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Market Data’s Power

July 30, 2018
You can analyze your investment in local markets doing some rather simple calculations with the data Electrical Marketing publishes.

I have been a bit of a market data nut since my earliest days with Electrical Wholesaling. One of my mentors, the late Andrea Herbert, was respected throughout the electrical industry for the Market Planning Guide she created in the late 1970s as part of her MBA project at Rutgers University. She won several Jesse H. Neal Awards, the highest honor in the business, for her efforts.

Over the past few years, Electrical Wholesaling’s editors have built on the foundational market data Andrea created with the Market Planning Guide to offer quarterly updates for electrical sales potential at the state and local level as part of a $395 annual subscription to Electrical Marketing Newsletter. We use the sales-per-employee equations she developed more than 30 years ago for these forecasts, and supplement that information with local market and state data on construction projects on the drawing boards or breaking ground, building permits, gross metropolitan product (GMP) and population trends. The cover story in this issue titled “It’s Market Planning Time,” (page 16), gives you a glimpse at some of the data we publish in Electrical Marketing.

Our journey through the world of electrical market data continues as we learn how to best analyze local market information and present it in formats that work best for our readers. The journey at times takes some strange twists as we learn more about the local markets that make up the electrical industry. For instance, during a few recent cross-country road trips my wife and I recently enjoyed, I found myself thinking about all the lonely miles between cities in so many states, and how some cities had to account for a lopsided proportion of the state’s total GDP, population, building permits, employment and, most importantly, electrical sales potential.

After returning from a two-day, 1,400 mile-ride from the Kansas City metro to Sanibel Island, FL, I had the geeky pleasure of revisiting some calculations I had done a year or two ago on some of the MSAs we passed through, where we looked at those cities’ contributions to their state’s economy.

I found the fast-growing Nashville MSA accounted for roughly 38% of the Tennessee’s total GDP, and 33% of the state’s total electrical contractors. A few hours down the road is Atlanta, which accounts for 68% of Georgia’s GDP and total number of electrical contractor employees all by itself. It’s one of those markets that dominates its state’s economy. The Phoenix, AZ, and Las Vegas, NV, metros, each with 75% of their states’ GDP, are two other good examples of cities with dominant economies. Las Vegas also accounts for 75% of Nevada’s electrical contractor employment, while Phoenix is a bit higher at over 80%.

Maybe it’s just me being a data freak, but I am fascinated by the fact that so many percent-of-state calculations work out to roughly the same percentage. It’s by no means exact for every local market, but it happens often enough that a metro will be within a percentage point or two of having the same percent-of-state ratios in its GMP, employment, building permits and other indicators, that’s it’s not an accident. I have found the same similarities with the same indicators for individual states as a percent of the national total.

What does all this data mean to your business and how can it help drive more electrical sales? You can use a metro’s percent-of-state calculations to see if you have the proper mix of sales personnel, inventory, and perhaps even branch locations invested in that market area. If  a local market’s percent-of-state data is quite a bit different than your company’s percent-of-state investment in that local market, it may be time to dig into the discrepancy. This sort of data analysis is by no means an exact science because each local market is unique, but it may be a good exercise to go through with your management team.

As important as it is to regularly analyze a local market’s economic indicators  and electrical sales potential, your success or failure in any MSA will depend much more on the strength of your relationships with the local customers and buying influences in that market. If you aren’t providing them with the right electrical products at the right time and place at a reasonable price, get that part of your equation tuned up before investing time in data analysis.