5 Strategic Ways To Increase Your Market Share
Grow or die.
That’s always the focus of an enterprise no matter the prevailing economic climate.
I often receive questions about marketing strategies, but there tends to be one question people focus on: how to increase market share.
Here, I’ll give some insight on how to calculate, measure, and increase your market share – and how this can all benefit your growing business.
What Is Market Share?
Market share can be described as the percentage of a market that is controlled by a company or its products/services. In other words, it’s the total sales of a company in comparison to the overall sales in that company’s industry within a given time period.
Understanding Market Share
So, why do we measure this metric, and why do we aim for an increase in market share?
The higher your market share, the more profitable and successful your company is likely to become. The company with the largest market share in its industry is considered the market leader. Having this kind of status doesn’t just attract more customers and inspire customer retention and loyalty, but it also attracts more and higher-quality employees.
Having a larger market share brings about a whole laundry list of benefits that give you a competitive advantage in your industry, including:
- Gaining enough bargaining power to request for better prices from suppliers;
- Lowering your production costs;
- Increasing and diversifying your customer base;
- Reducing the need for expensive marketing programs.
How To Calculate Your Market Share
To calculate your current share, take the overall sales of your company over a given time period and divide that number by the total industry sales within that period of time. Then, multiply it by 100 to get a percentage.
What Does It Mean To Increase One’s Market Share?
Increasing your market share means ramping up your sales and marketing efforts to engage active customers, draw in potential customers, boost your sales, and gain a bigger chunk of the market. In other words, you need to sell far more than your competitors.
From a high level, there are two directions organizations typically consider to make a significant increase in market share:
- Expand into a new market with fewer competitors, referred to as a “blue ocean”; or
- Move into a market that is rife with competition, called a “red ocean”.
A blue ocean is a market with little to no competition – time and uniqueness are on your side. A red ocean is a market where you have to fight off the “sharks” of competition every day to gain new customers and retain current ones.
The central problem is that blue oceans attract sharks (and every other sea creature). So, eventually, you either have to learn to deal with a little red or eternally swim in search of bluer waters.
Keep in mind that the concept of seeking a blue ocean vs. a red ocean doesn’t apply to all enterprises or business models.
How to Increase Market Share
Before you head off into the blue ocean sunset, we’ll show you five market share growth strategies to maximize your revenue streams from your current position.
1. Cut Operational Expenses
Business is a war between productivity and efficiency. Productivity initiatives pump up revenue while efficiency projects turn more of your current revenue into profits by shrinking costs.
There are several methods to reduce operational expenses including:
- Lowering financial expenditures;
- Identifying inefficiencies;
- Harnessing the power of artificial intelligence (AI) technology.
Leveraging AI for CRM data entry and repetitive tasks, for example, can reduce operating costs for sales and customer success teams while also eliminating human error. In fact, studies show that sales teams spend 20 percent of their week solely on manually logging sales activities.
Unlocking hidden efficiency improvements like this is an effective way to lower departmental operational expenses. These savings can be reinvested in marketing strategy and new customer acquisition tactics, such as organizational discounts and experiential marketing to reduce churn and earn loyalty.
2. Maintain Market Share
The goal here is to avoid losing market share to disruptors and other market leaders.
Businesses invest an enormous amount of time, effort, and expense building and acquiring their initial customer base. Mark Irvine, Data Scientist at WordStream has found that the average lead for B2B companies costs $63.57 per lead, whereas the cost per acquired customer (CPC) can be in the hundreds, even thousands of dollars.
Without a strong focus on customer relationship and retention strategies, companies could be losing market share to their competitors from high customer attrition.
Customer attrition or churn can be a slow death and sometimes neglected metric for rapidly growing organizations. MarketingWizdom claims that “The average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships.”
To combat customer churn, smart companies are turning to the power of AI and predictive analytics solutions like People.ai to automatically identify at-risk accounts. This is done by capturing all the interactions between your company and measuring customer engagement to understand the full 360-degree view. With this data, (otherwise impossible to compile or see in your CRM), companies can become more proactive in their approach to servicing their customers.
Recognizing the signs of unhappy customers and “turning up the love” at the right moment can be the difference between your company treading water or gaining market share from competitors.
3. Build Market Share
Yes, building and acquiring new market share is third on our list, and for good reason. Building market share is typically the most difficult of the three strategies, as well as the most expensive. There are several methods to create higher market share including:
- Market segmentation expansion;
- Distribution innovation;
- Promotional and sales innovation.
Over the past several years, sales innovation through account-based marketing plans (ABM) and increasing the efficiency of sales teams have become the primary drivers for most organizations when it comes to higher market share.
Empowering sales teams with an AI-driven sales and marketing technology stack is no longer a “nice to have” but rather a necessity in a competitive landscape. Companies need to equip their sales teams with the power of prospect engagement insights, weighted attribution modeling, and automated activity tracking to efficiently build or acquire new market share.
4. Talk To Your Customers
Want to keep your current customers happy? Get to know them more. Your loyal customers can help you gain key insight into what works, what doesn’t, and what’s missing from your product or service. Send out customer satisfaction surveys and customer feedback forms so you can get a better understanding of the customer experience and make data-backed steps to improve it.
5. Keep Your Customers Happy
This may seem painfully obvious, but it’s worth repeating. If you want to maintain your current market share, you have to be consistent with keeping your customers happy and excited to use your product or service. Customer loyalty is not a one-and-done kind of thing. It can wane if not nurtured properly.
One great way to maintain customer satisfaction and gain new customers at the same time is by establishing a referral program. Referral programs reward existing customers for recruiting new ones, thus allowing you to hit two birds with one stone.
These five points only scratch the surface of how to increase market share under difficult conditions.
In the years to come, expect new technology and problem-solving tools like AI to take on a bigger role earlier on in market growth strategies. In fact, a recent survey by PwC found that a majority of enterprise leaders tagged AI as fundamental to their growth plans, with 72 percent citing AI as “the business advantage of the future”. It works off the idea that some problems are too complex for human brains alone, and this is one area you do not want to leave to chance.
This is why companies have been calling on solutions like People.ai to leverage the power of AI to reduce operational expenses, hold on to loyal customers, and increase their market share.
Are you wondering how artificial intelligence can help you reduce operational expenses and sway market share advantage? Find out how People.ai helps organizational leaders gain visibility into their sales and marketing teams, as well as increase the overall productivity of each sales rep by scheduling a demo today.
Frequently Asked Questions
How can I improve my market position?
There are several ways you can improve your market position. Investing in AI to cut back on operational expenses can allow you to allot a bigger budget for your marketing team. Innovation – whether through product, distribution, or sales innovation – can also help you drive up your market share.
How do I calculate my current market share?
Market share is calculated by taking your overall sales over a set time period and dividing it by the total industry sales within that given period.
Why is market share important?
It has been a longstanding and widely held belief that market share is “one of the main determinants” of business profitability. Businesses that hold a larger chunk of the market are far more profitable than their competitors, by virtue of having a larger customer base, a better reputation leading to more bargaining power, and a lower production cost.