We recently worked with a distributor to identify the market potential for its portfolio of hydraulic and pneumatic products. A second objective was to identify untapped potential in its current customer base. Like many companies, it was working with anecdotal information from the sales force, and wanted to establish an external benchmark for a realistic addressable market size.
As we started to model the market opportunity, the phrase “mine the gap” struck me as an effective way to think about market analytics. Borrowing (or fracturing, depending on your view) the London Underground safety phrase, it nicely captures the concept of market analytics in a few ways.
Most companies don’t try to estimate an addressable market size. The reason tends to focus on not being able to get an “accurate” estimate. So there is a widening competitive gap between companies still guessing (or not) market size and segmentation, and those that have built directional models with benchmarks to profile demand by sales territory, product category and customer segments.
Your ERP system has a wealth of historical sales data to model growth opportunity at specific accounts as well as prospects. You just need to organize it and analyze it – not rocket science stuff. If you haven’t segmented customers by end-market, either with internal codes or using standard SIC/NAICS classification, that’s a first step.
Then build a best-in-class model by segment as a benchmark to measure relative share in other similar accounts. It’s a basic demand profiling tool, but better than nothing at all – refine your market profiler later rather than waiting because it’s imperfect. Call us, and we are happy to talk about best practices to improve your market and customer profiling.
Fill the knowledge gap and your sales team can focus their efforts on accounts and segments with the highest potential return. Then you have a better treasure map to where growth is, and smarter (i.e. more strategic) miners than your competitors.