I think a lot about Market Share. Maybe too much. I find it the most fascinating piece of data you can track because it tells you so much more about how you are performing than just sales, profits, or cash flow.
For one, it tells you how well you are competing in your market. If your share is growing, you’re obviously doing something right. If you’re losing share—even if your business is growing—you have a leak in your ship that needs fixing.
It also helps you focus your marketing. Once you realize that 9 out of 10 people in your area don’t shop in your store (results may vary but most indie retailers have less than 10% share of their market), you can hyper-focus your marketing on just one of those nine “people.” Win that one and you’ll double your sales.
Let’s talk about those nine people for a moment.
I was at an event recently that had a panel of expecting moms. They were asked where they went for information to buy baby products. All six answered Friends and Online Reviews. None of them answered Sales Staff in a Store. None of them said Advertisements for Baby Stores. None of them mentioned Informational Fliers at the doctor’s office. Not one of them discussed Emails from brands or stores. They barely talked about Instagram influencers (and not in a positive way).
Friends and Online Reviews.
Even the online reviews didn’t get a favorable viewing. Most of the panel said they didn’t fully trust online reviews but would read the negative reviews in detail. They trusted most the information from friends who already had children.
From this panel you might conclude that the most important form of advertising for your business is the word-of-mouth referral from your happy customers. You would be right.
Yet nine out of ten people don’t refer your business to their friends. That’s a lot of friends telling their friends to go elsewhere. Not one member of our panel had visited an independent specialty baby store. Only a handful had gone to a Buy Buy Baby chain store. Most did their shopping/registering at Target because nine out of ten of their friends went there.
It didn’t help that there was only one indie specialty store in their town and it had a limited selection. I would have loved to see the responses of a panel like this in a town with a powerful indie store. I think Sales Staff at a Specialty Store might have made the list of trusted sources.
As it is, the lesson for all of us is simple. You have to give that one out of the ten such an amazing experience that her voice drowns out the other nine when the subject comes up where to shop.
Conversely, you cannot allow one bad experience to walk out your door. You’ll be dead to her circle of friends. Yeah, you might have to eat some crow from time to time, but it is better to eat the crow now to get the chance to eat the filet later.
Retail is not a money game. It is a game of the heart. Win your customers’ hearts and the money will follow.
-Phil Wrzesinski
www.PhilsForum.com
PS Not sure how to calculate your Market Share? Check out the Market Share Diagnostic Tool. It will not only show you how to calculate your Market Share, it will tell you why this is the second most important part of your business to track.