Territory Design: The Power of Understanding Market Potential

  

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One of the most important pieces of data for a sales force to understand is Market Potential.  However, very few sales leaders can articulate the Market Potential for their sales force, most sales managers fail to understand the Market Potential of their region and many sales reps have no idea the Market Potential for their territory.

Sure, Market Potential is hard to determine and/or expensive to buy.  But, a sales force risks compromising every strategic decision that is necessary to define a healthy go to market plan without at least an estimate of Market Potential.  How else can a sales force answer questions like:

• How should sales territories be defined?
• What are realistic sales goals for each sales territory?
• How should sales results be measured?
• Where do the greatest sales opportunities lie?
• Where should sales demand be stimulated?
• How should sales leads be scored, graded and nurtured?
• What is the optimal sales process for converting potential prospects to customers?
• What go to market sales channels are appropriate for executing the sales process against the universe of potential?
• How many sales reps are required?
• What is the right sales structure to capture the potential?
• What are the right sales quotas to assign?
• How should sales compensation plans work?
• What sales talent does the sales force need?
• How should sales managers spend their time?
• What is the appropriate sales investment level?

This list of key strategic questions could go on and on, as everything a sales force does builds upon the available Market Potential.

Typically a sales force will attempt to answer each question above based on what was done the previous year, making incremental changes over time to do more of what works and less of what does not.  But what if the Market Potential shifts significantly and decision making does not keep up?  Or more importantly, what if prior sales decisions set the sales force on the wrong course and too much thrashing is required before the right mix of answers is compiled together?

Prior posts (Steps 2 and 3 of the Territory Design Process) explained the process for determining Market Potential using data that a sales force likely has available today.  Another option is to buy Market Potential information from a data provider.  Both options are viable and highly recommended.  Regardless which is chosen, the key to success before making further strategic sales decisions is to have an understanding of Market Potential.  This will ensure the path forward is valid and supported by those who will buy what you have to sell.

Learn more about Sales Analysis & Territory Design.