In Part 1, we discussed the functions of a sales organization.
In Part 2, let’s discuss the roles.
However, before reviewing the details, we need to discuss an important business concept: Segmentation. Segmentation is the process of dividing your market, and therefore business, into smaller elements or groups. The division may use multiple factors, including but not limited to:
- Industry
- Revenue
- Headcount
- Geography
- Customer
- Prospect vs Customer
For this blog, the output of the segmentation is called “target markets.” For example, a target market may be “prospective financial institutions, less $1B revenue, located in southern Florida.”
As a business segments, a few things may begin to happen. First, the organization may begin to specialize in that target market, meaning they develop high competency in the objectives and needs of that specific target market. Second, the needs and objectives of the target market may require changes in the products and/or services (offerings). The result is increasing demand to develop the offerings to support the various target markets. This can be highly challenging to say the least. Conversely, this may drive the business to exit certain target markets due to having strong prospects in adjacent or other target market segments, i.e., the opportunity cost of acquisition and retention is so high it constrains a business from being competitive in more prosperous market segments.
If you find this interesting, Read Porter’s Competitive Strategies
This is why understanding segmentation is so important to understanding the functions required to achieve sales. Using our example above of “prospective financial institutions, less $1B revenue, located in southern Florida.” Prospective is synonymous with new, meaning the function of customer acquisition would be required versus expansion and retention. If I changed “prospective” to “customers who are” this would require more expansion and retention. In short, the degree to which you segment your business may require different functional investments.
With that said, there are common archetypes that help describe the dominant function of a sales role. The archetypes are as follows:
- Scout
- Hunter
- Farmer
- Sentry
Scouts’ dominant function is acquisition. They are responsible for identifying prospects or “net new” opportunities. They are closely aligned to marketing activities and typically the first “live” contact in the sales process. Their key task is initial qualification – the timeless Budget, Need, Authority, Timeline (BANT). The question to be answered: “is this worth being hunted?”
Hunters’ dominant function is also acquisition. However, they are responsible for managing and closing the opportunity. The reason why Scouts and Hunters both sit in the acquisition function is due to the nature of the sales process as a function of economics. Marketing’s objective is to create a highly qualified lead flow through awareness and attraction activities that convert the moment the sales function enters the funnel. This is often with limited person to person interaction. Instead marketing uses content such as blogs, product demonstrations, videos, social media, etc to create demand. That content can be proliferated across many if not all prospects, i.e., great marketers can have a significant impact with limited resources.
Conversely, in the majority of cases, a sales resource can only qualify one customer at a time due to the personal nature of the engagement. This process is sometimes referred to as the Marketing Qualified Lead to Sales Qualified Lead conversion. Many sales professionals would argue that qualification is the single most important element of the sales process, because the opportunity cost of time spent on improperly qualified opportunities can not be recovered – time is the ONLY unrenewable resource!
Farmers’ dominant function is expansion. They are responsible for upselling and cross-selling the company’s products and services. Referring to the aforementioned target market specialization, the company must be able to meet the demands of the particular market segment to continue monetization. This requires collaboration and coordination across many organizational functions, including sales, product management, and engineering. More importantly, this may require the company to conduct tradeoffs, meaning allocating resources from one target market to another.
Sentries’ dominant function is retention. They are responsible for ensuring customer satisfaction and reducing churn. Referencing Cost of Customer Acquisition (CAC), in a majority of cases, retention and expansion is much more cost effective than acquisition, therefore keeping customers happy and loyal is paramount to ensuring a healthy business. When the retention function experiences significant churn, it places immense pressure on the acquisition function to “make up the difference.”
Understanding the concept of segmentation is critical in your development as a professional. Additionally, if you have a strong desire to pursue sales or general management opportunities you may be forced to ask yourself some very tough questions on how to grow or maximize your profitability.
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