What is the meaning of 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. Let’s start with two questions: 1) Do you have all of the possible business you could have from all of your customers? 2) Do your customers know about all of the “things” you can do (or sell) them? Recently I worked with a company that is looking for new opportunities to build business. While they want new business, what makes their quest a bit different is that they are not looking for new customers. They want more
business from existing customers. Some of their customers weren’t taking advantage of everything they had to offer. While they used to be interested in market share, they are now interested in customer share. That is their biggest opportunity for growth. This is a concept that can cross over to any business. Several years ago Coke had an annual report that talked about market share – how many consumers bought Coke compared to their competition.
They also talked about body share. They wanted the individual consumer to buy more coke. They had an interesting and entertaining concept that was about the percentage of bodily fluids in an individual was Coke versus water. Stockbrokers and financial advisors are faced with many of their clients having multiple accounts with competitors. The obvious reason is because clients don’t want to have “all the eggs in one basket.” But, sometimes it is because the
client wasn’t aware of the expertise or other investment ideas that the advisor has to offer. A server in a restaurant shouldn’t just take an order. They should try to up-sell the guest into appetizers, desserts and daily specials. Why? It isn’t just about the guest having dinner. It is about them having an awesome dinner. The server that gets the guest to enjoy the dessert special they didn’t know about not only enhances the guest experience, they most likely
grow their tip. Most businesses have the opportunity to experience growth with existing customers. It is a disservice to not let your customers know what you can do for them. If they already love dong business with you, there is no reason why they shouldn’t be open and receptive. Customers want to be up-sold! So, some of you are saying, “Shep, this is all great, but I’m not in sales. I don’t have anything to do with selling at all. This isn’t for me.” I say WRONG! I don’t care what job you have. What you do impacts the customer, or someone who handles a customer. Do you have a skill that is not being utilized in your current responsibilities? Does your boss or others know about it? Have you exploited your talents? It is unfortunate, but so many times an employees talents are underutilized. There is no excuse for this. If companies can grow a customer, why can’t we do the same inside a company? If you get recognized for other skills and abilities, it could lead to promotions or other exciting opportunities within the organization. It is far easier to keep a customer than to get a new one. (And easier to keep a job than to get a new one.) Look for opportunities with your existing customers and make sure they know all of what you can do for them. So, up-sell your customers – both inside and outside customers! Why is share of customer important?Focusing on the share of customer helps you increase retention. If someone is happy to buy more from you, it's likely that this customer will be more loyal. And as the formula shows, better retention means better Customer Lifetime Value.
How do you calculate customer share?Simply find your business's total sales revenue for your preferred time period and divide that number by your industry's total revenue during the same period. Once you have this result, multiply the number by 100 to generate your market share percentage.
How do you increase customers share?There are a number of strategies a company can put to work to increase market share. These include improving innovation, building and solidifying customer loyalty, employing a talented, dedicated workforce, acquiring other companies, deploying effective advertising, and pricing products and services efficiently.
What is customer share wallet?As described above, wallet share refers to how much of a customer's expenses for a category of product or service goes to a particular company. For example, a value-added reseller may have a 60% wallet share of a customer's spending on storage products.
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