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Why Bigger Isn't Always Better

By: Jerry Rosenbusch

1/1/2009

Sometimes selling to smaller districts makes strategic sense

One of the toughest decisions a channel manager has to make involves territory planning and targeting. With over 60,000 elementary schools, 40,000 middle and high schools, 16,000 districts, countless numbers of regional buying units and associations, how do you choose the best targets to meet your sales revenue goals? How do you break down this complex market?

Over the years I've employed several filters to guide my choices. In some cases, I would use a very simple formula-- let's say all districts that were members of the CSSO (Council of Chief State School Officers). In selecting this group, I knew their member districts had predefined traits and initiatives that met certain criteria for the kind of products I was selling (price point, Title I, and so forth). It was an effective way to target a single group, pull together messaging and training, and develop a largescale sales campaign based on one unified purpose.

Channel managers need to start with a fundamental question: Who is your customer?

The 80/20 Rule

But what if you don't have products or services that fit a predefined group such as the CCSSO-- how do you determine your best target within the overall market? As you review the school market, the 80/20 rule hits you square in the face: 80 percent of the students are in 20 percent of the school districts (QED has a good chart of market segmentation you'll find at qeddata.com). What this means is that the market is really divided into three distinct segments:

1. very large districts (enrollments over 25,000; equals 36 percent of the students in the total market)
2. mid-size districts (enrollments of 2,500-25,000; 47 percent of market)
3. small districts (1-2500 enrollments; 16 percent of market)

Naturally you'd go after the largest possible market-- right? Well, maybe not. The larger the district the more political it is, and the more likely exists layers of redundant decision making. From a strategic sales point of view, this means your reps or channel partners will have to make multiple calls on many members of various committees, each charged with the purchase of one aspect of one component of the product or service you are selling. (What this really means is that there are a lot of decision makers each protecting their own area of expertise and budget.) Long-term sales cycles, multiple decision makers, and an extensive review process: Are these largest districts really your best targets?