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Why Market Share Is the Most Important Metric

Market share is the most important metric that marketers can use in order to judge the effectiveness of marketing campaigns. This includes branding initiatives, advertising campaigns, CRM programs and any other revenue generation effort. Market share metrics are more important than ROI measurements. The reason is quite simple. Market share is a relative measurement against external benchmarks. Market share tells us how we are doing relative to our competition.

It amazes me how many enterprises ignore market share and focus on internal metrics like satisfaction, awareness, loyalty, churn, leads, recall, revenue growth, margin improvement etc. The problem is that internally focused metrics can be deceiving. While the inwardly focused enterprise may be happy with its results, this satisfaction can be delusional if the enterprise is performing below par relative to competition. Which is one of the reasons why many large customer-centric enterprises are vulnerable to attack by smaller more agile challengers.

While market share is the most important metric other measurements are needed to develop a complete picture. Units, revenues and margin must also be tracked in order to determine the ultimate value of your market share. There are many ways to measure share. The easiest is to rank revenue or measure absolute volume in unit sold or gross sales generated. By itself volume measurements are a start but need to be further described by the value of your market share. Having 70% share of a market in which you are losing money is not a sustainable strategy.

FCS