Blog · Territory, capacity and quota planning
The difference between a segment, which describes what a customer is from fields on the master and sets which norm it is compared to, and a tier, which describes what a customer gets from the company, a cadence and an owner, set from its revenue and its gap, why the two are often confused, the rule that segments define norms and tiers define effort, how a customer moves between each, and the two mistakes, tiering by segment and segmenting by tier.
Segments and tiers are both ways of grouping customers, and they are built for opposite purposes. Confusing them produces either a norm that means nothing or an effort plan that ignores the gap. This guide sets out what each is, the rule that separates them, how customers move, and the two mistakes.
| Segment | Tier | |
|---|---|---|
| Describes | What the customer is | What the customer gets |
| Set from | Master fields: size, sector, channel | Current revenue and gap at norm |
| Decides | Which norm applies | Cadence and owner |
| Changes when | The customer grows or changes sector | Revenue or gap crosses a boundary |
| Number of groups | Twenty to forty cells | Four |
| Used by | Norms, share of wallet, whitespace | Coverage, rep load, account plans |
Segments define the comparison. Tiers define the effort.
A gap is always measured within a segment. A cadence is always set by a tier.
| Move | Trigger | Effect |
|---|---|---|
| Segment | Size band crossed; sector reclassified | New norm; gap recomputed; migration list |
| Tier | Revenue or gap crossed a boundary at re-tiering | New cadence; new owner if the tier's owner differs; movement list |
A segment move can cause a tier move, because the gap changes. A tier move never causes a segment move.
Segment: mid manufacturers, norm $430,000 per site-equivalent.
| Customer | Segment | Revenue | Gap at norm | Tier | Cadence |
|---|---|---|---|---|---|
| 2207 | Mid manufacturers | $410,000 | $20,000 | 1: keep | 6 a quarter |
| 4471 | Mid manufacturers | $180,000 | $250,000 | 2: grow | 8 a quarter |
| 9034 | Mid manufacturers | $40,000 | $390,000 | 3: develop | 3 a quarter |
| 1187 | Large financial | $180,000 | $410,000 | 2: grow | 8 a quarter |
Same segment, three tiers. Different segments, same tier. The norm is per segment; the cadence is per tier.
Tiering by segment. Every large-sector customer is tier one. The mid manufacturer at a third of norm gets tier-three effort because its sector is small, and the large customer at norm gets tier-one effort it does not need.
Segmenting by tier. Tier-one customers as a segment. The norm is what tier-one customers do, which is buy a lot, and every customer is measured against the ones the company already serves best. Circular.
One grouping for both. Either the norm or the effort is wrong.
Tiers set before segments. The gap against the wrong reference.
Segment moves not on the migration list. A tier change that looks like a rep's decision.
Tier by revenue alone. The large full customer and the large gap customer treated alike.
Mapped once, the customer master produces the segments, the ledger and the norms produce the gaps, and the tiers follow from revenue and gap with the movements listed. Covirage builds this from the exports as they are. The segmentation guide covers the first grouping, and the tiering guide covers the second.
Yes, and they usually are. Two mid-sized manufacturers, same segment, same norm: one at the norm and one at a third of it. The first is tier one, keep; the second is tier two, grow. Same comparison, different effort.
Yes. A large financial services customer and a mid-sized manufacturer can both be tier two, with the same cadence and the same kind of owner, because both have large revenue and a large gap against their own segment's norm. The tier is about effort; the segment is about what the gap is measured against.
Segments, because the gap that tiers depend on is against the segment's norm. A tiering done before segmentation has measured the gap against the wrong reference and will move when the segments are built.