In our first of three articles, we discussed a relatively simple methodology to identify the predominant industries for one?s customer base and also market sizing for same. We called it: Determining Industries and Market Size The Cheap and Cheerful Method.

Yesterday, we moved on to a somewhat more elaborate analytical effort to find your best customers, but it will give you substantially more detailed information to base your planning upon. We’ll called this one: Determining Industries, Market Size, Firmographics and Best Customer? Profile

Today, we complete this 3 part series with the final few steps to complete: Determining Industries, Market Size, Firmographics and Best Customer? Profile.

  1. 1. Develop the KEY firmographics of your database.

Using the matched data, you now want to do a few database exercises to give yourself separate views of sales volume, employees, NAICS code and State. I’ll show you examples of these in a moment.

How to do the analysis: There are probably a number of methods and softwares that can enable you or someone on your staff to do these analyses. I prefer to use the Pivot Table function in MS Excel because it’s a commonly used software and (for me) it’s not too difficult to learn. Here’s a good introductory video about Pivot Tables.

The purpose is to take our 4,000 lines of data and collapse it into useable tables. In other words, we’re going to take data and turn it into information. When the raw data is organized into summarized tables, you can quickly see where the numbers cluster. The clusters for any given firmographic element are what I call the Sweet Spot? and all of the sweet spots combined provide a Best Customer Profile?. Please note that you are the one who identifies the sweet spots. The pivot table function does not do this for you. This is where your best judgment comes into play.

Let’s do an example using our 4,000 matched database scenario. You’ll use Pivot Tables to develop summarized tables for Sales Volume, Employees and NAICS code. Here’s a view of the tables you should build using the Pivot Table function:







Our final analytical step is to combine all of these Sweet Spots? into one profile.

This is the firmographic profile of this company’s best customers:

You now have statistically reliable data that tells you:

  • Your best industries
  • Your best customers by size for sales volume and number of employees
  • Your best geographic markets
  1. 2. Determining Market Size and Market Share.

This last task is easy and should not cost any money to accomplish. Equipped with the firmographic profile of your best customers, you now want to determine how many other companies match that same profile …this is the market size.

You simply go to a business list provider, give them the firmographic profile of your company’s best customers and ask for a count of all companies that match that profile. Easy!

Determination of market share: In this example, we would ideally want to identify the number of customers (of the 4,000) that have all three of the firmographic characteristics in common. If you have an analyst who can do this data manipulation, then you can take the resulting number and divide by the market size and you now have your market share. In the absence of this analytical skill set, I would be satisfied with simply taking the number of customers who match by industry code, adjust that number down by 20% to 25% (to broadly reflect sales volume and employees). Use the resulting number and divide by the market size and you now have your market share.

A few final thoughts about this approach:

  • The methodologies described above are intended for use by small or medium size companies who require good estimates of market size and market share but do not have the resources to hire staff or organizations that do this for a living (and charge significant fees for their services). In other words, either of the solutions above will provide good estimates of size and/or share but are not a substitute for an intensive, robust market size and share exercise but which could easily be a five or even six figure investment.
  • The so called ?sweet spot? ranges for sales and employees are intended to show the best ranges to target. These are the niches that your current sales and marketing efforts would indicate to be your best bets for new customer acquisition. However, that is not to say that one shouldn?t target prospects that fall outside these ranges. In fact, you may have a business growth strategy that specifically targets companies that fall outside these ranges. My one suggestion would be to test these secondary ranges and analyze the results before going full steam ahead with expensive acquisition programs.
  • Lastly, I currently do not have any kind of commercial relationship with Melissa Data and have not personally experienced their abilities regarding data cleansing and append services. Please proceed using our own best judgment on what company you might like to engage with this kind of project.

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