“We don’t have a clue what our company market share is. We are in several vertical markets, but we don’t how much just comes to us from each of those markets, and how much we have to fight to get. Nor do we have a plan going forward for how much business we can count on, and how much we’ll have to bring on through existing or additional efforts.”
Thoughts of the Day: Company market share is a key to profitability and competitiveness. Why should you care about figuring out market share? How do you calculate data to determine it? Considering why your company is a big or small player in each market in which it participates.
Knowing about the potential of the markets you do business in is essential to determine where your business has the potential to grow and where it might be vulnerable.
Look at trends as well as specific numbers in a given period to determine if your target markets are growing or declining. What do percent of company market share indicate? Use that information to figure out if there’s a target on your company’s back because you’re a big player or a lot of opportunities you can chase because you currently have a tiny portion of the market.
Ask your best customers if they have any data on their industry that they would be willing to share. Look to industry associations for data. Bureau of Labor and the Census Bureau have a lot of info you can access and mine. Sign onto a database service to look upmarket size and other details by SIC or NAICS (North American Industry Classification System) code. Ask your banker for connections to their economic department where you might be able to find useful information.
Separate revenue into categories of markets in which you do business.
- Break it down into at least 3 – 5 equal size groups, more groups is usually better.
- Figure out whether your revenue is growing, declining or holding steady in each group.
- Look at why for each market.
- How many external factors are driving your markets?
- How much of what’s happening to your revenue comes from your company’s internal efforts?
Consider how you are doing in each vertical market.That tells you company market share.
Look at factors such as sales efforts, marketing results, competitive threats, and ability to successfully service your clients in each market. Identify where you’re weak or strong, by a factor, by market. Consider whether strengthening or weakening by the market is under your control, or out of your control. As an example, if you could get more market share by adding to your sales force, that’s under your control. However, if you have a competitor who recently ramped up their influence and is pulling work away from you, that’s not under your control. Addressing problems servicing customers might be under your control well. If you’ve chased the wrong customers for what your company does well, that’s a sales and marketing problem you can fix.
Change in customers wanting something different from what they used to want is out of your control. But you can respond. You have to decide if you can make enough operational or sales/marketing changes to counter those changing customer needs.
It is possible to gain a lot of control over current and future market share.
You have to be willing to do the analysis to understand what’s going on. Then make choices about changes to implement. Decide on the budget to put to changes and match that budget to the expected return on investment to make sure you’ll get your money back and then some. And then get to work!
Looking for a good book?
Try, “The CEO’s Guide to Marketing: The Book Every Marketer Should Read Before Their Boss Does“, by Lonny Kocina.
