Sales Potential, Definition, Importance, Metrics, Examples
by Mashum Mollah Sales & Marketing 29 January 2022
What Is Sales Potential? It generally refers to what extent, a product can be sold in the market. In essence, it refers to what amount of a particular brand is possible to be sold. Let me make it simpler for you. Do you own a business? Then you will understand sales potential better. Here is an example for you…Have you estimated how much sales would you gain from a particular product within the coming 6 months? I’m sure you have. In short, it is the tool to determine the expected income from a business.
For further details about sales potential including its definition, importance, metrics, and examples…read till the end.
Sales Potential Definition
Sales potential definition is….it is the approximated market share that a firm expects to hold within a given time span amidst a competitive market.
You might be wondering, market potential and sales potential might be two similar things, right? But the truth is, they differ from each other a lot. The market potential is the summative potential sales of the overall industry within a particular time. On the contrary, sales potential is the amount that indicates total sales of a product from all the potential buyers. Thus the difference between market potential and sales potential is of great importance in business decision making.
What Is the Importance Of Sales Potential?
Now that you know the definition of sales potential, what it’s importance in the real world? Follow the bullet points below to get a sneak peek at its advantages as well as disadvantages:
Advantages of Potential Sales
- It indicates to what amount you can sell a product so that it brings the highest possible revenue.
- Since it deals with a summative assessment, it facilitates the decision-making process of a firm regarding the product or service.
- The sales potential method allows a business to predict the future revenue volume, market share, financial and business development.
- It facilitates the key stakeholders to determine the overall business health and meet the targets.
- Profit estimation is also pretty easier through it because of the involvement of direct costs.
Disadvantages of Potential Sales
- At times, this forecast gives incorrect results that hamper the decision-making process
- The purchasing behavior cannot be changes
What Sales Potential Metrics Can We Use
There are 4 key sales potential methods or metrics to estimate the future sales volume of a product or service. Once you get to know them, there is nothing simpler than implementing them. Let’s check them out:
- Territory Management: Here you have to take into account the most suitable salespersons and emerging markets simultaneously.
- Competitive Analysis: How about taking a look at what competitors are doing? Are they following stronger approaches than you? In which areas do you need to improve. View these questions from an industry-wide perspective.
- Median Volume Per Sale: It allows you to gain back the profits you lost due to macro and micro environmental barriers.
- Market Penetration: A ratio between present customers of each targeted province to the total number of potential leads.
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What Are Some Examples Of Sales Potential?
Would you prefer some examples of sales potential over the theoretical explanation? Well, then; let’s consider a company, McDonald’s predictive potential sales is a key component of their decision-making process. Based on the previous data, economic/social/legal/technological factors, the sales potential prediction happens regionally.
Also, here, they adopt internal situational factors like customers, company, employees, etc for this prediction. Finally, they incorporate the outcomes of this calculation into their business decision-making process. The improvement areas are also dependent on these sales potential outcomes.
Now you see, what helped McDonald’s to gain such a huge market share globally!
Q1. An Accenture Sales Team Is In Conversation With A Potential Client. What should the Sales team emphasize to differentiate Accenture’s AI capabilities in the marketplace?
The correct answer to this question is Option 1… A Guarantee That We Will Deliver AI Solutions More Cheaply Than Any Competitor
Explanation To The Answer
Accenture Sales Team Is In Conversation With A Potential Client. One of the key strategies to apply during client communication is to show how quirky a business is. The only thing that matters to the client is how different is your service or product from the competitors. Among the two options, it seems that “low-cost AI solutions” is the thing that the client would get attracted to.
It is because, he will get the alteratives of Accenture’s knowledge, experience, and assets among the competitors; for example IBM. But maybe IBM would not be able to deliver AI services at such a lower price like Accenture. Hence the guarantee to deliver cheap AI solutions is the correct answer.
An Accenture Sales Team Is In Conversation With A Potential Client. – Hope your idea of Sales potential is crystal clear by now.
Frequently Asked Questions (FAQ)
Q1. How Do You Calculate Sales Potential?
There is a general sales potential formula. It is the estimated number of customers*average value of the customers’ purchases. Other than this, there are some more:
- total value from the deals in the currents ales cycle * close rate,
- last month’s sales* velocity = additional sales. After that additionals ales + last month’s rate = next month’s forecasted sales.
Q2. What Is The Difference Between Market Potential And Sales Potential
What is the difference between market potential and sales potential Quizlet? The difference between market potential and sales potential is that market potential is the maximum limit of the overall industry. Whereas, the potential sales is the maximum limit of your company’s sales.
Q3. How To Write A Sales Letter To A Potential Client
How to write a sales letter to a potential client? Follow the steps below:
- Use catchy headlines
- Incorporate bullet points with crucial information
- Use statistics, figures, and facts
- Place call to action at the right places.
- Mention unique offerings
Q4. What Are The advantages Of Sales Potential?
The advantages of potential sales are as follows:
- Best utilization of resources
- Meet the financial targets
- Kickstart the decision making
We have reached the end of this sales potential guide. Not only we have explained the sales potential, but also, we have elaborated on the definition, merits/demerits, metrics, examples of sales potential. Also, we have run a short case study analysis in the scenario of Accenture.
I hope you have got rich insights from this guide. Do you have any further questions for us? Let us know your queries or any viewpoints in the comment area below, we will be reverting back to you.