Market share is the most important metric companies can use to judge the effectiveness of any possible revenue generating effort, such as marketing campaigns, branding initiatives, or CRM programs.
The reason for this is simple – market share shows you how you are doing compared to your competition, allows you to quantify the impact your strategies and tactical execution have had on business results, and ask questions of your performance that were previously unapparent to ask.
Yet, despite its importance, many companies ignore market share and instead focus on internal metrics such as satisfaction, awareness, loyalty, leads, revenue growth, etc.
The problem with these internally focused metrics is that they can be deceiving in that while the internally focused company may be happy with its results, this satisfaction could be misleading if the company’s performing below par relative to the competition.
But, it’s not just internally focused companies that don’t calculate market share.
Most companies don’t have the competitive data necessary to measure market share, which is why it has been mainly restricted to academia, as theory taught in classrooms.
The attempts that have been made to calculate market share have been at best a complex guessing game relying on partial and inaccurate data derived from publicly reported figures or from the participating members of industry consortiums.
But, even then, the information was never comprehensive and never available at the levels of granularity needed to make actionable business decisions.
In fact, because most companies don’t engage in comprehensive competitor monitoring or are excessively optimistic, they overestimate their market shares by a factor of two.
The companies without the will or interest to accurately calculate their true market share need to understand the importance of this metric and the peril they place on themselves when they operate without this guide post.
Why is a true, unbiased calculation of your market share so important?
Because market share is a key indicator of market competitiveness, it enables executives to judge total market growth or decline, identify key trends in consumer behavior and see their market potential and market opportunity.
Furthermore, by understanding market share, companies can objectively measure pricing strategies, consumer perception of new products/services, promotions, management personnel, real estate decisions and other key business initiatives.
You may be thinking, this is all well and good, but now what? There is no standard way to measure it.
Well, that’s where you’re mistaken.
Now, for the first time, there’s a way to accurately and objectively calculate your market share – Buxton’s Market Share Solution.
Through a relationship with a credit card provider, Buxton is able to access both you and your aggregated competitors’ de-identified credit and debit card transactions, which enables us to accurately and objectively quantify your market share at all levels of your organization – from the very top down to individual locations.
This market share report supports your ability to understand the impact your business strategies and their execution have had on your revenue and allows you to evaluate both your short and long-term trends in market share and competitive presence.
It gives you the ability to differentiate and quantify the revenue growth and loss you have impacted and to understand the growth and loss which has resulted from changes in the market that were beyond your control.
By understanding your true market share, you can filter out market noise with a metric that is not impacted by macro-environmental variables and measure your impact to revenue across your organization using a consistent, unbiased metric for each location, market and in summary for your entire business.
For more information about the importance of knowing your market share and how Buxton’s Market Share Solution can help your brand not only survive, but thrive, download our report: Market Share by Buxton.