Plain Talk

For the majority of companies, market share is the most sought after metric as it's a completely unbiased, accurate way of evaluating the success of any revenue generation effort — from marketing and advertising campaigns to repositioning your brand or remodeling initiatives.

The reason for this is really quite simple.

Market share allows you to see how you are performing compared to your competition, quantifies the impact your strategies and tactical execution have had on business results and uncovers previously hidden areas of strength or weakness that need further exploration.

Why Market Share Is Overlooked
Despite the importance of market share, many companies ignore it and instead focus on internal metrics such as satisfaction, awareness, loyalty, leads, revenue growth, etc.

The problem with these internally focused metrics is that they can be deceiving.

For instance, an internally focused company may be happy with its revenue results for the quarter, but this satisfaction could be misleading if the company is performing below par compared to its competitors.

Additionally, most companies don't have the competitive data necessary to measure market share, which is why the metric has been mainly restricted to academia, as a theory taught in classrooms.

Previous attempts to calculate market share have been at best complex guessing games that rely on partial and inaccurate data derived from publicly reported figures or from the participating members of industry consortiums.

But, even then, the information is never comprehensive and never available at the levels of granularity needed to make actionable business decisions.

In fact, because most companies don't engage in comprehensive competitor monitoring or are excessively optimistic, they overestimate their market share by a factor of two.

Why Market Share Matters
Companies without the will or interest to accurately calculate their true market share need to understand the importance of this metric and the risk of operating without this guide post.

Why is a true, unbiased calculation of your market share so important?

Because market share is a key indicator of market competitiveness, it enables executives to judge total market growth or decline, identify key trends in consumer behavior and see market opportunities.

And by understanding market share, companies can objectively measure pricing strategies, consumer perception of new products/services, promotions, management personnel, real estate decisions and other key business initiatives.

Buxton is the leading customer analytics firm that helps organizations identify who their customers are, where those customers are located, and the value those customers have to the organization.

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