Page 102 - HBR's 10 Must Reads - On Sales

GOYAL, HANCOCK, AND HATAMI

2. Determine Growth Potential
To gauge each micromarket’s growth potential, determine what drives your
customers’ (and potential customers’) purchases. Build a list of 15 to 20
drivers using industry knowledge, interviews with customers and reps, and
informed hypotheses. Drivers might include cost of inputs, cost of capital,
local demographics, and so on. Determine to what degree each driver influ-
ences customer purchases—for instance, derive simple correlations of growth
using historical data from the previous two or three years. Understanding
which drivers have the greatest influence on customer demand helps you
determine in which micromarkets future growth is most likely. Also, informa-
tion about demand at the individual customer level, when aggregated, can
help further define high-growth geographic areas.

By examining the drivers of customer purchasing in each micromarket, such
as terrain and age of housing stock, the firm gauged which markets were most
likely to grow.

Growth potential
Low High
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