Marketing metrics are very
important in sales and marketing reporting. After all we all
need to track and measure the performance of our marketing
campaigns, branding efforts, sales tactics, social media
marketing, etc. Without measuring and effective reporting
all we have is guessing and making decisions based on
feelings and latest trends.
The goal of marketing
performance metrics is to make sure we invest and allocate
our limited resources in the most effective initiatives.
Based on this our marketing metrics should have the power to
inform us what is working and what is not working so we can
reallocate resources and continuously improve our business.
One of the requirements of
any business metric and key performance indicator is to give
us actionable information: if certain KPI reports
performance below a certain level this information has to
have a meaning for us which is actionable and it should at
least leads us to a discovery process or simply leads us to
the required plan of action.
Letís talk about market
Market share has been
traditionally one of the top marketing metrics. Executives
like to show grow in market share as their achievement. For
example, in the last 12 months we managed to grow our market
share by 15%, sounds really good.
question is how relevant is market share today as a
marketing metric or business metric in general?
For the market share metric
to have a meaning the industry where the company operates
has to have a clear boundaries. Traditional industries have
a very clear limits.
By definition market
share is the share of the market in terms of volume (number
of units sold) or total revenue made by a certain company.
Theoretically in order to have an accurate market share
metric youíll have to be able to count every competitor and
every customer in your industry and know their sales and
units sold. Are you able to do it?
Most industries have been
transformed completely today. For example most of the
traditional photo industry has been transformed from
chemical into digital business. The publication industry has
been greatly transformed from print into digital as well. If
you are a publisher what is your market and industry? Can
you define it by specifying the number of competitors and
users? Even if you can give a good estimate is this metric
Startups which are in the
phase of shaping their strategy and business model
continuously are trying to enter new markets and develop
offerings for new market segments and niches. The market
share here has no meaning and it is impossible even to
estimate any results or define any market or industry in a
clear way. In most cases using market share in their
business plan does not make any sense for investors.
For large corporations this
is true as well. Think about Microsoft or General Electric
for example and how many markets and industries they target.
Can you count every competitor and their unit sales and
total revenue in each of those markets? There are so many
small players in each and every industry today and every
industry is global so good luck with your counting.
There are still "traditional
markets" where management still is focused on the market
share as a marketing metric and maybe they can still
calculate it or at least estimate it. For those the question
is: Are you missing the boat? Why have you not been able to
attract new market segments and reposition your offerings to
capture entire new markets? Have you used your core
capabilities to develop new products and services to
diversify into new markets and compete with completely
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