From The Stimson Group

By Tom Stimson CTS

A story I hear too often starts, "We hired this sales person to do Business Development and we are not getting the results we expected." This is usually a launching point to a discussion about where to find good salespeople. My first question is, "What business segment are you in?" Nine times out of ten there's an accurate answer, For instance, "We rent AV equipment for conventions." Or, "We sell and install audiovisual technology for corporate conference rooms." A good follow-on qualifier might include, "We specialize in videoconferencing systems." Most folks understand what business segment they are in and how some revenue is derived from a niche product or service. Inn other words, they know WHAT to sell. It's my next question that usually trips them up.

In which vertical markets do you sell?

The most common answer is: Corporate. Oops. This is just the kind of response that often leads to unsuccessful business development efforts. Now we need to have the conversation about market segments, verticals, and channels. Why? Because in order to find new business we need to understand not only what our best customers look like but also where the buyers are hiding in the value chain. Your success to date may be due to excellence within a market segment, but it is more likely because you have mastered a niche, a vertical, or a channel. First understand why you have been successful then design your marketing and sales efforts around those achievements.

Market Segments
Market segments are defined by commonalities amongst customers. Some common segments in the rental and events industry include Corporate Meetings, Entertainment, Conventions, Trade Shows, and Rental to Trade (wholesale). In sales and integration we find Retail Sales, Board room AV, Classroom AV, and many others. These markets utilize whatever your core business is.

Niches
Niches are specialized applications within a business segment. Large Venue Audio, Digital Signage, LED Display, and Video Conferencing are all niches and might be found in any of the above segments.

Vertical Markets
Automotive, Banking, Multi-level Marketing, Education, and Worship are all vertical markets. A vertical will fit into at least one market segment, but sometimes more. For instance, the automotive industry is represented in meetings, conventions, conference rooms, and retail. They may apply a niche technology - like digital signage - to retail, trade shows, or their corporate campus. You may do well with a particular vertical for one segment, but your ability to expand deeper into a corporation is limited by your access to channels.

Market Channels
Channels refer to whom you sell within a Vertical. Marketing departments, event planners and meeting producers are three different channels for Stagers. Integrators see construction contractors, IT departments, and corporate services as channels. The reason we focus on the channel is because this is where need is defined and often buying decisions (or at least recommendations) are made. For instance, when you meet someone at a party that works for XYZ Corporation and knows about a big installation in the planning stages (that your other XYZ contact doesn't know about), you have probably found a new channel within the same company.

Companies and organizations may identify needs and seek fulfillment through a variety of paths. A case in point is in how business meetings are produced. Stagers often target the independent meeting planner or event producer, who in turn seek corporate contacts. When possible, Stagers prefer to deal directly with the corporate representative - so in effect, Stagers often compete with their meeting producer channel.

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It would be a mistake to assume that two similar companies (same segment, same vertical) use the same channel to access your services. In integration we see some very nice projects that originate through design consultants: A classroom (segment), using video conferencing (niche), for a university (vertical). In this example the channel could be quite complicated, eg: The Board of Regents created a strategic initiative for distance learning, charged the Dean of Education with creating the initial implementation, who then went through procurement to hire a consulting firm to define the technology strategy, which was presented to a design consultant for a system specification, that then went out to bid via multiple systems integrators and contractors. The same project could have just as easily come through a general contractor for the new distance learning building and been offered directly to several integration contractors. One integration firm could be successful working with a GC but struggle to work with a design consultant. Your channel could be different than your competitors'.

Applying the Model
There are some companies that concentrate on one channel, but generally your business should focus on segments first, then channels. Getting back to hiring that new Business Development person - their success is dependent upon an understanding of both your segments and market channels. They might pursue a familiar channel to find matches to your segment. Or, they may find targets that need your segment and seek the channel entry for the prospective company.
Individual sales people however may specialize in a specific channel. This method works well for niche products and services but usually not for core business. When their business runs dry it might be because they seek a particular channel in companies where that channel doesn't exist. Imagine trying to tap the marketing director to sell an enterprise videoconferencing system.

When it comes to hiring good sales people, I recommend looking outside the AV industry. Not that there aren't good sales folks in AV, they just aren't all that available. And success in sales for one company is not a guarantee of success at another - for all the reasons I outlined above. I recommend looking for professional sales persons that are successful selling in the verticals and channels that you want to access. Someone that has sold telecom to colleges would know how to access the decision makers for distance learning systems. Someone that has sold service agreements for commercial HVAC might adapt to selling them for integrated AV.
Try analyzing your past sales as a company and for each individual sales person. A more strategic approach to vertical markets and sales channels might uncover more core business and help struggling sales folks find their personal niche.