Increase Your Small Business Market Share
Increasing market share is a business plan strategy any small business can benefit from. You win market share by taking business from your direct competitors, thereby reducing their slice of the market pie while increasing your own. Here’s what you must do:
Get to know your direct competition.
If prospects don’t buy from your business, where do they go instead?
Find out why your customers buy from competing businesses over yours.
Determine how to win business from direct competitors by enhancing or communicating the value of your offerings in a way that makes them more attractive than the competing alternatives.
Determine your small business' direct competitors
The first step toward gaining market share is to acknowledge that you have competition and to get real about which businesses are winning the sales that you’re working to capture. On an annual or regular basis, ask yourself these questions:
With which businesses does your business directly compete?
When people consider buying your product or service, which other businesses do they think of at the same time? Be realistic as you name your direct competitors. Just because a retailer sells jewelry in New York City, it doesn’t necessarily compete with Tiffany’s. Your direct competitors are businesses that provide your customers a similar offering and a reasonable alternative to your product or service.
If you have a service business, your direct competitors are companies that you regularly go up against as you try to win contracts or jobs. If you’re a retailer, your direct competitors are the businesses whose shopping bags your customers carry as they walk by your store or the business names you overhear while customers deliberate whether to buy your product or some alternative. Investigate by conducting customer research.
How does your business stack up against its direct competitors?
Invest some time learning about the strengths and weaknesses of your competitors. Shop their stores, call their offices, visit their websites, or take any other steps to approach them in the manner your customers approach your business. Compare how their offerings, their presentations, their brand images, and the experience of dealing with their businesses compares with the offerings of your business.
What are this competitor’s strengths?
What are this competitor’s weaknesses?
What could your business do differently to draw this competitor’s customers over to your business?
Among your direct competitors, how does your business rank?
Are you the top-tier player in your competitive arena or are you on the low end of the spectrum trying to become a more dominant player? Here are approaches for pegging your place in your competitive field:
Compare how your business ranks with competitors based on number of employees, sales volume, or any other indicator you can ballpark.
Compare your market share with the share of each competitor.
Evaluate your top of mind ranking or mind share. When prospects are asked to name three to five businesses in your field, does your name consistently make the list? If so, you can be pretty sure that your business has top-tier mind share in its competitive arena. Keep listening and you’ll discover the names of the businesses your customer thinks are your direct competitors.
Tackle your small business' direct competition
Most businesses misdirect their time and energy by tackling the wrong competitors. They take on the biggest names in their market area instead of the biggest threats to their business. As you develop your competitive plan of attack, follow these steps:
Start by winning market share from the businesses you’re actually losing customers to today.
Do this even if it involves facing the harsh reality that your customers consider your business among a less prestigious group than you wish they did. After you name your current competitors, study their offerings, their marketing, and the customer service they provide as you honestly evaluate how your business compares.
Make a list of the companies you wish you were running with.
Evaluate why you’re not in that group. Is it because of your business’s image or location? Does the nature of your clientele mark you as a lower-level player? Or do your products and pricing prevent you from competing with the biggest names in your business arena?
Consider whether changing competitive levels is advantageous.
Assess whether your business is more apt to be successful at its current competitive level (think of the big-fish-in-a-small-pond concept) or at the next competitive level (where perhaps you can compete for more lucrative business but where competition may be stiffer and where customers may be fewer or more demanding).
If you decide that your business would be better off competing with more visible and prestigious businesses in your arena, commit to making the changes necessary to get the market to see you through new eyes.
Increase your small business market share
As you seek to increase market share, steer clear of these land mines:
Avoid buying market share through price reductions. Don’t sacrifice your bottom line as you prepare to welcome new customers through the door.
Be ready before issuing an invitation to new customers. Don’t procrastinate, but do give yourself time to be sure you’re ready to make a great first impression. Run through the following checklist before launching a new business development effort:
Current customer satisfaction levels: Are your current customers happy with your product? Are they happy with your business in general? Do they return to your business again and again, or do you have a high turnover rate? Do customers speak well on your behalf? Are your customer satisfaction levels sky-high?
Customer service adjustments: Before working to draw in new customers, make changes that will enhance your customer experience and service levels, increasing the odds that you’ll develop lasting and loyal customer relationships. Start by studying current customer reviews, ratings, and input, looking for legitimate service or product complaints you can address before reaching out to new customers.
Get proactive. Do you need to fine-tune your product offering — how you price it, how you package and present it, or even how you guarantee it? Do you need to improve how you interact with customers? This may include everything from enhancing your business environment to revising your on-hold telephone message to improving the speed and user-friendliness of your website.
Business readiness: Do you have the inventory (or, if you own a service business, the staff, talent, and capacity) to deliver what you’re offering? Is your staff well-informed and ready to help prospects become buyers when they respond to your marketing messages?