Article: Assessing A Sales Area's Potential
An outline of six methods of arriving at logical sales targets...
It should be a matter of course for sales-teams to screen hardcopy, CD-ROM or on-line directories for companies which fit the class of industry to which they sell. The source can vary from the maps and lists sold by Market Location, to Kompass, the Commercial Classified directories and the appropriate trade journals. A straight count of the companies within a region may be a guide to the potential for a product. If, for example, one knows from experience that lithographic printers use a certain number of printer's blankets per year, then a company marketing these products can obtain a rough approximation of the area's sales potential by simple multiplication. This means of assessing sales potential is most suited to industrial products sold to end users who are thick on the ground and generally of small size - like printers, foundries, general engineering workshops and schools, to name but a few.
Many industrial products are used in association with others on which published data is readily available. Using a known ratio of sales between the two products an association can be used to provide a guide to the sales areas potential. A sales-person selling work rolls to strip rolling mills would not be able to find published figures showing the annual consumption of his products. However, it is relatively easy to establish the number of work rolls used per thousand tonnes of strip produced. Statistics abound on the output of steel strip from which a calculation can easily be made to show the sales potential for rolls. The imagination can run wild in seeking associations. The output of sand and gravel influences the consumption of screening meshes, sales of industrial bobbins are linked to the output of cloth, and sales of guillotine knives depend on paper production.
The Central Statistical Office, in their publication Regional Statistics, produce comprehensive and up to date statistics showing the number of employees by Standard Region, within broad industrial classifications: agriculture, forestry and fishing; manufacturing industries; and service industries. A more detailed breakdown of employment by Minimum List Heading of the Standard Industrial Classification can be obtained from the Census of Great Britain. In the same way that ratios can be established between strip output and work roll consumption, it is possible for example to calculate, by region, the number of overalls consumed per employee in woodworking, metal manufacturing or construction. The regional breakdown provided by the Census enables analyses of potential to be carried out by Standard Region, including major conurbation's. The ratios will be more valid if they relate to products which are consumed by employees themselves (such as personal safety equipment). Nevertheless, there may be scope for using the same economic activity statistics to calculate the regional demand for drive belts in the textile industry or the consumption of cement in the construction industry. Statistics are also available providing regional analyses showing the number of companies, by their size, measured in employment terms. Lists of companies within various industry sectors, are commercially available classified by size and geographical area. This could be of value to an industrial caterer who defines his target as those companies employing 500 people or more. It may help a supplier of copiers to decide how many models of different sizes he can sell in a region based on his knowledge of the popularity of models to certain sized businesses.
More general population statistics published in the Census of Population are not as useful to the industrial marketer as employment figures. Nevertheless they can be of value to certain types of companies. A manufacturer of house bricks (or window frames) may be able to use the statistics to establish the approximate potential for his products regionally in the knowledge that most members of the population are likely to be housed in dwellings constructed with his products. Producers of goods purchased by local authorities (from dustbins to wheelbarrows) can obtain a reasonable estimate of demand within an area by the population that the authority serves.
Infrastructure & Property Statistics
The opportunities for assessing potential sales is almost as wide as the ingenuity of the researcher. The miles of roads within a county council's domain will indicate to a manufacturer of safety reflectors the current potential the sales-person can aim for, as there is an obvious relationship between the two variables. In some circumstances, estimates as to the potential for industrial goods may be calculable from the regionally available rateable values of industrial properties. Even the regional incidence of sunlight and population may be found useful to some industrialists, for example, if they produce solar water heaters.
There are many manufacturers who cannot make broad assessments of the potential for their sales-team from readily available data. For them the answer may be an interview programme in which a sample of carefully selected companies provides an estimate of the regional potential. As our interest is in industrial marketing, it must be recognised that random samples are impracticable owing to the different sizes of consuming companies. The omission of a large end user would clearly bias the result and in a random sample such a company has an equal chance of being missed. This means a high level of discretion must be given to the interviewers who could be directed to research only the largest companies in the area. The approach may seem unscientific and it may even be messy, but it is the only one which works. Given resourceful and diligent interviewers, the results can be very acceptable indeed - even though it may not be possible to measure the accuracy within statistical confidence limits.
The methods that have been discussed for measuring the potential of a sales-person's region are not precise marketing tools. In many instances the opportunity exists for the calculation of the sales potential by more than one method, so providing crosschecks.
Obviously the awareness of the potential in a region does not in itself set the sales target. This may be open to debate depending on views of what is attainable. However, the assessment of the area’s sales potential does put the sales-person’s target in perspective; it shows the total business to go for and it may well indicate a much greater opportunity than had previously been recognised. Indeed, the sales-person and sales manager may otherwise be under the misapprehension that an extra 10 per cent is good enough.