How To Measure Sales Potential

If your business sells consumer products, consulting turnover indicators is very helpful when making plans and monitoring your sales and making decisions on your sales training requirements. Turnover indicators will show the importance of every region according to the turnover achieved in the retail trade in each one, using a one thousandth measure .

The turnover in each region, especially in large administrative districts, generally does not just consist of the local inhabitants. Regional turnover also consists to a large extent of the inhabitants of the surrounding countryside and tourism. Turnover is therefore the expression of the centrality of an area.

It is better therefore to bear turnover distribution in mind when assessing the sales forecasts of goods which are predominantly sold in larger areas and in the business centres of large towns.

For consumer goods manufacturers, irrespective of whether they are manufacturing confectionary, women's clothing, or DIY appliances, regional turnover is usually more relevant then income.

As well as turnover indicators, other basic statistics could be consulted when planning sales, so that at the end of the day you have a company-specific sales indicator, which takes into consideration all the particular details relating to sales route and consumer patterns, etc.

Your specific sales indicator is depicted for individual sales areas as a percentage of the national figure. A comparison of the turnover (again in per cent) achieved by your own salespeople shows which salespeople have used the existing market opportunities more than most and which have used these opportunities less often than most.

If the whole of your sales force were using these market opportunities to the full, your sales turnover and specific sales indicator (in per cent) would be identical. In practice, however, there is usually a difference in these two figures.

The difference in each area can be calculated as follows:

Market share coefficient = your company's own turnover in %/company-specific sales indicator in %

If the result is greater than 1, the salesperson has made full use of market potential. If the result is less than 1, they have not made enough use of market potential. A result of 1.05 means that the sales representative has exploited market potential 5% more than average. A result of 0.87 means that the sales representative's exploitation of market potential is 13% below average.

You should thoroughly investigate the reasons for this difference. Whilst the result may indicate that extra sales training is needed, the sales person involved may not be the only cause. Differing regional advertising intensity, particular competitive influences and also different consumer habits or lack of continuity may cause this difference.

One of the goals talked about on sales training for sales managers is to mobilise turnover reserves. A turnover increase in supposedly weak areas brings about an increase in the whole of the company's turnover, which, in turn, means that areas which were previously average or above average, receive a lower market share coefficient. The new figures, which relate to the relative market potential of each area, trigger the development of existing markets as a result of increased performance on the part of all of the sales team.