In the dynamic landscape of B2B sales and marketing, the concept of coverage design stands as a strategic linchpin, weaving together the threads of revenue generation, customer experience, and cost-effectiveness.

Coverage Design—What Is It?

Coverage design is a strategic approach to revenue generation. It involves outlining the specific channels and roles that will execute each task in the customer journey. This systematic organization of revenue motions, termed a ‘coverage model’, is key to providing a top-tier customer experience while ensuring cost-effectiveness, typically measured as the Expense-to-Revenue (E/R) ratio.

Coverage models map essential customer touchpoints to the resources required to service them. This includes both strategic and tactical levels of interaction. At the strategic level, channel models align with market segments, whereas, at the tactical level, coverage extends inside accounts and across the sales pipeline.

Two Coverage Design Types: Tactical and Strategic

There are two levels of coverage design typically approached in business operations: 1) Strategic Coverage Design and 2) Tactical Coverage Design.

1. Strategic Coverage Design

Strategic coverage design involves long-term decisions about the selection of channels used to engage targeted markets. At the highest level, this means choosing between direct and indirect coverage.

• Direct coverage leverages a company’s internal resources (say internal sales) to drive revenue. It gives more control over the customer relationship, which, over time, is a considerable advantage, especially in owning customer data.
• Indirect coverage, on the other hand, involves outsourcing go-to-market activities to an agent. Indirect coverage, often referred to as “the channel” in B2B tech go-to-market strategies, is attractive for several reasons. It can be quickly activated, offers full-funnel solutions, and can bundle your product with other complementary products, creating a more attractive value proposition. However, it comes with a literal cost, the channel discount or commission.

Channel (indirect) vs. Direct economics. The channel discount–13 cents per dollar in this example—essentially pays for go-to-market other than brand advertising.

Therefore, strategic coverage design involves deciding which route-to-market to choose for a given product-focus segment intersection.

2. Tactical Coverage Design

Tactical coverage design takes a deep dive into the learn-shop-buy process to map each interaction from the customer’s perspective. There are three primary models of tactical coverage in use today:

• Single Point of Contact approach: One resource handles the entirety of the sales process, from prospecting to closing, and ensuring post-sales customer success.
• Hunter-Farmer approach: This model bifurcates the sales team into acquisition-focused and retention/success-focused resources.
• Hybrid approach: This approach is the most specialized, dividing tasks into lead generation, sales, and account management roles.

Designing an optimal tactical coverage model is a balance of three interrelated factors: customer-channel preference, seller and role capability, and economic efficiency. By considering these factors, businesses can ensure that all customer touchpoints are covered and the appropriate resources are allocated to each stage of the sales process.

The Power of Coverage Design in Optimizing Business Performance

To summarize, coverage models play a pivotal role in enabling organizations to drive profitable revenue growth while providing a superior customer experience. Strategic and tactical coverage designs form the backbone of these models, with strategic coverage choosing the ideal channels for market engagement, and tactical coverage optimizing the allocation of resources across the customer journey.

By striking a balance between channel preferences, role capabilities, and economic efficiency, an optimized coverage model can be developed, leading to enhanced organizational performance and customer satisfaction.

For a more comprehensive understanding of designing optimal B2B go-to-market strategies, download our whitepaper “A Roadmap for Modern B2B Go-to-Market—Part 1: Growth Design.” This guide offers detailed insights and practical tips to help you streamline your go-to-market operations and achieve your business objectives.

Download our whitepaper, “A Roadmap for Modern B2B Go-to-Market: Part 1 – Growth Design”​

Learn what it takes to find and maintain predictable revenue growth in our essential 49-page whitepaper.

Download

In business-to-business (B2B) operations, the term “revenue motion” refers to the strategic method of entering and expanding within client accounts. This term evolves from the more traditional “sales motion” to reflect the shift towards more customer-centric, account-based marketing, and product-led marketing strategies. Revenue motions essentially describe how customers within accounts can best identify, try, and purchase a product or solution. It is the translation of within-account targeting into a growth thesis.

Revenue motions are not just a tactical approach but serve as a blueprint for all customer-facing aspects of a business. As such, they require close collaboration between marketing, sales, and service departments. By understanding how accounts and contacts try, buy, and use the product, these departments can work in concert, using the account as the focus for their strategies.

Driving Growth with Revenue Motions

B2B organizations are increasingly recognizing the importance of revenue motions. According to Forrester Research, companies that excel at lead nurturing generate 50% more sales-ready leads at 33% lower cost. Moreover, nurtured leads make 47% larger purchases than non-nurtured leads, underlining the value of a well-planned revenue motion.

Three Primary Types of Revenue Motions

There are three primary archetypes of revenue motions: Top-Down, Bottom-Up, and Middle-Out. Each archetype has its own set of advantages and constraints that revenue leaders must evaluate prior to selection. Revenue leaders can determine which model to choose by considering three key factors: the adoption method, value transfer, and price.

• Adoption method describes how potential customers find, try, and purchase a given solution
• Value transfer describes who seeks to benefit from the implementation and utilization of a given solution
• Price describes the affordability of the solution for a given set of stakeholders

1. Top-Down Revenue Motion

In a Top-Down motion, sales teams build and leverage relationships with high-level stakeholders to drive product choice and rely on those stakeholders to drive implementation across the organization.

• Adoption Method: This motion relies heavily on senior leaders to drive standardization throughout the organization. This strategy requires direct access to key decision-makers, with marketing playing a secondary role.
• Value Transfer: The value is realized by the company as a whole, with individual contributors possibly feeling detached from the product or solution.
• Price: These solutions command significantly higher prices and realized revenue than bottom-up or middle-out motions, often exceeding $1,000,000 annually.

2. Bottom-Up Revenue Motion

A Bottom-Up motion is geared towards end users, only elevating to more senior levels once a critical mass of users has adopted the product.

• Adoption Method: In this scenario, marketing plays a lead role in helping potential customers find, understand, and adopt the product.
• Value Transfer: The product does most of the selling, relying on low barriers to entry, quick time-to-value, and broad appeal.
• Price: In a Bottom-Up revenue motion, adoption is the primary objective, with revenue coming later. Thus, prices tend to be significantly lower compared to other motions.

3. Middle-Out Revenue Motion

A Middle-Out motion strikes a balance between the Top-Down and Bottom-Up methodologies, targeting both end users and C-suite level stakeholders, with a sweet spot typically at the manager or director level.

• Adoption Method: A Middle-Out motion is sometimes termed “land and expand,” starting with one business unit at a customer organization and sequentially moving to new buying centers until standardization becomes a viable option.
• Value Transfer: The value transfer is applicable to both individual users and their management teams.
• Price: Pricing for Middle-Out motions can vary greatly due to the nature of the products and focus of the revenue motion (e.g., land and expand).

The Importance of Understanding Revenue Motions

The modern B2B landscape is evolving at a rapid pace. As such, it’s critical for organizations to adopt a more customer-centric approach to their go-to-market strategies. Understanding and employing the right revenue motion for your organization can dramatically increase the effectiveness of your marketing, sales, and service departments, leading to higher customer satisfaction, increased lead conversion, and ultimately, a healthier bottom line.

We’ve just skimmed the surface of this vast subject. To delve deeper into the intricate details of B2B revenue motions, including best practices, pitfalls, and proven strategies, download our whitepaper, “A Roadmap for Modern B2B Go-to-Market—Part 1: Growth Design.” This comprehensive guide will equip you with all the knowledge you need to craft a revenue motion strategy that fits your business like a glove. Happy reading!

Download our whitepaper, “A Roadmap for Modern B2B Go-to-Market: Part 1 – Growth Design”​

Learn what it takes to find and maintain predictable revenue growth in our essential 49-page whitepaper.

Download

Segmentation empowers businesses to tailor their marketing efforts, optimizing resource allocation for higher customer engagement and increased sales. Yet despite the positive results, many businesses fall short in their segmentation and targeting efforts. They often struggle to identify the right segments or target inappropriate market sections. This misstep usually stems from a lack of quality data, misinterpretation of market dynamics, or inadequate understanding of the business’s unique value proposition. As indispensable tools for businesses aiming to navigate the intricacies of the market effectively, this blog dives into common pitfalls and best practices of Segmentation and Targeting acting as a comprehensive guide. As Theodore Levitt rightly stated,

“If you’re not thinking segments, you’re not thinking.”

Understanding Segmentation and Targeting

‘Segmentation’ and ‘targeting’ – these terms, central to marketing parlance, carry weighty implications for businesses worldwide. But what do they entail, and why is their implementation often riddled with pitfalls?

Segmentation refers to the process of breaking down a large, heterogeneous market into smaller, homogenous groups based on shared characteristics. These shared traits could span a wide range – demographics, purchase behavior, needs, or interests. The goal of segmentation is to simplify the complex universe of potential customers into more manageable, actionable groups. By segmenting the market, businesses can streamline their decision-making processes and allocate resources more effectively.

On the flip side, Targeting pertains to the process of selecting particular market segments that a company considers most profitable or relevant. After segmentation identifies and organizes these segments, targeting swoops in to determine which of these segments to focus on and engage with.

A Fine Line: Differences between Segmentation and Targeting

Although used interchangeably in casual conversations, segmentation and targeting when viewed from a marketing lens carry distinctive meanings and roles.

Segmentation zeroes in on splitting the total market into meaningful groups. It involves organizing accounts and roles within those accounts into distinct groups, providing revenue leaders with a comprehensive picture of the most lucrative opportunities.

Targeting, conversely, focuses on the selection of specific segments for engagement. Targeting is all about deliberate decision-making—choosing segments deemed valuable for business while disregarding those that do not align with the business’s strategy or objectives.

The Art and Science of Segmentation

The world of segmentation is vast and varied, with multiple approaches, potential pitfalls, and best practices. Let’s take a deeper dive into these aspects.

Approaches to Segmentation

In the B2B space, segmentation is usually driven by the size of the accounts. The bigger the accounts, the higher their complexity. However, this complexity brings along with it a higher revenue potential and more appealing transaction economics. Smaller accounts, although easier to deal with, often yield lower transaction sizes and lesser revenue potential.

A commonly adopted approach to B2B segmentation entails dividing accounts into opportunity tiers. Although these tiers may vary depending on the specifics of a business, they typically include:

• Key Accounts: Comprising 10-100 accounts, these are Fortune 500 companies (or their international equivalents) that are high-volume buyers.
• National Accounts: Typically 50-500 accounts, these are Fortune 1000 companies (or their international equivalents) with core needs that the business can cater to.
• Core Accounts: Ranging from 100-1000 accounts, these are large, complex accounts that demonstrate a clear need for the business’s products or services, though they might be buying at medium-to-low volume presently.
• Small and Medium Businesses: Potentially reaching up to millions of accounts, these are smaller, simpler accounts that aren’t usually directly covered, but represent a significant revenue potential.

Another approach hinges on the concept of Total Addressable Market (TAM) and Total Serviceable Market (TSM). TAM provides a picture of the maximum market potential—a representation of the growth ceiling for a firm. TSM, on the other hand, filters TAM down to a more pragmatic subset of potential customers, using segment hypotheses.

The evolution of technographics has further revolutionized segmentation. Technographics offer valuable insights into companies’ technology stacks, use cases, and adoption rates. This information is particularly useful for businesses selling technology products or services, as it allows them to tailor their segmentation strategies based on the technology preferences and needs of their potential customers.

Pitfalls in Segmentation

Despite its advantages, the road to effective segmentation is fraught with potential pitfalls, including:

• Inside-Out Segmentation: Many businesses fall into the trap of relying on historical revenue to segment accounts. This approach often fails because past successes do not necessarily predict future opportunities, especially in dynamic markets.
• Grandfathering Account Classifications (Account Hoarding): Some organizations classify accounts based on pre-existing relationships, driven by the misguided belief that this lowers the risk of customer churn. This approach can lead to resource misalignment, hindering scalability.
• Creating Too Many or Too Few Segments: While segmentation aims to capture buyer-seller nuances, overly complex segmentation matrices can drive administrative complexity and additional costs. Conversely, oversimplified segmentation models may fail to account for differences in customer value and needs, leading to misaligned marketing and sales coverage models.

Best Practices in Segmentation

When done right, segmentation can unlock significant growth opportunities for businesses. Here are some best practices to guide your segmentation strategy:

• Keep It Simple: Aim for a balance of simplicity and discrimination by keeping the number of segments between three and five.
• Common Segment Understanding: Ensure sales, marketing, and service organizations use the same customer segmentation to promote cross-functional harmony and efficiency.
• State and Enforce Segment Policies: Establish clear guidelines, exception policies, and a governance process for account-segment assignments to maintain the structure of segments and make concessions for valid reasons.
• Stay Relevant: Reevaluate segments at least once every three years as part of your commercial planning process. This allows you to retrospectively assess segment performance and evaluate new segment hypotheses, keeping your segmentation strategy relevant as your business evolves.

The Art and Science of Targeting Buyers

In the competitive landscape of business-to-business (B2B) marketing, one crucial element stands out: targeting. This process, a meticulous exercise in resource allocation, involves prioritizing segments and accounts. As one might expect, this can be a contentious issue. Inevitably, someone in the sales force will be disadvantaged when their accounts are deselected, tying targeting closely to the mechanics of territory design.

Segmentation and targeting can be thought of a series of magnification lenses—from wide angle (the total addressable market for the entire enterprise) to microscopic (individual buyer and influencer archetypes within accounts.)

Approaches to Targeting

There are three levels of targeting: Segment Targeting, Within-Segment Targeting, and Within-Account Targeting.

Segment Targeting

Segment targeting is the prioritization of segments defined in the segmentation exercise. This process might involve focusing on large enterprise healthcare companies for “Tier A” acquisition efforts based on opportunity, while explicitly stating that the focus will not be on large enterprise technology companies.

While the process of segment targeting is straightforward – with executives simply selecting segments for focus based on the segment hypotheses – the challenges lie in socialization, communication, and operationalization. This typically occurs in the annual forecasting and budgeting process, with the targeted segments receiving higher goals and more attention from both marketing and sales.

Within-Segment Targeting

Within-segment targeting has traditionally been a bottom-up process, primarily the responsibility of the sellers. They are typically tasked with examining the accounts in their territories and formulating plans to move existing opportunities through the funnel or to drum up new leads. However, these plans rely heavily on the sellers’ intuition and existing relationships, potentially missing significant opportunities.

Contrarily, a data-driven and scientific approach is a more effective method for within-segment targeting. Account data should be enriched with segmentation metrics in the CRM database and updated at least annually. This data can then be used to prioritize accounts within each segment. Seller input remains crucial, but ultimately, data, not emotion, should be the primary driver of targeting decisions.

Within-Account Targeting

Targeting can be refined further, drilling down to the specific buying situations and roles within accounts. Understanding buyer scenarios – the specific use cases that describe how buyers, influencers, budget holders, and users collaborate to generate the need, evaluate services and products, and make final decisions – is a qualitative, not a quantitative exercise. It requires conducting in-depth interviews, focus groups, or even observing stakeholders in their natural work environments.

Pitfalls in Targeting

Targeting in B2B marketing is not without its pitfalls. Missteps often involve a lack of in-depth research in Buyer Scenario Analysis, an overreliance on demographic data, and a failure to update and improve targeting strategies continuously.

• Overconfidence in Buyer Scenario Analysis: Revenue professionals, while often highly empathetic, can fall into the trap of overconfidence, leading to inaccurate buyer personas and purchasing scenarios.
• Overreliance on Demographics: While demographic data is easily accessible, relying solely on this can lead to a one-dimensional view of the buyer.
• Stagnant Targeting: Targeting strategies should be continuously updated and improved to stay current with the buyer population.

Targeting Best Practices

• Reliance on Data: While seller intuition is essential, data should ultimately drive targeting. Using enriched account data and segmentation metrics can help prioritize accounts effectively within each segment.
• Understanding Buyer Scenarios: Understanding the specific use cases of buyers, influencers, budget holders, and users can offer a clearer understanding of the buying dynamics and help in effective targeting.
• Continuous Improvement: Even the best targeting strategies can benefit from regular tracking and analysis of their effectiveness.

Unlock Growth Opportunities with Segmentation and Targeting

Segmentation and targeting, when understood and implemented effectively, are powerful tools for navigating the complex B2B landscape. They provide a comprehensive understanding of market opportunities, enable precise targeting, and support the deployment of resources in a cost-effective manner. However, as highlighted, these strategies can unlock significant growth opportunities.

If you are interested in diving deeper into these topics and want to establish a blueprint for growth in modern B2B, download the whitepaper “A Roadmap for Modern B2B Go-to-Market—Part 1: Growth Design.” This comprehensive guide will equip you with all the knowledge you need to navigate the complex landscape of segmentation and targeting successfully. So, don’t wait, download your copy today and start your journey to a more focused, targeted, and successful business approach.

Download our whitepaper, “A Roadmap for Modern B2B Go-to-Market: Part 1 – Growth Design”​

Learn what it takes to find and maintain predictable revenue growth in our essential 49-page whitepaper.

Download

In the shifting sands of the digital era, business-to-business (B2B) sales and marketing motions have transformed drastically. Where traditional face-to-face sales pitches once dominated, technology and evolving buyer preferences have since reshaped the playing field. As a result, the rise of subscription-based models, an emphasis on customer experience, and the dominance of digital channels have all made their way into B2B go-to-market strategy(ies).

Define and Optimize Your B2B Go-to-Market Strategy

Leaders who can establish consistent and dependable revenue streams, and embrace technological disruptions and new business models, all while counteracting seasonal variations, macroeconomic influences, and competitor moves will prevail. Sounds simple right? Not so much. Such resilient revenue channels don’t arise by chance; they’re meticulously crafted. This focused approach is known as a go-to-market (GTM) strategy.

Go-to-Market (GTM) Strategy: A plan that outlines how a company will sell its products or services to customers. It encompasses everything from identifying and segmenting the target market, positioning the product or service in that market, to choosing the appropriate sales channels and setting the right price. The GTM strategy ensures that all parts of an organization are aligned and work cohesively to bring a product or service to market successfully.

Design for Sustainable Growth

Developing a robust B2B go-to-market strategy in an ever-evolving landscape may seem daunting, but the fundamental principles remain the same. The first step starts with building a blueprint to find and maintain predictable growth. In helping enterprises with complex purchase cycles, designing, diagnosing, and retooling their go-to-market strategies, the path to growth is not shrouded in mystery. Driving growth is akin to operating a factory. You begin with a blueprint, gather the raw materials, assemble, and add value to those materials in assembly lines, and finally ship the product out the door. Marketbridge’s tried and true blueprint for growth (see part 1 of our 3-part whitepaper series) comprises Market Selection, Routes-to-Market, and Organizational Structure.

1) Market Selection

It is always tempting to look inward when thinking about strategy. Starting with organizational problems, technology integrations, or new data sources can be more comfortable for executives because these issues are well-known for being easily accessible. However, growth starts outside the walls of the enterprise, and that’s where the go-to-market strategy should start. After all, the market is literally in the title of the discipline.

Three elements make up Market Selection:

1. Growth Opportunities: the chunky, big areas of growth that the enterprise should bet on over the next few years to grow revenue
2. Segmentation and Targeting: understanding the universe of accounts and the roles inside of them, and deliberately choosing targets within them (and ignoring others)
3. Revenue Motions: The strategy inside of an account to actually land the revenue, matching buyers with value.

2) Routes-to-Market

While the Market Selection process looks at the world from the perspective of the customer, the Route-to-Market planning process is concerned with the company getting to the customer. Route-to-Market planning includes marketing and sales coverage and channel economics; addressing channel conflict; and role design in the internal sales force. It is very much a mechanical and economic exercise, whereas market selection is an empathetic and creative exercise.

Note: Market Selection and Route-to-Market Planning are intimately linked and thus must be designed concurrently and iteratively. It would be a mistake to run each process in sequence, only thinking about coverage and role design once market selection and revenue motions have been finalized. Instead, two teams should work in concert, communicating regularly, and ending up with an integrated Market Selection and Route-to-Market strategy that works together.

3) Organizational Structure

Strategies need structures to operate. The structure of a B2B go-to-market strategy is hugely predictive of its success. Organizations with many siloed teams—particularly sales and marketing—tend to operate in those silos, regardless of the stated strategy. Geographically separated organizations tend to be geography-centric—even if sales territories are realigned toward industries

Organizational Structure can be broken down into two parts. First, the overall design of the organization is concerned with the roles, reporting structures, relationships, and specializations that will execute the go-to-market strategy. Second, capacity planning determines the right number of people that will be required to execute revenue motions in quota-bearing roles.

First Step Toward a Modern B2B Go-to-Market Strategy

While developing a resilient go-to-market strategy is crucial, the reality is that it is only one piece of the puzzle. To truly future-proof your business and set the stage for sustainable growth, a comprehensive approach is necessary. And this blog covers just one piece of the puzzle. Whereas, there are Operational and Analytical frameworks vital for market entry, and ultimately Execution and Engagement activities to drive revenue success.

For a more comprehensive look at the blueprint above, we invite you to download our whitepaper, “Part 1: Growth Design – A Roadmap for Modern B2B Go-to-Market.” We delve deeper into the graphics above and all of the components needed for growth. Learn how to effectively select your markets, choose your routes-to-market, and design an organizational structure that best supports your strategic objectives.

The B2B marketing landscape may be ever-changing, but with the right guidance, your business can not only adapt but thrive.

Download our whitepaper, “A Roadmap for Modern B2B Go-to-Market: Part 1 – Growth Design”​

Learn what it takes to find and maintain predictable revenue growth in our essential 49-page whitepaper.

Download