How big is the available pie, and how generous is your current slice?
Understanding the size of the available market and your potential within it serves to plan your path forward. This information allows you to set realistic growth goals while also highlighting areas of opportunity and areas of concern.
So how do you find out these important facts?
How to estimate market size
Accurately estimating the size of your market can be a somewhat complicated task. You may have developed a customer persona of a 40-year-old female professional, but that doesn’t mean that every 40-year-old female professional is a target customer, nor that your target audience is limited to 40-year-old female professionals.
Estimating market size demands that you take a wealth of factors into account: your products/services, your location, your audience and your reach amongst a wealth of others. The ways in which it can be done will differ by channel. On Facebook you can get a basic idea of market size by:
- Going to Facebook Ads.
- Clicking on ‘Page Likes’.
- Scrolling down to ‘Audience’ and inserting demographic details (be ultra-specific.)
- Check your ‘Potential Reach’.
Outside of social platforms, market size can be measured through quantitative keyword search volume data. This work requires specific tools and the high-level expertise, but will arm you with invaluable insight. At Growth Partners, we measure market size as part of the Benchmarking Competitors and Market Share stage of our Digital Enablement Program (DEP).
How businesses measure performance
The first step in measuring business performance is deciding what to measure it against. While most businesses will measure against themselves, aiming to grow by a certain percentage year-on-year, others may use external factors, such as gauging themselves against competitor performance or the size of the market opportunity.
Once you have your metrics, measuring business performance is a simple matter of paying close attention to the numbers. Good metrics will give you a holistic view of your current situation, including highlighting areas of opportunity and areas of concern.
Why is it important to know your online market share?
Market share allows you to compare your total revenue in relation to the total revenue of your industry over a specific time period. This gives you more meaningful context as to how your business is travelling.
Say your business grew by 30% last year. That’s an incredibly impressive number… unless your industry grew by 50%. If that’s the case, your 30% growth was, in context, a little underwhelming. Knowing your market share removes your organisational blinkers – it gives you a complete view of your industry so that you can better gauge your performance within it.
What metrics should businesses use to measure performance?
Tracking the numbers is vital if your business is to succeed. But what numbers should you track? Key performance indicators will change from company to company, and will reflect the broader goals of the business.
Examples of KPIs for business performance include:
- Financial KPIs: Operating costs, gross profit, net profit.
- Customer KPIs: New customers, return customers, customer spend.
- Employee KPIs: Performance, professional development, retention.
- Benchmarking: Market share, competitor analysis.
How market share differs by channel
‘Market share’ isn’t a single metric – it’s a group of metrics. Every business should delineate the measurement of their market share by channel. This grants you the ability to compare channels and identify those in which you have room for improvement.
Your search engine market share, for example, will be very different to your social media market share, both in terms of the hard numbers and the ways in which you measure them. You’ll need to use different metrics to effectively determine your performance across each channel: for social media you might use followers and impressions, while for SEO you might track anywhere from 1000 to 10,000 keywords, constantly gauging where you rank against your competitors.
While conducting such deep analysis will demand the help of professionals, it is crucial to the future of your business. Only by gaining a clear sense of your current place in the market can you work to improve it.
This is the idea upon which the Benchmarking Competitors and Market Share stage of the Growth Partners DEP is built. Knowledge is power, and in modern business, knowledge is found in the zeroes and ones of data.
If you’re ready to understand your place in the market and how to improve it, we’re ready to help. Book a 15-minute consultation with Growth Partners Director Steve Bambury today.