The starting point for market segmentation is the information necessary to determine the potential of each client in the market place to be covered. To determine that in the equipment world we have to obtain a complete and accurate working machine population. This is the usual starting point for any good marketing information in the equipment world. To expand on that we truly have to state that if you don’t have an accurate and complete working machine population you really don’t know your business.
The machine population information required is the make, model, serial number, configuration, year built, annual hours of work, and current hour meter reading. From this information we can make a determination of the market potential for parts and service.
The machine population is normally split up into four categories.
- Small 1 – 3 machines
- Medium 4 – 12 machines
- Large 13 – 24 machines
- Fleet 25 + machines
In many cases these categories codes can be split into the same identifiers based on the total machines for all brands owned by the customer as well as the number of machines of the dealer supported brands – this might become an important distinction in some dealerships.
The next levels to consider in market coverage are the relationships that exist between the dealership and the customer. This we can determine by the level of purchases that the customer makes at the dealership for parts and service.
These purchase levels are the old fashioned A, B, C, and D.
- A the top 10% of purchases
- B the next 15% of purchases
- C the next 25% of purchases
- D the bottom 50% of purchases
These levels are obtained by providing a descending purchases report for parts and another for service. From these reports you can apply the A, B, C, D categorization to each customer – one for the parts purchases and the other for service purchases. This is the beginning of marketing. This is the starting point for market coverage. Are you ready? The time is now.
Words of Wisdom #3
Sleeism # 3
Always assume the other person is twice as smart as you are and work twice as hard to prove they aren’t.
This is another from Tony Doxsey and it has help up rather well over the years. It is expressed another way that might help make it more clear to you. “In the long run, the race belongs not merely to the swift, but to the farseeing, to those who anticipate change” – Lykes Lines. This gives me great hope. It means you don’t have to be good looking, to be muscular, to be athletic, to be intellectual, or in any other manner extraordinary. You just have to be curious.
That combination of curiosity and the ability to work hard will get you a long, long way in life.
The time is now.
Instore Selling Representatives
So we have identified the Medium Potential Customers. We know who they are and where they are and what they buy and what they own. Now we can assign them for market coverage. That means we have to select the number of customers that is appropriate for one person to handle. But first we have to deal with the fact that this will not be a Product Support Field Representative rather it will be an Instore Sales Representative. Who is that?
This is all those men and women in your parts department and service department who deal with customers today. This is the service clerks, the counter personnel, the telephone sales support personnel, and the parts office and warehouse personnel. Almost anyone who wants to be involved and who has a “sales” personality would work.
I will assign one hundred customers to each Instore Sales Representative. I will expect that there will be five personnel touches each work day by each Instore Sales representative. If this is different there is no time like the present to get going. Are you ready? The time is now.
Huggers or Hunters – that is the question
So we have identified the High Potential Customers. We know who they are and where they are and what they buy and what they own. Now we can assign them for market coverage. That means we have to select the number of customers that is appropriate for one person to handle from a geographical and number of machines perspective. This becomes somewhat of an art form rather than pure science. I don’t like to have more than one hundred and fifty customers in one territory and depending on the split of machine types no more than 450 machines.
You have 3000 High Potential Customers which would provide for 20 territories. What kind of sales people are required for these customers? Well now it comes down to what they buy and what they don’t buy. If you have a high market share of the customer’s business then you want someone to protect your business – a hugger. If you have a low market share then you want someone to grow your business – a hunter. With either individual you need to go about setting objectives for all the commodities and services you provide. You have to get a better understanding of the competitive landscape. What does your customer/competitor neighborhood look like?
We are at the beginning of being able to take advantage of Product Support Selling now. For those of you who already employ Product Support Sales Representatives – does you market coverage look like this? If this is different there is no time like the present to get going. Are you ready? The time is now.
Making Segments that Work
Alright, you have run the reports, established the different levels of purchases, obtained accurate machine populations for the customers and have put this market segmentation code into the name and address record on your computer. Well now you have 64 market segments. I submit to you that this is too many segments to determine a strategy for each segment and have everyone understand. What next.
How about we take all of the Fleet (F) and Large (L) machine population segments that are also either A or B in either of Parts and Service purchases and make them one marketing segment? And let’s take the Medium (M) machine population and all of the C purchases for either of the Parts and Service and make them another marketing segment. Then we will have three segments. What I will call High Potential, Medium Potential and Low Potential.
The High Potential segment customers are the ones that should have a product support sales representatives call of them. The Medium Potential segment customers should be “touched” but perhaps you don’t have the budget to assign a product support representative. What are you to do? Assign and Instore Sales Representative and touch them on the telephone.
Did you know that in America Corporations fail at implementing their strategy 90% of the time? Typically that is because their employees don’t understand the strategy. In order to be able to lead people to conduct themselves in a manner that will allow successful implementation of strategy they have to first of all understand the strategy. Second they have to accept that the strategy is a good one. Finally then they can commit to making it happen.
We are at the portal of our market coverage strategy. Are you ready? The time is now.
The Beginning of Marketing
The starting point for market segmentation is the information necessary to determine the potential of each client in the market place to be covered. To determine that in the equipment world we have to obtain a complete and accurate working machine population. This is the usual starting point for any good marketing information in the equipment world. To expand on that we truly have to state that if you don’t have an accurate and complete working machine population you really don’t know your business.
The machine population information required is the make, model, serial number, configuration, year built, annual hours of work, and current hour meter reading. From this information we can make a determination of the market potential for parts and service.
The machine population is normally split up into four categories.
In many cases these categories codes can be split into the same identifiers based on the total machines for all brands owned by the customer as well as the number of machines of the dealer supported brands – this might become an important distinction in some dealerships.
The next levels to consider in market coverage are the relationships that exist between the dealership and the customer. This we can determine by the level of purchases that the customer makes at the dealership for parts and service.
These purchase levels are the old fashioned A, B, C, and D.
These levels are obtained by providing a descending purchases report for parts and another for service. From these reports you can apply the A, B, C, D categorization to each customer – one for the parts purchases and the other for service purchases. This is the beginning of marketing. This is the starting point for market coverage. Are you ready? The time is now.
Market Coverage
Being all things to all people has long been impossible. Yet many dealers continue to operate without a strategy for market coverage and as a result continue to do what they have always done. Treat everyone the same, until that special customer has a problem.
To make matters worse for our customers – somewhere in the 1980’s resulting from the huge run up in interest rates, enacted by the Paul Volcker Federal Reserve, dealers made the decision that they didn’t have enough money to provide face to face market coverage. So they cut back on the number of salesmen in the field.
The intent was to reduce sales costs, read market coverage costs, but it meant something else. It meant that the decisions made on market coverage were made by a salesman not by the company. The salesmen were confronted with a time limit – they could only work so many hours. This left them with the decision of who to visit and who to ignore. I remember an old story about a dealership hiring a salesman. He visited with the Sales Manager on first day on the job and was given a customer list, the keys to a vehicle and the boss pointed at the door saying – “here is a list of your customers, your vehicle is parked outside the door, there is the door – see you.” I am sure this is fictitious aren’t you?
The trouble is we have not done a very good job of determining a market coverage strategy. It is all about market segmentation. You need to determine which of your customers you want to have a salesman touch in the field and unfortunately, due to costs, you have to decide who you don’t want to have assigned to a salesman. This can only be done with a proper and complete market segmentation plan – more on that in a future blog. The time is now.
A Personal Note
It is Saturday and one of my favorite events is what I call a “Man Date.” This is when my grandson and I go and have our haircuts. It started when my daughter began to have trouble getting him to sit still for his haircut. So off we went for his first trip to the barbershop.
My barber is a terrific man, his name is Joe. He has run the typical old barbershop for many years. He is also a musician and entertains across the valley. He also leads the Scouts. He does a lot of things as well as providing a pretty mean haircut.
So there we are and my grandson is about four or so and he is going to have his first Barbershop haircut. He is not happy to hear the clippers or to see his mother and grandparents taking pictures of him crying. Joe you see has a grip on his head like it is bowling ball without the three holes. That is where it started. So for a number of years the two of us have gone off on a regular basis to have our “man date” at Joe’s.
This morning was our date and now it is a rather enjoyable time. The little guy sits in the chair – no booster required anymore – and has a chat with Joe. It is a fun and amusing watching the two of them talking about all kinds of weird and wonderful things. He has learned how to use the gels now – his grandfather (me) hasn’t got enough hair to use a gel and I am convinced that is Joe rubbing it in by teaching the little guy how to apply it and clean up afterwards. But it is a great haircut and I had one at the same time. So there we are – two “men” sharing time on a date getting our hair cut. You have to love it. The time is now.
The 2nd Weekend of March
Well here we are – the second weekend in March – spring forward time. The clocks go forward one hour Saturday night – just what we all need – one less hour of sleep. Oh well.
The week was a good one. The only exception was a trip in which the winds of spring interrupted a nice schedule. The airline industry is becoming like the bus industry. I still remember my first business flight. It was on a DC9 which American Airlines continues to use as the MD80. I sat in the bar in Montreal watching take offs and landings where it looked like the tail of the airplane was going to bottom out on the runway. That was quite a trip through O’Hare. Customs for the first time and was I ever green.
Well there is a lot to do over the weekend and plenty of work to get done too. I hope you enjoy. Share quality time with family and friends.
The time is now.
Friday Filosophy #2
Great souls have wills; feeble ones have only wishes – Chinese Proverb
You can do anything if you have enthusiasm. Enthusiasm is the yeast that makes your hopes rise to the stars – Henry Ford
All dreams come true if we have the courage to pursue them
Words of Wisdom #2
I started working – an actual on a daily basis job when I was fifteen years old. Yes I did a bunch of stuff before that but I don’t count it. Sometime in those early years I took on this Sleeism #2. It has been heard by anyone who has ever worked with me or suffered a discussion with me or in one manner or another spent time with me – which leads to me two short stories. Remember me? I tell stories as a means of ensuring that people understand my strange mannerisms in communications.
Story #1: It is 1983 and my family and I have moved to Denver, CO. I was working for a computer software company, EBS. The VP of Sales was a gentleman named Bill McManes. He was one of the best sales people I have ever seen from a selling technique perspective. He was awesome in action. Well my family was invited to join Bill and his family for Thanksgiving Dinner. It was a wonderful gesture. We were new in town and we didn’t know that many people so it was appreciated. We sat down for the dinner and Caroline my daughter was sitting to Bill’s left and Marlene, my wife, and I were down at the other end of the table. Bill looks to Caroline and asks innocently “Caroline have you heard about your father’s three strikes rule?” Caroline is an extremely wonderful person and she has a rather scary attribute – she is extremely intelligent. I know that is a father talking but I promise if anything I understate it. Well without missing a beat Caroline, who was somewhere around 8 years old at the time, said “Yes Bill I have one strike how many do you have?” Bill in amazement looked down the table and said “You do this to your kid???”
Story #2: It is about 2009 and my daughter Caroline is going through her student teaching assignments. She was in a rather rough school in an underprivileged area. Well Caroline is a small woman somewhere around 100 pounds soaking wet and about 5”3. She also is a runner so she is incredibly fit. She calls me after school one day and relates the following story.
One of the students was causing trouble. This was a grade 5 class and the students are always trying to be the center of attention. After politely attempting to get control of the room there was this one young man who continued on being a disturber. He wouldn’t stop. So what did my daughter do? She asked him to stand up and while he was standing, being watched by everyone in the room, she walked slowly up to him and get very close. She held up one finger and said to this astonished your person in the appropriate tone “That Is One” – she turned didn’t say anything else and walked away. When she turned around to face the class she told him that he could now sit down. He never caused trouble again. She said to me on the phone “Dad does that ever work.” And I asked her why she thought it worked. She said – and I love it – he didn’t know what #2 was going to be.
So there are two stories to explain Sleeism #2 here it is:-
Sleeism # 2
Once is happenstance; Twice is circumstance; Third time is Enemy Action