Penetration

Of the products or services a customer could reasonably buy from you, the share they actually do. A customer buying three of nine lines is at 33 percent penetration.

DefinitionOf the products or services a customer could reasonably buy from you, the share they actually do. A customer buying three of nine lines is at 33 percent penetration.

How it is computed

Penetration = products the customer buys ÷ products the customer could buy

"Could buy" is the judgement. For a store it is the SKU list for its channel. For an institutional client it is the strategies or products that similar clients hold. For a hospital it is the product lines a facility of that type uses.

Weighted and unweighted

Unweighted penetration counts products. Weighted penetration weights each by its typical value, so missing the largest line counts for more than missing the smallest. Report which one you use.

Levels

Per customer first. Then per salesperson as the sum of products held over the sum of products possible across their customers, not the average of their customers' percentages.

Where it goes wrong

Measuring every customer against the full catalogue, so a convenience store is penalised for not stocking the 24-pack. Counting a product as held on one small order a year ago. Not updating the possible set when the catalogue changes.

How it is computed

Products a customer buys divided by the products relevant to customers of its kind, where relevant means bought by more than half of comparable customers.

Example

A customer buys three of the six lines that most similar customers buy: 50 percent. The three missing lines are valued at the median spend of those who do buy them.

Where it goes wrong

The whole catalogue used as the denominator. Every customer scores low and the gaps include things they could never use.

Articles that use this term

AI and self-service analytics

A weekly sales digest worth reading: what a good one looks like, line by line

An annotated example of a weekly sales digest built from computed tables: the header that states the period and the checks, ten movements each with the measure, the level, the change, the threshold and the citation, the three lists that follow, untouched, slipped and dormant, the line that says what did not move, and the footer with the definition version. What each element is for, and the version of the same digest that nobody reads.

16 Sept 20263 min read Coverage and territory

Account penetration rate: formula, denominators and a worked example

Account penetration rate defined, accounts buying over accounts in a stated universe, the four denominators it is computed against and what each answers, the target list, the estate, the segment universe and the installed base, a worked example per rep against a target list, the roll-up, the identity to the universe file, and why a penetration rate with no stated universe is a percentage of nothing.

16 Sept 20262 min read Wallet share and penetration · Industrial manufacturers

Aftermarket attach: installed base against parts and service revenue

How an industrial manufacturer measures aftermarket capture per customer from the installed base register and the parts and service ledger: expected annual aftermarket per unit from the customers who buy it all from the OEM, actual per customer, the attach rate, and the list of customers running the OEM's equipment on someone else's parts, ranked by the revenue at norm.

16 Sept 20262 min read Wallet share and penetration · Industrial manufacturers

Catalogue fit per customer: how a manufacturer measures the product lines its customers could buy

A method for industrial and component manufacturers to measure, per customer, the product lines bought against the lines customers of that type buy, value the gap, keep direct and distributor channels from double counting, and reconcile to shipped revenue.

16 Sept 20263 min read Wallet share and penetration · Industrial distributors

Category penetration and dormant accounts by branch for industrial distributors

How an industrial, MRO or building products distributor measures category penetration per account and finds dormant accounts per branch from the ERP's invoiced sales: the norm from your own accounts, the valued gap, the dormancy window, and the roll-up that reconciles to invoiced sales.

16 Sept 20264 min read Wallet share and penetration · Construction and building materials

Category share by trade: plumbers, electricians and builders against their own norm

How a builders' merchant measures each trade account's category basket against the norm for its trade rather than against the branch average: the categories a plumber's account typically buys and at what share, the same for an electrician, a general builder, a roofer, the accounts below their trade's norm in a category they should buy, the value at norm, and why the trade field on the account master is the most valuable column the branch never fills in.

16 Sept 20263 min read