• (08) 8232 1400
Market Share vs. Customer Share

Market Share vs. Customer Share

Here’s a big tip: forget market share, set your sights on customer share.

As a business owner, you’ve probably heard many times that getting one new customer costs five times as much as retaining an existing one. Why then are so many businesses putting so much money into going after new customers? The answer is that they’re looking to increase market share.

You may be thinking, so what? Isn’t that a good thing? Isn’t that what I should be doing?

Well, the problem is that for small businesses this approach won’t really work in your favour.

Sure, if you’re a massive corporation, like the major supermarkets, then you will probably earn yourself a market share. But if you’re a small business owner, it’s highly unlikely that you’ll even make an impact on market share regardless of the number of customers you acquire.

What I recommend you go for instead is customer or wallet share. Having a customer share will let you compete with the big market leaders and, often, beat them.

Today’s consumer is hungry for good service. Look after a customer well enough and they’ll give you your loyalty. You’re more likely to go back to the coffee shop that gave you an extra stamp on your loyalty card, than the shop that didn’t. Even tiny, generous gestures such as that free stamp can have a big impact on retaining your customers. Not to mention the reputation your business gains through the positive recommendation those customers might give to others based on a great experience.

The point is that you want to look after your existing customers so they don’t need or want to go elsewhere.

To go after customer share is to aim at getting 100% of your customers. What I mean by this is that you should aim to have your customers buy 100% (or as near as possible) of their goods or services from you. Do you think your customers do this with your business? If you’re not sure, perform a survey to find out. I can tell you that most customers will buy from more than one outlet.

So seriously consider redirecting your attention and efforts away from market share. Focus on customer share. Instead of clamouring for new customers, nurture and retain the ones you already have. You can go about this in a variety of ways but it always comes back to attentive service. Follow up on your sales, alert them to special offers, run promotional events and/or start birthday clubs or loyalty programs.

Be creative, be generous, be different. Anticipate your customers’ needs and wants and deliver. Above all, provide excellent customer service and maintain regular contact with your customer base.

And if you’re still sceptical about making the change from market to customer share, you can always test it out first. Pick a handful of your customers and make it your target to increase their business over 3-4 months. Based on your results you can refine your approach before applying it to your entire customer base.