Dilemma: We don’t have a clue what our market share is. We are in several vertical markets, but we don’t know how much 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. How can we determine these critically important numbers?
Thoughts of the Day: Determining whether your company is a big or small player in each market of operation will help inform the decisions you make in the future. It’s about asking yourself a series of questions, like what you plan to gain by figuring out your market share and how do you get accurate data in the first place.
Knowing about the potential within the markets you do business in is essential to determining where your business has room to grow and where it might be vulnerable.
Look at trends as well as specific numbers during a defined 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 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 additional data, too. The Bureau of Labor and the Census Bureau have a lot of information you can access and mine for further breakdowns of what kind of work you’d like to target—or serve as a clear indication of what kind of work or markets you should steer clear of. Understanding the trends that are happening within specific markets, such as a contraction, can help you to better address client price sensititivity or offer services to anticipate their changing needs.
You can also sign up for a database service to look up market size and other details by either a SIC (or Standard Industrial Classification) or NAICS (North American Industry Classification System) code. Ask your banker for connections to their economic department, where you might also be able to find useful information.
Internally, you can separate your 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, as it gives you a more complete picture of the work you do).
- Figure out whether your revenue is growing, declining, or holding steady in each group—and why.
- Consider how many external factors are driving your markets.
- Examine how much of what’s happening to your revenue is influenced by your company’s internal efforts.
But if you’ve had problems servicing customers, that might be under your control—but it also may not be if, for example, you’ve had clients who just want to complain for a free ride or are looking for a lower-priced contract that is difficult to match. If you’ve targeted the wrong customers for what your company does best, that’s usually a sales and marketing problem you can fix. If customers have changed and want something entirely different from what they used to demand, that is out of your control. But you can respond. You have to decide if you can make enough operational or sales/marketing modifications to counter those changing customer needs, if it’s worth it to adapt with the need of certain clients, or to forge ahead and court new ones.
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 what 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! [CD1019]
Robyn Goldenberg is Director of Operations and Marketing for Strategy Leaders. She can be reached at email@example.com.