We don’t have a clue what is our market share. We are in several vertical markets, but we don’t know 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 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: It’s about answering a series of questions: Why bother with figuring out market share? Where do you go to get data? 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 determining where your business has 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. Look at the percent of the market done by your company. 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 opportunity you can chase because you 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. The Bureau of Labor Statistics and the Census Bureau have a lot of info you can access and mine. Sign onto a database service to look up market 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 to 5 equal-size groups — more groups is usually better. Figure out whether your revenue is growing, declining or holding steady in each group. Then 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?
For each vertical market, consider how you’re doing. Look at factors such as sales efforts, marketing results, competitive threats and the ability to successfully service your clients in each market. Identify where you’re weak or strong, by factor, by market. Consider whether strengthening or weakening by market is under your control or out of your control. For example, if you could get more market share by adding to your sales force, that’s under your control. If you have a competitor who recently ramped up their influence and is pulling work away from you, that’s not under your control. If you’ve had problems servicing customers, that might be under your control and it might not. If you’ve chased the wrong customers for what your company does well, that’s a sales and marketing problem you can fix.
If customers have changed and want something entirely different from what they used to want, that 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!
BOOK RECOMMENDATION: “The CEO’s Guide to Marketing: The Book Every Marketer Should Read Before Their Boss Does” by Lonny Kocina.
Andi Gray is president of Strategy Leaders Inc., StrategyLeaders.com, a business-consulting firm that teaches companies how to double revenue and triple profits in repetitive growth cycles. Have a question for AskAndi? Wondering how Strategy Leaders can help your business thrive? Call or email for a free consultation and diagnostics: 877-238-3535 or AskAndi@StrategyLeaders.com. Check out our library of business advice articles at AskAndi.com.