Maximizing Account Potential through Segmentation
•competitive strategy •market segmentation •segmentation •High Potential Accounts (HPAs) •High Volume Accounts •High Potential Accounts Report •High Volume Accounts Report •High Efficiency Accounts (HEAs) •High Leverage Accounts (HLAs) •customer segmentationWednesday, October 4, 2017—A Look at the WayPoint High Volume Account Report
Join Randy MacLean, President of WayPoint Analytics, as he discusses account segmentation and how WayPoint handles this powerful tool for managing your accounts.
Effective account segmentation dictates how your sales force interacts with your clients and customers and informs the types of policies and procedure you use to service different types of customers. Segmentation is a convenient and efficient way to streamline customer management, rather than servicing each individually and uniquely.
The High Volume Account report in the WayPoint customer tab shows those clients that have the highest profit potential because they produce the bulk of your cash flow. This is what allows you to create bottom line profits. Within this segment are several sub-segments, including the high value accounts (HVA) high potential accounts (HPA) and the profit drain accounts (PDA), and the high leverage accounts (HLA).
High Leverage Accounts
The HLA segment is a special group that produces high volume cash flow but also has a high NBC rate, which means they are efficient at turning cash flow into bottom line profit dollars. This is the place you should be looking for the biggest return. Here's how.
Penetration - HLAs should be a target for penetration. Run a gap analysis report to find ways to sell more into these accounts.
Duplication – Bring in more accounts like these to have more opportunities for creating high return on your dollars.
High Value Accounts
These accounts have low expense rates meaning that they are high efficiency accounts that consume less of your resources as you convert gross profit dollars into bottom line dollars. These accounts can potentially create high levels of profit.
Duplication – These are good accounts for growth and for duplicating. Find the direct competitors of these accounts, bring them in, and you are likely to have another high value account for growth.
Pricing – Good for opportunity pricing and aggressive pricing because their expenses are low.
High Potential Accounts
These are accounts that not meeting their potential but have high volume. These accounts could be profitable but are not yet. How do you get them there?
Reduce infrastructure costs – Work with the account to have fewer shipments, fewer invoices and orders, and fewer deliveries. Reduce transaction costs to turn them into HVAs.
Profit Drain Accounts
Transaction costs for these accounts exceed the gross profit they produce, so they are producing losses. These accounts can sometimes be converted using the HPA approach.
Attempt to change - The first step is to try to change the nature of the account. Combine orders to reduce your costs or adjust pricing to improve margin. Or charge for deliveries. which can add extra gross profit into the sale.
Replace profit - If changes are not effective it may be time to let go of the account. Before you fire the account, or put yourself in a position where the account will leave, look at your HVA accounts and find a similar account in the marketplace that you can bring in to replace the profit.
The most important point is to recognize that these accounts exist in your business, and start shaping your programs to address each segment and put your business on the fast track to rapid profit growth.
For more information about Randy MacLean, visit: www.waypointanalytics.net
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