Narrow vs layered account targeting
It is counterintuitive, but one of the common mistakes in the commercial teams in off highway is being too focused.
Of course it is good practice to have a clear idea of who is your ideal customer profile, to spend some time scoring and prioritising a list of top target customers. But how many targets is enough? Should we do a top 10? and if so what do we do with the rest of the market.
Let’s consider the nature of the off highway market.
In Europe and North America, the territories that I personally focus on, there are approx 650 equipment brands. The biggest of these has a revenue of $67billion and the smallest would fit in a tiny standard industrial unit and produce only a 3 or 4 machines per month.
OEMs are not always “in market” for new components or solutions. The cost (design, validation, certification, aftermarket readiness) and risk mean that OEMs are highly disciplined in not making ad-hoc changes to machines that are already in production. A general rule of thumb is that at any one time only 5% of B2B companies are in-market, that is that they are in a purchase consideration process for a particular component or service. I don’t know if this number is precisely accurate for our market, but it certainly feels about right. For most categories of supply to off-highway machines, and certainly for anything that is on the bill of materials (BOM) there is absolutely nothing that a supplier can do to change this. It is just about being in the right place in the buying committees awareness and favour when a machine model is at the correct concept or development stage.
Then we need to consider that the very few major OEMs are generally risk adverse. They will consider new suppliers, but the first project that they try a new technology may be one of their lower volume niche machines rather than the fast moving heart of their range.
So if we if you target only ten accounts, there is a reasonable chance that none of them currently has a relevant opportunity, and if there are opportunities, even with big accounts then they might be quite small. I do not underestimate the importance of creating that first bridgehead into a major account, even though it is unlikely to be a major profit contributor for the supplier.
Layered targeting to get “front of mind:
The answer isn't to abandon prioritisation. It's to separate intensity from coverage.
Your highest-priority accounts might still be a relatively small group. These deserve concentrated effort: account research, an expanded relationships to a wide range of decision makers and influencers. High intensity marketing delivery through 1-to-few or even 1-to-1 account based marketing techniques.
But behind them should be a much larger group, perhaps 100 or 200 relevant OEMs. The marketing (again through account based techniques like linkedin ads, email automation) and regular sales contacts (think 80% zoom and 20% physical visits). The idea is to systematically growth account knowledge and ensure that your brand is front of mind with future potential buyers. When they think of hydraulic pumps, they thing of your name and you have more chance of being invited to make a proposal
And even beyond this wider group a certain amount of brand coverage makes sense. Regular linkedin. Physical exhibitions where it makes sense. Advertising and press releases in the trade press.
This somewhat replicates the famous work of marketing researchers Field and Binet in their seminal work “The Long and the Short of it”. They demonstrated that the optimal long term strategy for growth was to spend about 50 to 60% of marketing budget on brand development (which is extremely hard to measure) and about 40 to 50% on performance work - highly measureable promotions.
The objective is simple: be known before the opportunity appears, and notice when something changes.
