Share of Customer: Why It Matters More Than Market Share

Improving share of customer is too often just a byproduct of a marketing strategy that aims to increase market share.

Most marketers think that bigger means better.

And they focus on selling to more and more customers rather than finding ways to sell more to their existing, satisfied customers. Unfortunately, giving priority to acquiring customers over retaining them comes out of thinking short-term.

The old marketing recipe isn’t working anymore: Boost awareness with advertising, make big discounts to trigger a purchase, repeat…

Things have changed. We’re in an era of hypercompetition, where everyone competes for consumers’ attention and money. In the 70s, the marketing gurus, Al Ries and Jack Trout, were already talking about this in Positioning:

“Today’s marketplace is no longer responsive to the strategies that worked in the past. There are just too many products, too many companies, and too much marketing noise.”

And the internet, the smartphones, social media… They didn’t even exist at the time.

Here’s the bottom line:

Your marketing strategy has to take into account consumers’ limited attention. The best way to achieve that is to target the customers that are already paying attention.

Remember that Customers Pay Attention

We have a limited amount of attention. In a world where marketing noise will never stop getting louder, this means two things:

  1. Getting your prospects to pay attention for the first time will keep being more and more difficult. There’s no space for mass marketing anymore.
  2. Once your customers have decided they like what you do, it’s just the beginning. You must continue to find ways to delight them. You cannot keep recycling the same stuff over and over again. Fortunately, the more you know them, the easier it gets to innovate. [1]

The First Sale Is the Hardest

When you want to sell a product to a prospect, your most difficult task is to win his confidence. Your prospect needs to trust you before buying from you. He has to believe your story.

Once you made the first sale, your done with the hardest part your job. From now on, the following sales will cost you less. Your customers have demonstrated real interest in what you have to offer. They now have less reasons to hesitate.

Why? Because your customer believes in you. You have sold him something; it has proved to be all you claim for it; therefore he feels safe in trusting anything you may say to him in the future.

— Robert Collier, copywriter and author of The Robert Collier Letter Book

By making a first sale, you should have won your customers’ confidence with a product or service that has done all you promised for it—and more. Then, keep being trustworthy and honest.

You cannot afford ruining that trust by trying to squeeze them with the following sales…

Building relationships with your customers requires them to trust you. If you always deliver what you promise and more, they’ll keep doing business with you.

Customer Share vs Market Share

There’s a big difference between customer share and market share:

Instead of trying to get a little bit from a lot of customers, a customer-share oriented strategy focuses on getting as much as possible from fewer customers.

It is cheaper to retain existing customers. Knowing that, it’s wiser to focus on turning making customers more loyal. Trying to get a larger share of the market will cost you more and make you lose an unfair advantage: existing customers who have already made the decision that it was worth buying from you.

Here’s what you should focus on when thinking about growing a loyal customer base:

  • Build strong customer relationships;
  • Focus on increasing your share of customer.

Build Interactive and Strong Relationships with Your Customers

Customer retention is a key component to business growth. Interacting with your customers is the best way to stay on top of their mind when they need you.

Interaction doesn’t mean advertising new products. It means understanding your customers in order to find ways to create a delightful customer experience, even when they’re not buying.

  1. Provide value first. Build upon the trust of your customers and provide things that matter to them, don’t settle on sending mere marketing messages.
  2. Know how to reach your customers. Along with the old stuff like email marketing, make sure that you leverage the social media platforms and other communication channels that are relevant to your audience. [2]

“Creating value through interaction is far more important than solving a consumer’s problem in thirty seconds.”

— Seth Godin in Permission Marketing

Your customers have no need to care about what you do. So it’s your role as marketer to interact about things that matter to them.

Increase the Share of Wallet: The Great Strategy of Amazon

Share of Wallet refers to the amount of the customer’s total spending within a category that your business captures in the products and services that it offers.

Share of Wallet = Amount Spent on Your Products / Total Amount Spent on Category

Adopting the right strategy requires you to make choices. Do you want to invest in acquiring more customers or in making sure that your existing customers keep buying more from you?

Amazon is a good example of a business that focuses on increasing share of wallet. The customers who subscribe to Amazon Prime love it. Every time they want to buy something, they think Amazon. They constantly receive new and relevant offers via email, get unlimited video streaming, and free delivery.

The example of Amazon Prime shows that focusing on existing customers first matters.

If they keep liking what you do, over time they’ll want to get more from your brand than from any of your competitors. So use what you learn from your customers to find what your next moves will be.

Customer Share Wins Over Market Share

Instead of focusing on constantly acquiring new customers, why not spending more time and effort to delight your existing customers?

Think about making profit in the long run, even if it means losing money on an occasional product or transaction. Customer lifetime value should tell you what you can afford to do.

Amazon, Starbucks, Apple, Uber, and Netflix. They all focus on increasing their share of customer. Market share is just the byproduct of their marketing strategy, not the other way around.

You cannot go wrong when your focus is on growing in profitable ways your share of customer.

Notes about Growing Share of Customer vs. Market Share

[1] This is something customer support teams know well. The more you listen to your customers, the more you learn about what they really want. That’s the bedrock of a Minimum Viable Audience strategy.

Don Peppers and Martha Rogers, who theorized one-to-one marketing summarize it well in Managing Customer Relationships:

“The enterprise learns more about its own strengths and weaknesses from each interaction and from the customer’s feedback, and is therefore able to market, communicate, and handle some aspects of its own tactics or strategy more efficiently and effectively than was possible prior to the relationship.”

[2] Twitter, Facebook, Instagram… The major social media platforms are not always the answer. A younger audience would hang out on Snapchat, while an older one could spend their time on forums.

Make sure that your audience is there before you spend time on a platform. Trust me. I learned it the hard way by wasting time and money on the wrong platforms.

Like What You’re Reading?

Remain on top of your game.

Receive exclusive marketing and business insights that we only share with our private newsletter subscribers.

And join our community of 1,000+ business enthusiasts. Just great stuff.

Share of Customer: Invest in Customer Share