Targeting Your Sales Effort To Get The Best R.O.T.I. (Return On Time Invested)

by Guest Expert

Target marketing is one of the predominant behaviours required to succeed in business, and in sales. Sales people, like business owners and many other professionals, are required to be constantly targeting prospects for new business. This new business is what keeps you, and everyone else in your organization, employed. Without new business, you will not survive as existing business does diminish over time due to many factors - economic conditions, competition, relocation, mergers, bankruptcies, etc. New business is what provides continual growth in revenue, profits and market share.

Targeting your sales effort first requires some planning and this is the first part of the process. Many organizations and salespeople take the traditional approach and look to the outside to define their target markets. You will soon learn that the opposite approach of looking inside will prove to be more valuable to you and to your future success.

Let's define your target market from the inside-out by what you already have - your customers. If you don't have any customers and you are starting up, consider who you would like to have as customers and follow the same process.

Take a look at your customer base. Identify the common elements between all customers - industry, size, location, needs, demographics, etc. There are at least three common things that you will find. They all have a need for your product or service, they have the ability to pay and they have a desire - a desire to purchase from you, which is usually based on some form of personal relationship. Take the time to identify some of the other common elements and profile your customer base.

Consider these common elements and profile as criteria for your target market.

Next, identify why you are in business - what you want most from your clients and rank them as an A, B, or C. If you want revenue or profit most from your clients, rank your highest revenue or profit clients as an "A". The next level as a "B" and the lowest level as a "C". This sort of ranking will identify the big hitters - the 20% that gives you 80% of the revenue or profit. These are your most important customers - you're "A's". At one time they could have been part of your target market.

Let's now paint a picture of your 20% - your most important clients. What makes them different from the rest of your customer base, besides revenue and profit? Is it a relationship, size, need, demographics, location, market growth, competition, etc.? Identify as many elements as possible that differentiate them from the others.

Let's now refer to these differentiating elements as criteria. Once these criteria are identified, let's refer to them as Absolute (A) criteria for "A" customers, as they are also our absolute (A) customers. You absolutely need them to survive. Define the absolute criteria, based on your "A" customers, as the most important criteria that a suspect must have in order to fit into this category. That criteria must be defined clearly for your "A" customers and suspects.

"Why", you ask? Knowing this will help you in identifying where you should be spending your time prospecting in order to get the best return on your investment in time, which by the way is limited and expensive.

Before we move on, answer the following question to yourself: Where do you spend 80% of your time - on the 20% or the 80% of your customer base? Where should you be spending your time? Where will you get the best return on your investment in time?

When we take a closer look at these questions we have to look again at the traditional approach. Traditionally, sales people have focused 80% of their time on the 20% that give them the smallest return on their investment in time. In other words sales people are not focused on where they can get the best return on time invested. They too get caught up in the crisis of the moment and take the easy route as opposed to working on a plan of return on time invested (R.O.T.I.).

The R.O.T.I. plan is to focus your sales efforts on where you will get the best return on your investment in time. To get that return you must know who in your target market will give you the best potential return. By profiling the top 20% of your existing business and focusing your efforts on those suspects with the same profile, using the pre-established "A" criteria, your return on time invested will be greater.

"But wait a minute Bob", you say. "If I focused all of my attention on the "A's" who will take care of the rest."

Well the answer is simple and it all depends on how you manage your time and your behaviour. There are only so many "A's" out there - 20% of your target market. Once you have identified them and put a plan of action together and approached them, you then move on to the next level, the "B's" or those suspects that follow the profile and criteria of customers who are not absolutes, but beneficial (B) to your organization. Then there are the "C's" who make up the convenient portion of your customer base. The C's are the customers, or suspects, that provide the smallest contribution to revenue or profit. Using the profiles and criteria for each of the A, B and C categories will help you in identifying how you should be spending your time. To give you an example, let's look at the airline industry and what makes up a profitable flight. Usually there are three classes of fares- business, economy and seat sale. As you see when you get on the plane, 20% of the plane is dedicated towards business class and 80% towards economy. Which fare do you think is the most profitable for the airline?

Business class is where 80% of the revenue comes from - 20% of the customers. They are the absolute customers as they pay for the flight. Therefore the "A" (absolute) criteria would be based on the profile of Business class travelers. That profile and criteria could be based on being a frequent traveler, a corporate executive or a person who enjoys and can afford the finer side of life. This criteria would be used to identified the "A's in the airline customer base and the suspects in their target market of air travelers.

The next level would be the economy fare passengers. They pay less, but are greater in volume and usually fill the plane. These are the "B" (beneficial) customers. They are beneficial to the bottom line.

Then we have the seat sale fares. They fill the plane when economy fare doesn't and are referred to "C" (convenient) customers. The are convenient to have, but not as beneficial as full fare economy and certainly not as absolute as the business class traveler.

The same process applies in all industries. Simple identify why you are in business and those clients who contribute the most to that focus. Identify and profile those existing (or potential) customers who contribute the most to that focus and what criteria it takes to be ranked as the most important - as an "A" absolute, followed by the next level "B" (beneficial) and then "C" as convenient.

Using the same profile and criteria used on your customer base, identify suspects in your target market using the same ranking - A, B, C. Focus your time and efforts in the same manner - mostly on the A's (60+%) followed by the B's (25+%) and then the C's (15-%). By following this planning process for prospecting your results will improve and your return on time invested will increase dramatically.

There is also another component to consider in the ABC's of Targeting that is not related to targeting your sales effort, but deserves a mention. It is related to how you must retain and develop your "A,s" while trying to regain past clients.

You have already identified your most important "A" customers. It is this group of buyers that contribute the most to your business focus. How much time to you spend thanking them for their business, building your relationship with them, staying close and listening to them, going the extra mile for them and contributing to their success? I think you already know what the answer is. Are you giving them the time they deserve?

You have probably heard that it is easier and cheaper to get business out of existing clients than it is out of suspects or prospects. This is very true and simple to do. The process is to spend the time with your "A's" and give them the service and attention they need and expect if you want to first retain the business you already have. Secondly, your "A" customers may need more, or something else that you offer, particularly is they are a light buyer but meeting your "A" criteria. This is where your highest potential for growth exists but you have to develop the business. Thirdly, if your clients like you and the service you are giving them, they will refer you to others, or others to you. As you know, referrals are easier, more effective and more powerful than cold calls.

Take care of your customers and they will take care of you. Consider this as part of your "retain strategy", which you should take the time to consider and further develop. This is an "A" (absolute) priority.

If this is not a priority then you have to consider past clients and develop a "regain strategy" - a strategy to gain back those clients you lost. If you and your organization do your job well in the first place, as described above, you may not need a regain strategy. However, if you do need to regain some past clients, you must ask yourself, your organization and the client, why you lost them and what will it take to get them back. It is then up to you to get them back or forget them. Just remember that people only tell so many people when they are satisfied, but they tell a lot more when they are not. As long as it is feasible, do what you have to do to satisfy them to keep them and/or get them back.

Let's now take a look at your gain strategy. You have defined your target market, the common profile and the criteria from your customer base and ranked each client as an A (absolute) a B (beneficial) or a C (convenient). Your next step is to identify all suspects within your target market, if you can, and rank them in the same way as best you can.

Each organization has a different way of identifying and approaching suspects in their target market. Some organizations use a shotgun approach and go beyond target markets while others use a more targeted approach, even on a one-to-one basis. Lead generation methods used vary from direct response advertising, direct mail, telemarketing, e-mail, trade shows, public demonstrations to networking to name a few. The key is to use the methods that get you the best results in your target market, which is sometimes defined by marketing or the product development group.

If you are supplied leads, be thankful. All you now have to do is analyze the leads, if information on them is provided. Then rank all leads as an A, B or C. If no information is provided contact the leads and qualify them for prospect status in A, B, C priority, or not even a prospect. Don't try and sell them yet, just qualify them. You will learn more on how to do this in the next section on Competencies.

As you qualify suspects to prospects you have to take the information you gathered and manage a database. A database is where you keep all the information you can on every prospect you come across, even after they become a client. Maintaining and updating a database is a no pay time activity but has all the payback rewards for being disciplined in doing it.

There are many programs on the market today that can be used for database management. Select the one that best fits your needs. Whichever program you do use maintain the information current. It is the real value of your business to your potential prospects when it comes time to sell.

Bob Urichuck


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