I recently spoke with Rick Haviland, the President at MarketSource. MarketSource is the world’s most successful sales and marketing outsourcing company. The company has helped more than 200 companies generate over $6 billion in revenue.
The topic of conversation was selecting the right markets to compete in. Why is this an important step in your overall strategy? Because without clearly defined markets, functional departments inside the company will make the decision individually. And this will result in conflicting priorities.
So, how does Rick tackle this issue? And what advice can he give his peers in similar situations?
Defining the Market & Its Potential
It starts with market definition. At MarketSource, they define their markets primarily by vertical industry.
Why? Because they have built themselves around industry and channel subject matter expertise. And their offering is specific to their customers’ businesses and verticals. So it makes sense to look at their markets in this way.
In addition, Rick touched on what makes a market attractive. The first two dimensions considered are the potential spend, and account scoring within the market. They look for healthy markets with healthy accounts. Rick looks for an area where there’s a high degree of complexity in the sale because he knows that’s their sweet spot.
What MAKES A Market unattractive?
Equally important is understanding what makes a market unattractive. In the case of MarketSource, they know they must avoid certain markets.
For example, heavy regulation is less than desirable to them for a number of reasons. And if face-to-face interaction isn’t important or if the product sells itself, these are warning flags. Rick understands what works and what doesn’t for his organisation. This allows him to keep his resources focused on only the markets that matter.
Size & growth rate of markets
Next Rick spoke to us about the size and growth rate of his markets. How are these determined?
“We take a pretty straight-forward, simple approach to it,” explains Rick. “What we look at is the potential spend of accounts within a market. Then we look at the revenue and income health of those accounts within the market.”
Critical Success Factors
Another piece to the puzzle is critical success factors. These are the things customers demand from you to be great at, in order for them to give you their business. And they will vary from market to market. So, how has MarketSource determined what their buyers want in the markets they serve?
“First and foremost, we ask them,” states Rick. His team spends a lot of time talking directly with clients. They also conduct an annual voice of the customer survey. Why? To ensure they understand their requirements, willingness to pay, and desired business outcomes. The end goal is to ensure MarketSource’s value drivers and differentiators are in line with the buyer’s critical success factors.
Rick considers why people outsource in general. The organisation needs to be able to deliver on all of the possible reasons. Ultimately they talk to their customers, look at the general space they play in and determine what it takes to be successful.
How to replicate this plan
First, pick and choose your new markets. Second, complete an account segmentation effort for both current and potential target markets. This will provide confidence and visibility into what you need, to determine where to invest time and money which will result in you making your number.
At the end of the day, sales and marketing leaders need an accurate number. This is the responsibility of the company’s CEO because making the number requires having a number that’s obtainable. A key input into assigning a revenue target is market selection. Get this wrong, and you will miss your number.