Over the years there is strong evidence to suggest that increasing market share drives higher profit margins. Certainly, if increased market share translates to higher sales one would hope that would lead to potentially higher margins.

However, a much more pertinent and actionable driver sits below the market share macro picture. The question you should also be asking? How much of the customer’s spend on solutions like your solution are you capturing?

If a customer spends $5m per year on cyber-security and your product in that space is selling $500,000 to that customer, you have a 10% market share.

If you look at your sales last year by customer, do you know what your market share of each customer was? Why not?

To live in that mindset. To want to really understand your market share by customer requires a commitment. It requires a level of curiosity few sales teams possess.

The objective of the sales and marketing team has changed. Today, to win in most markets requires a far deeper analytical approach. We need to understand not just what our customers spend money on but why! We need to understand our customer’s business as well as our own. If your customer is in the automotive supply chain, trying to enable BMW to capture a greater market share of the Advanced Driver Assistance Systems (ADAS) market, then you need to understand their challenges. You need to translate those challenges into solutions you can provide. Solutions that improve your customer’s performance.

By reframing sales as a mission “to improve each and every customer’s performance” instead of selling stuff, you change the game. You change the narrative of the company, not just the sales approach. Engineering looks through the correct lens. It’s not about us building the best new shiny die bonder machine, ADAS car system, or enterprise talent software. It’s about the whole team engineering, marketing, product management, sales, service, strategy focusing on what the customer needs to be remarkable. To win in their marketplace.

It forces us to think in terms of Competitive Value Propositions we bring to the party. We not only improve the lives of our customers. We do it better than anyone else. Of course to get this level of data, to be able to prove our competitive value, requires trust, openness, honesty, and long term thinking. It requires you and the customer to be symbiotically aligned in the achievement of higher performance. Only then is it possible to understand how your solutions stack up against the competitors. Only then might the customer give up the data to allow you to measure and improve your customer market share.

Stand back and look at the big picture. Senior management’s function amongst many is the efficient deployment of capital. It is not to spend the budget! Management wants to make measured informed decisions when spending money. Buying the cheapest machine/service is not the same as the efficient deployment of capital. The latter requires the spender to assess the total cost of ownership. In software spending, for example, this must include an assumption on adoption rates. This is why it is naïve to say for example that Salesforce is expensive. If no one uses the “cheap” competitor version, the ROI on that investment is zero! Another example could be, if you invest $700,000 on sophisticated capital equipment, that automates a semi-conductor production line, with high yields, fast speeds, and amazing precision, then these performances need to be trapped in your ROI. It would be like spending $20,000 on a car instead of $25,000 but the cheaper car gives you one mile to the gallon because the cheaper car has a totally inefficient combustion system.

Sales and marketing teams need to engage customers in this type of thinking. Only then will customers share information that helps them to make the right decision. If your intentions are clear and you can deliver solutions that validate your performance promises, you will enjoy the long term benefits of increased customer market share. These relationships are the basis of long term profitability.

Reach out to Ian to discuss how we are executing this approach – Ian@TPPBoston.com