OK, let’s soften that. You care, but your customers and prospects don’t. Why? Because by itself, market share doesn’t convey value or benefits. Yet, marketers endlessly pursue market share bragging rights: the bigger, the better!—usually. Which is OK, until marketing tells Sales to drink the Kool Aid. Then trouble begins.
Salesperson: Our company has 45% of the fast-growing Tetra Pixel market!
Prospect: (silence) Oh. What does that mean for me?
Salesperson: It means that twice as many companies have selected us as their Tetra Pixel provider versus our closest competitor.
Prospect: They told me the same thing. I’m not sure what that means. Is your product twice as good?
I feel this prospect’s pain. Market share bombast can be shrill and claims are easily fudged. “We’re number one for unit growth!” “We have fifty percent share for revenue in the healthcare market!” “Numero uno for market share in Small-to-medium sized business!” You can add your own fine print and disclaimers to these platitudes. We’ve all made them at one time or another.
But in a sales call, crowing about market share frequently lands with a thud. “If you have the largest share of the Tetra Pixel market, how do I know my business is really important to you?” Valid point! Market share claims are a two-edged sword. So you can imagine my surprise when I attended a presentation recently where the following statement appeared on a PowerPoint slide: “Collaboration is required to keep new people = productivity = market share.”
The equality symbols threw me, so I asked the presenter about them, and the answer I received was that senior executives often designate a specific market share as a strategic objective, and there’s a connection between that and employee retention and productivity. I’m not entirely clear what it is. Even still, what value does market share provide companies and prospects? If there is an answer, it’s ensnared in a messy knot of personal ego and cold numerical logic.
Sure, the vendor with highest market share can enjoy purchasing clout that enables higher production volumes, lower unit costs, and the profits that accompany them. But I can’t help but think of two well-known companies that relentlessly pursued market share bragging rights, and suffered miserably. One is rebounding after a government bailout, and the other sustained a serious blow to its brand and reputation. Of course, I’m speaking of General Motors and Toyota, and both have proven that nobody stays on top forever.
That hasn’t prevented Volkswagen from getting sucked in by the seductive powers of #1 Producer bragging rights. Volkswagen Chairman Martin Winterkorn recently tied his US sales team to an annual unit goal of 800,000 by 2018, part of an effort to overtake Toyota as the world’s biggest carmaker. Echoes of the past? Will “biggest” deliver value to VW buyers in the US and worldwide? Ask Toyota and GM about what that relentless pursuit did for their customers and their company’s stock prices.
No doubt that trumpeting #1 in Market Share feels good, but it’s just marketing fluff—cotton candy for Sales that provides a sugar high, but no protein, no octane, sales traction, or whatever. And no clear value for customers and prospects.
Market share hype is mamby-pamby. Even when claims are concrete and verifiable, they can’t pass the “so what” test. Toyota Camry is the #1 selling mid-sized car in the US! That’s not why people buy them. So why doggedly burden salespeople to push market share claims when there are other attributes that are far more compelling and persuasive: that customers who buy from us have lower risks, that they will have a better product, and a better experience.
Go ahead, keep your company’s market share objectives on all your internal communications. But remember, your customers aren’t necessarily wowed by market share, and they aren’t seeking a percentage–just value.
Andy, I have to disagree with you on this one.
Yes, value matters and claims of “we’re number one” can be overdone and become a turnoff.
But, most people like knowing they are doing business with a market leader. This follow-the-leader effect is especially evident in the software industry. I can’t tell you how many times I’ve seen software vendors tout their market leadership and customer base. The message is clear: do business with us because all these other customers are happy doing so.
Being a market leader IS part of the value proposition for the customer. It represents security and lower risk.
I’d say companies should feature it appropriately in their marketing and sales messaging, but keep in mind that they can go from No. 1 to an industry footnote quickly if they stop delivering all the other forms of value that customers want.
Bob: thanks for your comment. Good point about the appeal of doing business with market leaders. I’ve made buying decisions based on that attribute myself. There are two issues:
1) As a strategic objective, companies often pursue market share or #1 Producer status (VW is a recent example), but the value that imparts to customers is anything but clear. In fact, I’ve seen market share hegemony lead to complacency (Blockbuster Video), quality problems (Toyota), lack of innovation (IBM and Sony). In these cases and in others, market leadership becomes a liability to companies, leaving them vulnerable to hungrier, more aggressive upstarts with better products and the willingness to take intelligent risks.
2) A sales strategy that depends on market leadership as a competitive differentiator is a tenuous one. I’ve been on both sides of the equation. As a salesperson for an upstart product, I’ve exploited a market leader competitor’s failure to differentiate on more compelling value, and capitalized on prospects’ concerns about what it means to be a client of a dominant vendor–“I’m just another account to them. I doubt they’ll take care of me.”
I’ve also lost plenty of sales opportunities by resting on my own laurels as the dominant brand or technology, only to be upended by a resourceful upstart with a stronger, more effective sales proposition.
One major selling problem occurs because salespeople make assumptions about what market leadership means to prospects: “do business with us because all these other customers are happy doing so.” Maybe customers are happy, but maybe they’re not. As a company with a huge share of computer operating systems has demonstrated, a company can dominate a market for reasons that don’t necessarily include providing excellent products, services, or customer support.
Being the market leader is like being the quarterback on your high school team. You sure think you’re a bad-ass at the time, but no one really cares once you move on with your life.
It’s all self-indulgent nonsense.
And shame on us for advocating this as a strategic message. It’s a loser line. It’s a “I didn’t do my homework so I’m going to BS you into thinking that I am the best option” type of amateurism.
Current size does not dictate client satisfaction no more than the amount of wealth equates to happiness. It just means you have more to spend on getting noticed.
We have told traditionally to use these types of “persuasive peer pressure” tactics to “close the deal”. It’s a textbook ” must do” to convince clients that our market dominance is a reason why “you have to do business with us” or “you’re missing out”.
And we wonder why we are still in the worst economic selling environment in almost eight decades.
Maybe it’s NOT the economy. Maybe it’s just our Neanderthal approach to prospects and our craft as salesman.
Maybe it’s time to change how we think and drop the loser lines.
Dan Waldschmidt
http://www.EdgyConversations.com
Hi Andy,
I like the way you write and your story is spot on.
Who cares? – and if doesn’t pass the so what test, why bother.
Boasting about awards and market share are only relevant if in context – like the Avis Ad from a 25 years ago “Were #2 in the market, so we try harder, because we wanna be #1.”
Or “we’re #4 in market share and looking for acquisitions because we want….etc.”
Best,
Mark
I’ve worked largely with B2B technology companies with disruptive offerings. So they weren’t so much competing for share in an existing, well-defined market as much as trying to reinvent, re-define or re-segment that market, or to create a brand new one. Their natural constituencies are the early adopters or early mainstream buyers.
Under those circumstances, claiming dominant market share of an established but (maybe) soon-to-be-declining market isn’t particularly helpful. But demonstrating that the pioneers, the thought leaders, in their market have started to turn to you rather than your competition can be very powerful. For these prospects, your being the company that other smart companies are turning to can be highly persuasive.
Market share is about history. Market momentum is about shaping the future. Which would you prefer to be associated with?
This is a great discussion, each person has made so many great points. I think I can unequivocally declare that, “It Depends.”
I really want to side with most of Andrew’s comments. I think from a customer point of view, market share, can be a “so what.” I think from a business point of view it can be distracting to the point of being destructive.
There might be an argument that would say a large percent of the early stage and even some of the current big names would never have launched if market share were so critical.
On the other hand, why do these arguments seem to abound? Probably because they have an impact on at least certain types of buyer behavior. Where customers might feel size, experience, etc. are critical to their selection–market share arguments can be verry powerful.
In reality, at least from a customer and selling point of view, we can argue each side, equally well. What we are really saying in this discussion becomes, value is in the eye of the beholder. Each customer value different things. For some, share is important, so we must focus on that (and in some cases those of us who can’t make that claim may disqualify the opportunity). In other cases, share does not translate into value perceived by the customer, so the sales person that builds their value proposition on share, is hurting herself.
Great ideas and discussion!