Positioning II

...their biggest weakness is their "inadequate, outdated technology" (even though there is zero correlation between technology infrastructure and profitability).

Many companies run through the usual evaluation of their strengths, weaknesses, opportunities and threats (SWOT) based solely on the opinions of the employees attending the meeting.  They convince themselves that their biggest strength is their "great people" (even if they have performed below industry medians for years) and their biggest weakness is their "inadequate, outdated technology" (even though there is zero correlation between technology infrastructure and profitability).

Bottom line: a strength is only a strength if it provides value to a target customer.  If your customers are manufacturers who are really buying flawless logistics to support 100% up time  your technical expertise is not a strength--even if every single sales rep in your company holds a PhD in engineering.

ACTION POINT: Know and understand what strengths your customers want.

Positioning

The greatest deficiency in most wholesaler-distributor's strategy and business planning is their internal focus.

Every company (except a start up) holds a current position in the market.  This position is based entirely on your customer's perception of you and your competitors.  Aside form the foundation laid by segmentation and targeting, the key to successful positioning is in viewing your capabilities through the lens of your target customers' perspective.

The greatest deficiency in most wholesaler-distributors' strategy and business planning is their internal focus.  They simply fail to examine every issue in light of "how much does this really matter to our target customers?"

ACTION POINT: How much does what you are doing really matter to your target customers?

Benefits of Targeting

Think of every sales call as an investment.  targeting helps ensure that this investment is made thoughtfully, 

Segmentation and targeting always produce critically important insight that often leads to a company making fundamentally different decisions about its sales management practices and compensations structures.  Experience has shown targeting will yield one of the following levels of outcome:

• Minimum. Targeting provides the strategic clarity necessary for tactical sales compensation, management, and territory assignment.   Think of every sales call as an investment.  targeting helps ensure that this investment is made thoughtfully, based on the company's objectives, rather than reactively or based on individual rep's habits.

• Typical. The process produces a strategic reallocation of resources to take advantage of competitive strengths and profit opportunities.  In some mature lines of trade, wholesaler-distributors have made giant leaps in sales productivity by moving from a 2:1 ratio of outside to inside reps to 1:1, 1:2 or even more.

• Ideal. Targeting enables you to identify a market segment in which you have an opportunity to create a truly differentiated value proposition that competitors cannot match.  One national distributor had an epiphany when targeting revealed that its scale provided an opportunity for dominance in a segment that it was not currently even serving. 

ACTION POINTS: Use segmentation and targeting to improve your sales and business focus.

Management Minute: Credit and Risk

After thinking for a moment, the woman drops her towel and stands naked in front of Bob.

A man is getting into the shower just as his wife is finishing up her shower, when the doorbell rings. The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next-door neighbor.

Before she says a word, Bob says, "I'll give you $800 to drop that towel."

After thinking for a moment, the woman drops her towel and stands naked in front of Bob.

After a few seconds, Bob hands her $800 and leaves.

The woman wraps back up in the towel and goes back upstairs. When she gets to the bathroom, her husband asks, "Who was that?" "It was Bob the next door neighbor," she replies.

"Great!" the husband says, "did he say anything about the $800 he owes me?"

ACTION POINT:  If you share critical information pertaining to credit and risk with your shareholders in time, you may be in a position to prevent avoidable exposure.

Targeting V

...you are making hard decisions about where your efforts and investments will be focused.

Determining the relative attractiveness of a segment is the first part of targeting.  The second part is deciding what your company's basic posture will be for each segment.  This is where the tough trade-offs come into play.

Although you are note yet determining exactly how  you will attack each segment, you are making hard decisions about where your efforts and investments will be focused.

ACTION POINT: The most important outcome of targeting is agreement on the areas of the business that will not receive further investment.