Friday, March 20, 2009

Is Your Market Saturated?

I’d like to tell you a story.

Several years ago I was part of the launch of a direct sales company. About a year and half later I had an opportunity to do a show for a friend of mine who happened to live in the company’s home city. The population of that metro area was 804,340 at the time. Using the 1 to 1000 rule, the area could sustain 804 active consultants. Using the 80/20 rule, we’d need five times that or just over 4000 signed up consultants to be saturated. (I'll talk about these "rules" below.)

Now, being as the company was based there, many of the first consultants and superstars lived there. In fact, at the time I did the show there were at LEAST five senior leaders – the top level of management with teams generating in the hundreds of thousands in sales per MONTH. Now, of course, the teams were spread all over the country, but a whole lot of them were in this city. Although no one person I knew had access to the company’s ledger, my senior leader estimated (based on conversations about team size with her counterparts, joint meetings, etc.) that there were about 4000 consultants SIGNED UP in this city at that time, eighteen months after launch. Using the 80/20 rule, there were probably 800 active, selling consultants.

So, I pretty much figured doing this show that the audience would have seen it all and heard it all about the company and products. To shorten it up, I did the show, booked two shows, and then one more from one of those. I did four shows there in three weeks, with approximately forty-four total customer guests.

I’d like you to take a guess at the following: How many of the forty-four had already been to one of our shows?

Are you ready for this?

One.

That’s right. Eighteen months after launch, in the headquarters city, with approximately 800 active consultants, ONE guest of forty-four had been to show. Even more interesting, at least HALF had never heard of the company before they were invited.

HALF!

This experience cured me of believing in saturation. But, let me put some "rules" and numbers around it so you can see where the expectations come from.

One reason is simple math. Different examples exist by various organizations, but common wisdom is that an area is saturated when there is one consultant for every 1000 people. Using Year 2000 census data, let’s pick a city. How about the metro Atlanta area? Using only four counties – Fulton, Gwinnett, DeKalb, and Cobb, the population was 2,678,150. So, theoretically that area would be saturated if there were 2,678 consultants for any given company in metro Atlanta.

But wait, don’t forget another common wisdom, the 80/20 rule. That is 80% of the work is accomplished by 20% of the people. So, should you consider the total number of consultants in an area, or 20% of that number? Using that rule, it would take over 13,000 signed up with 20% active to "saturate" these four counties.

Let’s throw another common statistic. Among every three consultants who sign up, one will do nothing, one will sell for a while and eventually drop out, and one will sell something consistently. Then, of the three who sell consistently, one of those will sell only, the second will sell and sponsor and move into lower management levels, and one will sell well, sponsor and move into upper management. For the third, one in three is a superstar. If you’ve stayed with the math, one in nine works the whole business, and one in ninety-nine is a superstar.

Here’s another example, and I’m not picking on Mary Kay. I have PROFOUND respect for that company and what they have accomplished on behalf of all of us who do direct sales. But, there’s a perception that MK is saturated in the U.S. I beg to disagree. Let’s go back to the stats. Population – about 300 million. Divided by 1000 that’s 300,000. And yes, there are more than 300,000 MK reps in the U.S. But, how about the 80/20 rule? Last figures I could obtain for U.S. Mary Kay consultant numbers was around half a million – so 20% of that is 100,000 doing 80% of the sales.

Waaay under the 300,000 the population could sustain.

And no company has anywhere NEAR MK’s numbers. Not even close. I always ask people – is there a Mary Kay rep on your street? Do you know her name? You’d be amazed how few people actually know anyone who actively sells.

Do certain areas have a higher percentage of consultants to population for any company? Absolutely. Does that mean a passionate and determined sales person is destined to fail there? Absolutely NOT. There’s no substitute for effort. None.

Bottom line. Saturation is a myth. Don’t let the perception of saturation keep you from working. A determined sales person who is actively seeking customers will find them anywhere, regardless of how much presence the company has.

Do you love your product? Then just keep looking for people who need it. They’re out there. Just keep asking – and prepare to find customers!

SALES…the Life of the Party Plan.

Kimberly Bates, the Better Seller Coach
Twitter @thebetterseller
http://www.beabetterseller.net

1 comment:

  1. Great article! There is also a myth that being the first Consultant in your area or region is a guarantee for success...not quite so! The growing curve is not always fast and profitable in the beginning stages, especially when no one has ever heard of the products or company before!

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