Understanding Sales Potential: Definition, Application, and Strategies for Leveraging It

Sales Potential refers to an evidence-based estimate of the achievable sales or billing level for an individual business customer across different offerings. It is derived from the behavior of similar customers in a peer group, providing insights into what could realistically be achieved within a given market segment.

In this context, "evidence-based" means that we look at existing customer data to establish benchmarks for what constitutes a "good" sales level. These benchmarks are not static—sales potential evolves as customer behaviors and market conditions change. As performance improves, sales potential can increase accordingly.

Why is Sales Potential Not a Fixed Figure?

Sales potential is dynamic, not a fixed number. As sales performance improves or as more data becomes available, the evidence supporting the potential changes. This allows businesses to refine their forecasts and adjust their strategies to better capture growth opportunities.

The Role of Peer Groups in Defining Sales Potential

One key factor in estimating sales potential is the use of "similar" or "peer" companies for comparison. By analyzing these peers, businesses can model the market and segment customers into groups, making it easier to predict potential sales outcomes.

The more specific the segmentation (e.g., using the Standard Industry Classification level 3), the larger the dataset required to get meaningful insights—especially if the customer base is highly diverse. However, with clustering and segmentation techniques, we can derive actionable insights even with a relatively smaller customer pool.

Understanding Sales Potential in Different Business Contexts

Sales potential varies depending on the stage of the business and the market maturity.

• Early-Stage Business: In the initial stages, new customers represent "greenfield" projects, where the focus is on introducing new solutions to the market.
• Mature Business: As a business matures, new customers come mainly from competitors. At this stage, the focus shifts to more sophisticated strategies involving demand generation, lead nurturing, and customer retention. Risk management and retention strategies become critical to sustain growth.

Example of Variations in Potential:

• Segment A: High volume of customers—offering significant opportunities for upselling, cross-selling, and new customer acquisition.
• Segment B: No existing customers—no evidence of sales potential.

Practical Use Cases: How to Leverage Sales Potential for Growth

1. Account Planning

Account managers can use sales potential to identify which offerings are currently generating revenue and where there is room for growth potential. By combining current value with potential sales, account managers can prioritize areas for upselling, cross-selling, and improving retention. This ensures a more strategic approach to growing customer relationships and driving revenue.

2. Growth Planning

Sales potential is also valuable for growth planning. By analyzing macro-market data such as company size, industry, geographic location, and other attributes, businesses can identify high-potential segments. This helps define an “Ideal Offering Profile” that supports both organic growth through existing customers and new customer acquisition. Prioritizing these segments ensures that marketing efforts are focused where they will have the most significant impact.

3. Offering Management

On the offering side, understanding sales potential helps determine the “Ideal Customer Profile” (ICP). By identifying the customer types that offer the highest growth prospects, businesses can prioritize efforts and resources effectively. This ensures that the right customers are targeted with the right offerings, optimizing both the sales process and customer satisfaction.

Conclusion

Sales potential is a vital concept that drives growth and strategic decision-making in businesses. By leveraging evidence-based insights and applying sales potential across account planning, growth strategies, and offering management, companies can identify and prioritize opportunities for sustained success.

"Similar companies or peer companies" is an important factor in this modeling. By modeling the markets according to customer segmenting and grouping, we can create scalable outcomes. The more specific the segmentation is, e.g. in case we would directly use Standard Industry classification level 3 segmenting, we need thousands of customers to analyze, especially if the customer base and target group is very heterogenous. By clustering and segmenting customers we can get to actionable and relevant insights with much smaller customer base.

Potential has a different meaning in different business types

In early stages new customers represent greenfield projects and the business is about adopting new solutions, but in later stages all new customers are won from competitors. Naturally the actual means to turn potential into sales are very different and require different approach to demand generation, lead generation, selling and retention. In matured markets, risk management and retention become very important factors.

Variation:

1. Segment A: a lot of users and volumes of hunting customers = Potential for upselling, cross-selling and new customer acquisition
2. Segment B: No customers = No evidence = No potential

USE CASES - VALUE AND BENEFITS

1. ACCOUNT PLANNING: When an account manager does account planning, they have a clear view on which offerings the money is coming now and is there up-sales potential in those offerings. In order to grow offering penetration, improve retention and uplift annual revenue there is also potential for cross-selling offerings. The combination of current value and potential gives answers and priority for account management for growth.
   
   
2. GROWTH PLANNING: By using views with macro market level data, the current value and potential can be analyzed by company size, Industry Classification, Geo location, Sales team, internal division/business unit/subsidiary or any other attributes. When we look at the history and change, we are capable of delivering "IDEAL OFFERING PROFILE" for different segments and supporting organic growth with upsales, cross-sales and new customer acquisition priorities.
   
   
3. OFFERING MANAGEMENT: On the offering side the important question to answer is about "IDEAL CUSTOMER PROFILE". Offering side needs to prioritize customer types and define priorities on who are they actually serving and where are the biggest growth prospects.

LEARN MORE ABOUT PRACTICAL USE CASES FOR POTENTIAL

Value and Potential Based segmenting for management

ARPA (Average Revenue Per Account) Defined

Penetration Defined

Risk and Readiness Defined