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.
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.
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.
Sales potential varies depending on the stage of the business and the market maturity.
Example of Variations in Potential:
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.
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.
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.
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.
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:
Value and Potential Based segmenting for management
ARPA (Average Revenue Per Account) Defined