A sales GAP analysis is a critical tool for companies that
provide industrial finished goods within a business-to-business marketplace.
The analysis not only defines the opportunities for sales with individual
customers, but it also summarizes the opportunities within a larger sales
territory and the company’s entire market. In fact, the GAP analysis is the
building block that helps define a company’s market share.
Consultants are known for taking simple strategies and complicating them. They’ll take some that has been well understood for decades and put their own spin on it. It’s their way of adding value, but in the end, it’s not new.
The GAP analysis isn’t new; it’s a simple tool that defines the business you have now versus the business you want to close. What business do you have now, and must defend in order to maintain market share, versus the business you must close in order to increase sales and increase market share? The GAP analysis answers this question.
Let’s assume your company sells widgets to an original equipment manufacturer (OEM). You know that you can sell one widget for every line your customer makes. In order to define how many widgets you can sell to the equipment manufacturer, you need to know how many models they make and how many they sell of each model. This is the only way you can define the total number of widgets you can sell to this customer.
A Simple Example of a GAP Analysis
Your salesperson is tasked with determining, 1) how many models the equipment manufacturer makes, and 2) how many of each model they sell in a given year. The salesperson then provides the following table. It defines the sales he/she is making right now, versus the opportunities for sales that remain.
The above table is from: Performing a Sales Gap Analysis on an OEM Account
The GAP analysis involves taking the total potential for sales with the customer minus the company’s current sales. What remains is therefore the GAP. It’s nothing more than subtraction. However, it’s critical to defining the sales potential with a given customer.
Now, I’ve used gross profit in the above table. The reason being is that a sale has no value if there’s no gross profit. As such, gross profit is the ultimate indicator of an order’s value to the company. However, you can easily do this analysis on units sold or total sales. In fact, sales totals are often a good variable to track within the analysis because marketing budgets are expressed as a percentage of the company’s sales.
The purpose of the analysis is to define existing opportunities for sales. It’s simple and straightforward. It’s an ideal tool for any company that provides consumables, raw materials or industrial finished goods. All you need to do is define total sales with a customer, within a territory and within your market.
To read more, please go to the following articles:
Performing a Gap Analysis on a Sales Territory
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