The foundation for any selling organization is the coverage strategy. Get it right and the rest of the dynamics become clear. Get it wrong and it is a recipe for chaos and dysfunction.

To develop a coverage strategy, we recommend sales executives consider the following five fundamentals:

1. Competition - Assess the competitive landscape and go-to-market strategy of your competitors.

•    How is your competition selling?

•    How do their offerings compare with yours?

•    What adjustments do you need to make to surpass them or find a unique direction or niche?

•    What does SWOT analysis indicate about your comparative performance to rivals or win/loss rates and market share?

2. Segmentation - Identify meaningful customer groups, vertical markets, and tailored strategies based on how you are going to position yourself relative to the competition.

•    What are logical segments based on your selection criteria? Are they worth pursuing?

•    Which groups are most profitable or have the greatest potential for growth?

•    How might your selling organization accommodate their needs?

•    What groups will the selling organization target and with whose resources?

3. Value Recognition - Understand how and why each of your customer segments buys to create value for them.

•    How do you create value for your customers?

•    What are your customers' buying criteria?

•    What is their chosen buying channel?

•    How can you align your organization to create profitable results?

4. Branding - Customize and leverage your market messaging for each of your customer segments.

•    How must you position your market offerings so that they occupy a clear, distinctive, and desirable place relative to competing products in the minds of your target consumers?

•    How do your sales channels need to represent your brand?

5. Channels and Organization - Determine how best to deploy your selling resources.

•    What is your selected channel configuration?

•    How is it organized for performance?

•    Are you thinking in terms of channel differentiation? You can gain a competitive advantage through the way you design your channel's coverage, expertise, and performance. For example, Caterpillar's success in the construction-equipment industry is based on superior channels. Its worldwide dealer network is renowned for its first-rate local service. It is complemented with a global CAT-deployed segment-focused marketing organization.

You'll see a good coverage strategy begin to take shape by aligning these elements into a coherent, customer-facing direction based on value for your customer and your company.

But here's the rub. You're not done. Markets change-rapidly. Continuing to modify your coverage strategy in a thoughtful, fact-based fashion is essential. Here are a few examples of game changers that spurred our clients to reexamine their coverage strategy:

Speed

•    Life cycle compression - Historically, product life cycles were three to five years. Today, they can be six months to a year. Information intensity, technology demands, and increasing customer expectations have combined to significantly impact the selling environment. Responsiveness is critical. The need for salespeople to communicate in real time with their customers, their companies, and their sales team is ever increasing.

Market

•    Access to information - With the Internet, your customers and competitors now know more about you than many of your salespeople do. On a 24/7 basis, they can access business information, challenge standard practices, and demand changes to the design and delivery of products and services. While more businesses can reach customers more easily and in more ways than ever before, this also give customers enormous power to vet prices, offerings and value provided by vendors. The result is that customers have become much better at managing procurement of products and services.

Geography

•    Increased globalization - When it comes to business, the world is shrinking. As the world economy becomes increasingly integrated and globalized, companies are looking to develop more revenue opportunities in global markets. At the same time, technology and globalization provide extensive visibility of products and services, allowing new competitors to join the fray every day.

•    BRIC - Brazil, Russia, India, and China have emerged as new global engines. They are collectively perceived as the economic bloc behind the shift in global economic power away from the developed G7 economies towards the developing world. They are smart, aggressive, nurtured by their governments, and are now leveraging resources to create new sources of value.

Economy

•    Planning horizons and ROI time frames - The buying cycle has virtually collapsed into ever-shorter periods. Management thinks in terms of quarterly results. Every investment is scrutinized and measured for value impact. Value life cycles are measured in months, not years.

•    Selling to Procurement - In the last decade, companies have shifted power to their procurement organizations to better manage their costs in tough economic times. Salespeople who traditionally sold their products or services to operations or line-of-business executives have discovered that their clients' procurement organizations have taken a prominent role in the buying process. Today, procurement is keenly involved in cost cutting, capex, significant solution purchases, outsourcing, and alliance arrangements.

•    Cash is king - Cash flow has taken on heightened importance in this unpredictable and precarious economic climate. Cash has never been more coveted and conserved. Sellers may have a terrific ROI, but if it doesn't result in positive cash flow quickly the selling may not be over.

As much as you would like to cover your market consistently year to year, market dynamics dictate that you revisit your coverage strategy much more often, and be willing to try new approaches to organizing and deploying your selling resources. Rethinking your sales coverage strategy and ensuring that it is a customer-focused approach ensures the best outcomes with your customers and is a powerful differentiator for you.

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