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Definition

A sales potential forecast comprises the number of prospects and their buying power. Sales potential can be represented in a number of ways. Of these, the most basic is population (i.e., the number of potential accounts in a territory). In a survey of nearly 200 senior marketing managers, 62 percent responded that they found the "sales potential forecast" metric very useful.[1]

Purpose

This metric can be used to determine sales targets and to help identify territories worthy of an allocation of limited sales resources.

It does not assess the likelihood of converting "potential" accounts. Definitions of buying power are more an art than a science.

Construction

      Sales potential ($) = Number of possible accounts (#) x Buying power ($)

Buying power is a monetary figure based on such factors as average income levels, number of businesses in a territory, average sales of those businesses, and population demographics. Buying power indices are generally specific to individual industries.

References

  1. ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc. <http://www.amazon.com/Marketing-Metrics-Definitive-Measuring-Performance/dp/0137058292>

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