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Tuesday, October 17, 2006

All About Market Penetration and How to Make Customer Type and Revenue Goals Fit

Market penetration is simply the way you gain market share by informing your customers about your product. Market penetration is an important part of business strategy, particularly when you are talking about revenue goals. If you need to get a specific amount of revenue, you need a market penetration analysis in order to figure out what type of customers you need in order to get to your goal.


Your first step is to figure out the revenue goal for the next twelve months, then figure out how much of that revenue will be achieved by each client.

For example, you may want to do $120,000 worth of revenue for your company in the next year. That means in order to figure out market penetration you have to decide if the revenue will be earned from six clients at $20k per client, 12 clients at $10k or 20 clients at $6k. When you do a market penetration analysis, you have to consider your average client size in order to figure out what your sweet spot customer is. The bigger your client, the more services you can offer and the fewer clients you will need overall. This marks the first step.

The next step is to analyze the number and types of businesses that are in your area. You need to know if there are enough businesses able to afford $20k or service per year, and if selling to this size is going to work for you and be realistic. The most important thing to think about in terms of your revenue goals is to fit your market penetration strategy with the types of businesses in your area.

Market penetration starts with your total revenue goal and is important to your business success; you need to be certain that sweet spot clients will be able to get enough revenue for your business.

Blogged By: Computer Consulting 101 Professional Kit