Have you heard the joke?
Two farmers bought a truckload of watermelons, paying five dollars apiece for them. Then they drove to the market and sold all their watermelons for four dollars each. After counting their money at the end of the day, they realized that they’d ended up with less money than they’d started with.
“See!” said the one farmer to the other. “I told you we shoulda got a bigger truck.”
Measuring by market share alone and ignoring profit is like saying that a football team won because it had more shots at goal when the other team scored more goals. Measuring by market share alone is like saying the cricket team won because they faced more balls.
Measuring by market share alone and ignoring profit is when you measure success by the number of customers you have but don’t know their profit value. Successful businesses know the true cost of each customer. That is, the resources- both time and money – required securing each customer, the time spent in servicing their needs, and the cost of goods in the delivery.
Smart businesses identify those customer groups that provide the highest margin and greatest opportunity for growth, and replicating this if possible. This is Adloyalty’s business, working with businesses to grow their true value not by buy bigger trucks.