NEWS RELEASE June 2023
Cleanroom Filters - Example of Creating the Most Profitable Niches
The most profitable market is an aggregation of niches where high market share and EBITDA can be obtained. The template is
- Market opportunity: annual revenue of $10 million
- Market share: 20% or $ 2 million
- EBITDA: 30% or $ 600,000
- Direct sales cost: 5% or $ 100,000
- Sales cost per man year: $1 million
- Man-years per niche: 0.1
- Value propositions per sub niche: 1 or more
- Number of niches which can include a specific sub-niche: multiple.
The individual salesperson has assignments in certain sub-niches which can be combined around specific value propositions which maximize EBITDA.
Here is an example for a $1 billion company.
- 500 niches
- 5000 sub-niches
- Sales allocation: 50-man years
- Niches per man year: 10
- Sub niches per man year: 100
Let’s use California as a geographic example. It could easily represent 5% of the biopharmaceutical world opportunity and 3% of the total market for the company.
There will be the need for the local salesperson to be supported by a regional manager and various product managers. Large accounts such as Amgen need to be supported to coordinate the home office and plants in California with the one in RI and the one under construction in NC.
- Revenue: $30 million
- Total man years: 1.5
- Sub niches: 150
- pharma air filters: revenue $4 million or 2 niches, 20 sub niches and 0.2-man years.
- pharma FFUs, scrubbers. Dust collectors, and mist eliminators: $ 1 million or 0.5 niches and 5 sub niches
- Other high purity industries including semi air filters: $ 6 million.
- Other high purity industries FFUs, scrubbers dust collectors and mist eliminators: 2 million
- Revenue for all products in other industries: $ 17 million
The assignments of time by salespeople are dictated by the value proposition. One may be to offer cleanroom filters and pre filters on an annual contract basis to large users. The assignments would mostly be to the product and large account managers with minor involvement for the local salesperson.
Another value proposition would be to coordinate all air purification needs for small prospects. The local salesman would play the major role.
The assignments would be very specific, the local salesperson would be expected to spend 28 days out of 250 on pharma air filters.
Potential Assignments from the Perspective of Pharma Air Filters
The program will emphasize collaboration and maximize the knowledge and insights of each assignee.
One initial reaction could be that this is way too much detail. On the other hand, it is way too much detail to utilize FIFO cost accounting for each product. This level of focus is necessary to marry the right value proposition and the appropriate validation.