DACOR APPLIANCES MEASURING SALES TERRITORY PERFORMANCE

Dacor Appliances is the premier manufacturer of high end kitchen appliances in the United States.  Half of the company’s sales territories were  managed by company sales representatives, the other half were managed  by distributors.  There was not an established measurement to compare sales performance vs. market potential, and it was difficult to know which group of territories was performing better.

ENGAGEMENT GOALS

The goal of the project was to develop  an accurate, easy-to-understand measurement to compare sales vs. market potential within each sales territory

THE PROBLEM

The problem is this:  how does a company compare New York vs Oregon in sales performance?  Or California vs. Nebraska?  Is this even possible?states

MARKET POTENTIAL

The goal is to geographically allocate a 100 point index representing 100% of the US market potential.  If we’ve done a good job creating our index, then 1% of market potential in New York is the same as 1% of market potential in Oregon, California, and Nebraska.  The results for the four states are shown in the table below.  By adding sales data, we can calculate sales performance vs potential in each state, no matter how large a state is.salesbpi

CALCULATE RATE OF REVENUE FLOW

The math is simple – but powerful, and can be used to in many ways to provide strategic guidance to a company.  The result calculates how FAST cash is “flowing” out of each state (which is very different than how much).  We can compare each state on equal grounds- whether that state is New York, or New Hampshire. Dacor Flow Rate - California

By applying this simple formula to all four states in this example, the following table results, showing that cash is flowing very fast in Oregon, but not that fast in New York.  It shows that a state similar in size with New York (California) is generating sales 38% FASTER, more efficiently, than New York.  It indicates by all standards, that New York is under-performing in spite of HOW MUCH total revenue it is generating for the company.Dacor Flow Rate Table

THE RESULTS

Dacor was able to compare the performance of every territory, every state, every metropolitan area, and make more informed, better strategic decisions.  Changes were implemented, and as a direct result of these changes, the company generated an additional $20M the following year.

money

For more information this case study, or on how your organization can estimate market potential and develop a strategy for improved sales performance, contact GeoStrategies at (800) 738-4GEO

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