I am often asked about potential and how much something will cost and what the return will be. This is true in both paid & owned media campaigns. I am unsure if it holds true in PR style efforts, but I imagine it would.

The theory: The size of the market for a product can be calculated based on the Inside Audience and an aggregate averaging of the external potential audience.

I turned this theory into a framework called the InsideOut Potential Market Sizing Framework. To utilize this framework, you must

• be an established business with at least 12 months of revenue from an existing customer base
• you must have some basic baseline data on conversion rates
• You should also have a good idea of attrition rates & lifetime value

Thats what you need at min. to get started.

Here is how the first iteration of this works:

Mo – Mi x AC = MSp 

M = Market

o = Outside

i = Inside

AC= Assumed conversion

MS = Market Size

P = Potential

How to get the data?

Use your first party data to understand 1) how many customers you have 2) What do your customers looks like so you can identify and build up the outside market.

Then use a mix of first party data, social media data (think Facebook Audience insights) and 3rd party sites or industry reports to build out both sides of your equation.

The trick to this theory is finding a realistic average for the outside market, ensuring you have taken steps to account for the redundancy in your existing customer base.

To see an example or work through this over a cup of coffee, hit me up on twitter @tj_g3  or the contact form 

*as of this publishing, I have not seen this theory in practice or published elsewhere, if it has been, please let me know and I will gladly add attribution.