It does not need to be sophisticated or complex, but it does need to be clear before you begin the process of designing your sales compensation plans.
An external market perspective (that is, seeing through the customers' eyes) is the essence of a successful strategy. The process for developing this perspective into an actionable plan is abbreviated as STP: segmentation, targeting, positioning.
Segmentation is the act of grouping similar customers into categories based on what they want to buy, which is often quite different from what you are currently trying to sell them. Good segmentation involves analyzing the economic and organizational drivers of buying behavior, which are typically not proved by your sales force. The insight uncovered by segmentation is often eye-opening.
Targeting is the process of identifying the most attractive segments based on their cost to grow and potential to grow. It can be uncomfortable because it involves going beyond our everyday "manager as cheerleader" mentality and making strategic trade-offs. Targeting drives discretionary investment and focus; it does not mean turning down business or ignoring markets.
Positioning is the identification of market gaps; Those areas where there is a divergence between what a target customer wants or values and what your are currently offering. By closing the most critical gaps, you will ensure that your limited resources are aimed at the biggest opportunities. Positioning is the essence of ensuring that your sales force is working smart, not just hard.
ACTION POINT: Establish the financial goals you wish to achieve and develop an actionable plan using segmentation, targeting and positioning to achieve them.
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