leads that have already been well qualified by marketing or inside sales. Field salespeople also sometimes get caught up in service-oriented issues and dealing with customer challenges, which again are better suited to other roles in your organization. In short, salespeople often fall into the trap of “role pollution,” activities that are not core to their roles, increasing the cost of sales and reducing your reach into this very large and challenging mid-market segment.
The big middle is a massive market, spending more than $150 billion each year on technology and making up about 21% of total IT spending, according to ZS’s recent research. Therefore, sub-segmenting it and deciding where you’re going to use direct sales versus leveraging indirect channels is an important best practice.
Unfortunately, many high-tech companies haven't clearly defined the roles that they intend channel partners to play in a hybrid coverage strategy. For sales teams and the channel partners, it’s not clear who should lead activities across the sales process. In this uncertainty, sales reps have a tendency to take on too much responsibility and become a “crutch” for channel partners. Channel partners are sometimes accused of not doing enough to drive growth. You need to ask yourself, What are your expectations of channel partners? What parts of the sales process should they drive? What are the right rules of engagement? How can you better enable partners to truly take the lead so that you're able to expand coverage rather than duplicate efforts? (Part four in this blog series will offer channel partner best practices.)
Another common challenge is underutilization of inside sales to address the mid-market segment. Inside sales can play an important role in broadening coverage in the big middle, from qualifying leads and advancing through early stages of the sales process to owning certain sub-segments of customers from qualification all of the way through closing and ongoing relationship management. The more leverage that high-tech companies can get from this efficient sales channel, the more likely they are to drive profitable growth in the big middle.
It's critical to find the right balance between field sales, inside sales and marketing resources, clarify sales and channel partner roles, and make sure that your sales team is engaged in the right activities across the sales process. Getting this alignment of sales resources right will result in more effective and efficient coverage of the big middle, helping you tap into this often underpenetrated market segment, and ultimately drive higher sales and profits.
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 high-tech firms can more efficiently use their inside sales teams.