Think buyer share, not market share

Market share is one of the oldest measurements of success.

But for 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 small- to mid-sized business, sales and growth are derived from tracking buyers and orders.

While the 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, then can be grown into repeat customers.
  • The sales force (inside or outside) is designed to grow specific numbers of buyers and orders. It doesn’t define market share.

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

First, gather and define 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. Andy Birol ([email protected]) is president of PACER Associates, Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. Andy can be reached at (440) 349-1970 or through his Web site, www.pacerassociates.com.