Service-Dominant Marketing has a series of interesting position papers in it each of which poses thought provoking concepts both past and present. Let’s look at market coverage.
We started in the equipment world with salesmen; there were rarely any women, each of whom was given a geographic territory – “These are your counties.” The salesmen then went dutifully about their work and called on customers and sold machines. The problem with this method of market coverage is that it is the salesman that determines who will be covered and who won’t. The employer doesn’t even factor into it. I know many of you will be saying that the sales manager will have something to say about that but you also know that I am right.
Pioneer Hybrid Seeds, before they were sold, radically altered the market coverage approach when they went to a customer list for market coverage. This was covered in a Harvard Business School case study in the 1990’s. They found terrific success when they focused on relationships of the salesmen and the farmers. Sales increased dramatically and the company ultimately was sold for a hefty premium as a result of their market penetration and sales results.
For some time now we have had product support salesmen as well; people selling parts and service programs and supporting the customer in their needs and wants. Unfortunately the same pattern was followed as with equipment salesmen with a small kink in the approach. The salesman was required to bring back a quotation to prove to the Company that in fact they had influenced the purchase. As you can imagine this led to all manner of tricky behavior to get paid, rewarding the Company with exactly what they were trying to avoid.
Over time the market was segmented, more on that in a future blog, and the salesmen were given specifically named customer accounts to cover. Finally we got to the point where the salesmen could concentrate on developing a relationship with their customers. The number of customers assigned was rarely more than 150 although there are exceptions with a smaller urban territory. The other factor that was taken into consideration was the number of machines. The number of machines was limited to 500 but this too had to be made smaller depending on the type of machine and the application. After all in the parts and service world the machine is the customer. Many dealers who have followed this approach, assigning customers to salesmen with limits placed on the numbers of accounts and machines are reaping terrific results. Market capture rates are higher as is customer retention. We will continue this dialogue in the next blog. The time is now.