Chase Revenue or Market Share?

There has been an ongoing debate since the beginning of business: “What’s more important, market share or revenue?” In other words, do you go after market share or go after revenue?

One theory is if you focus on revenue, you only do business that is nicely profitable and you discard any business that is not profitable and ignore market share. The other theory is that if you grab all the market share you can and corner the market, revenue will automatically follow.

I have a different view. If you want to go viral, you concentrate on satisfying the customer, every customer in your target public, and own that segment of the market. If you take care of the customer and your product is priced right, you get BOTH revenue and market share.

I came across a quote from Aristotle Onassis many years ago. (Some of you are probably wondering who that is. Greek shipping magnate, married Jackie Kennedy.) He said, “Money isn’t the game, it’s how we keep score.”

If you focus on revenue as your primary goal, you tend to lose sight on what MAKES the money: customers buying your product in ever-increasing numbers. The best way to get customers to buy your product is to make great products priced right, marketed right, supported well. The focus is on SATISFYING the customer.

What prompted this post was a salesman proposing a particular solution within his company “so we get more revenue.” If all of the particular transactions with a customer were captured by “Company A,” they would generate more revenue. Company A was already on track to process 80-90% of the customer’s transactions. Should they try to force a minor competitor to pass transactions through Company A’s pipeline? His focus was on monopolizing every transaction, whether the customer was well-serviced on the additional transactions or not.

What would be the cost of that extra business? Not just the fixed cost of hooking up more software “plumbing” and managing the details of that extra segment, but what about the problems and headaches of that extra business? What about the customer satisfaction? What about the tussles and turf wars associated with inserting a solution between the customer and a minor competitor? Would it really be worth it?

Could Company A give excellent service and results to their customer by forcing the competitor to use this solution? (The alternative was to let the minor competitor pass transactions directly to the customer, a potentially more efficient process.)

My focus is on providing the customer with the best solution to their problem. Revenue and market share follow and are only two measurements of how well I’m satisfying the customer. When I lose sight of customer satisfaction and focus on revenue and market share, I’ve just put the brakes on the Going Viral curve. I may grab more market share and revenue in the near term, but over several years I’m going to see that market share and revenue erode as competitors bring elegant solutions to the market and customers migrate towards them.

How does that happen? I’ve lost sight of satisfying the customer and focused solely on revenue. The result is a degradation in quality of service, a degradation in quality of product, a degradation in satisfying the customer. Can you say Lotus 1-2-3?

Focus on satisfying the customer. Focus on delivering the best product or service possible to the customer. Certainly, pay attention to revenue and market share and paying your bills and all the other things that are good business practices.

In the case of Company A, if passing the competitor’s transactions through their pipeline is better for the customer, then by all means do it! Do it for the right reasons, not because it increases short-term revenue while providing lousy service to the customer.

The keynote is take care of the customer. Give them the best solution possible. Do a better job of taking care of them than the competition and success is assured. Do a MUCH better job of taking care of them than the competition and you’ll be amazed at the growth curve.

Focus on that as your mantra and Going Viral is in your future.

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