Since your company’s sales are the lifeblood of the business, your ability to credibly forecast sales is critical. Sure, the math is straightforward, but obtaining the source data can be tricky -- especially in new markets.
This hypothetical example determines the estimated retail sales for a local hardware store. (Keep this image open as you read the rest of this post.) As always, there are three primary ways to grow the business:
- Passively enjoy growth in the overall market (This is the "rising tide floats all ships" effect -- where the pie enlarges for all competitors),
- Increase the average yearly purchase amount per customer, and ...
- Steal share from competitors.
Items 1 & 3 relate to customer acquisition. Item 2 is a share-of-wallet issue. Notice that a simple 5% increase in market share from 30% to 31.5% increases sales to $143,248. Yet if all of these variables increases by the same meager 5%, the impact on sales is huge -- bringing the total revenue to $157,930. That's why every company should engage in both "pie-rearranging" and "pie-enlarging" marketing activities.
Action item: Step through this exercise for your company as well as your top five customers. Click here to obtain census figures. Note the search tool that allows visitors to input a specific address to obtain local census figures. Claritas is also very helpful: For some high-level demographic information regarding your trade area(s), click the "You Are Where You Live" button on the right hand side of Claritas' homepage.
To obtain industry-specific trade information, visit ASAE's Gateway to Associations for a complete list of associations to contact. (Select the "Gateway to Associations" option.) With numbers in hand, ask yourself:
- Are my company’s sales per customer below the industry average?
- How quickly is the number of competitors growing in my trade area?
- Is my market growing or shrinking?
If you don’t know, contact a local chamber of commerce in your trading area. Click here for the Nationwide Directory of Chambers. Now, what’s your game plan for dealing with a shrinking or hyper-competitive market?
Q: Need the number of a recruiter who "gets it?"
A: Download Harry's contact info for future reference.