Discovering your true message gap

Facilitating customer migration is now a core focus, and the company has achieved record revenue growth over the past two years.

More than 10 years ago, an industrial distributor recognized that highly centralized customers had fundamentally different needs than those that were more locally run, and created a separate "major accounts" division to handle them.  Although the group was successful, its account base had stagnated. Worse, revenue through the traditional sales channel had been shriveling for several years.

During this time, the company tried a series of tweaks to its sales compensation plan, adding promotions and bonuses for key products, increasing the commission rate on new business, and penalizing sales reps for customer churn.   Ultimately, the CEO determined that the compensation plan needed to be radically overhauled.  A team was appointed to design a new structure that would address the issue.

Fortunately, the team was sufficiently empowered to question some fundamental assumptions.  Using a positioning exercise, they determined that the two existing sales channels were in fact appropriate for the market.  The gap they discovered was that customers were unable to migrate freely between the different sales organizations as their needs changed. --and that they were largely ignorant of the twin capabilities the distributor offered. 

For example, the distributor's large corporate customers had often gone through several waves of consolidation (remember the procurement outsourcing and online marketplace fads of the early 2000's) and decentralized (think of hollowing out corporate overhead in 2009).  This clearly caused their support needs to change.  Due to the separation of the sales forces and territory based measurement, however, reps would never give up accounts to the other side.  As a result, customers that were centralizing abandoned the distributor because the viewed it as a local "mom and pop" with limited scale and sophistication.  Customers that were decentralizing had no local contacts or support.  There was a clear message gap in that customers were not aware of the company's full capabilities. 

In the end, the distributor changed its organizational structure and eliminated all"ornaments" from its sales compensation plan, replacing them with a simple formula plus a residual for all transferred business.  Facilitating customer migration is now a core focus, and the company has achieved record revenue growth over the past two years.

ACTION POINT: Sometimes a critical evaluation of your external positioning can lead to a true breakthrough, especially if you take a rigorously external approach and question your own assumptions.