Think buyer share, not market share: Determining the strength of your company in the marketplace is not as simple as defining your market share. Cons

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

Market share is one of the oldest measurements of success. But for the small to middle-sized business, particularly those with sales forces, it is virtually meaningless for several reasons. Among them:

  • Only the largest businesses have the capacity to serve meaningful shares of most markets.
  • Small to medium-sized businesses are by nature niche players. They can only serve smaller pieces, usually defined in their own unique way.
  • There is no objective data to determine a company’s share of a niche it has defined. Sales forces instead focus on identifiable buyers.

So how can a business keep track of its market position? For the typical mid to small-sized business, sales and growth is derived from tracking buyers and orders. While number of orders is useful, tracking the number of buyers is the best way for small businesses to determine their share.

That’s because:

  • Companies don’t buy, people do. Buyers purchase one time and then can be grown into repeat customers.
  • The sales force (inside or outside) is designed to grow specific numbers of buyers and orders. They don’t define market share.

>That raises another question: How can your company quickly measure buyer share?

First, gather and define all your existing buyers by general and specific characteristics, including title, role in their organization, role in your buying process and style and personality.

Then, add new prospect buyers to your potential number of customers by defining prospects in terms of those you now call customers.

Finally, track results and market share three ways - number of first-time buyers, first-year purchases and expected lifetime purchasing of the buyer. Defining these numbers as a portion of everyone your company is aware of allows you to measure your firm’s success in real terms.

By taking these three steps, you will have a meaningful share number that the whole company can understand. Specifically, the sales force and your marketing department will have targets they can agree upon. And, finance can tie actual and potential sales to sales and marketing efforts and costs.

The bottom line is that simplifying and expressing your firm’s performance in terms of buyer share is a win-win proposition. Otherwise, your company is flying blind without true measurements of your market position.

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080 , by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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