Business Growth Strategies: Segmentation for the Long Term

Those of you who already know me understand I am a big fan of Strategy, Focus and Execution as it relates to building great companies. As an early or expansion stage founder or CEO, the more you can exhibit these three dynamics, the less growth capital you will need to achieve a successful company exit. This will lead to a bigger win for you, your management team and your venture capital partner.

I was talking to one of the CEOs I work with today and we were discussing his business growth strategies, the companies economic model and the budget process he is currently undertaking with his management team in preparation for 2011.

As our conversation continued we started discussing the work the CEO and VP of Sales were putting into segmentation (I wrote a blog about segmentation for growth you can read more about here) of their sales territories to drive bookings and revenue growth.

What impressed me about the approach was that they were actually creating more territories than needed for the 2011 year. They were planning for future sales rep growth by creating 36 territories instead of the 8 they needed. They expect to add 8 sales reps and have them focus on 4 territories and as they ramp up they will also add a junior rep to each reps team. As they demonstrate proficiency, they will divide the territories once again.

More importantly, they are co-opting the current team as part of this plan. For example, when giving a sales rep California as a territory they make sure the rep understands that as the company experiences growth, his territory will encompass San Francisco in the future. As a result, the sales rep will focus on building for the long term around San Francisco while still expressing optimism concerning qualified opportunities in Los Angeles and San Diego (territories that later would be given to a future rep). This creates a planned and organized approach allowing for future expansion of the sales force over the next couple of years with minimal disruption while still maximizing the present opportunity. Furthermore, they are doing it with the buy in of the sales team so there will be more focus and minimal loss of productivity as they grow in the future.

As you think about 2011, hopefully you are not just segmenting for growth but also segmenting for long term. This is what operational execution is all about!