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Expanding market share is one of the primary goals for any corporation. After all, it indicates competitive strength.
However, focusing solely on capturing a larger portion of the market sales may not be the most effective strategy, especially for small or medium-sized enterprises.
For companies that aren't large corporations, it can be more beneficial to concentrate efforts on gaining a larger share of customer.
Throughout this article, you will understand what share of customer is and how it differs from market share.
Whats is Share of Costumer?
Share of Customer (SOC) is the concept that a company should focus its efforts on increasing the share of each customer's total spending with the brand, which includes everything from raw materials to marketing expenses.
However, it's important to remember that this is a marketing metric that measures the percentage of business a company conducts with a specific customer.
SOC can be used to gauge consumer loyalty and the brand's market penetration. The formula to calculate it is:
SOC = (Revenue generated by the company from a specific customer / Total revenue generated by the company) x 100%
For example, a business that has total revenues of R$ 100,000, with R$ 10,000 coming from a single customer. In this case, the SOC would be 10%.
The Importance of Share of Customer for a Company
Companies are increasingly focusing their efforts on attracting and retaining customers.
One way to do this is through Share of Customer, which refers to the share a group holds relative to the total number of customers.
For an organization, having a higher Share of Customer means having greater bargaining power because customers are more valuable and loyal to the brand, becoming less price-sensitive.
In other words, it's crucial to shape your target audience so that they see value in remaining loyal to your company.
From another perspective, for competitors, a higher Share of Customer represents a slice of the market.
Therefore, investing in this process is essential for organizations that aim to grow and maintain their position in the market.
What is the Difference Between Share of Customer and Market Share?
As previously mentioned in the text, Share of Customer (SOC) is the percentage of a company's customers relative to the total market customers.
On the other hand, Market Share (MS) is the percentage of market participation that a company holds. More precisely, market share is the percentage of sales a company captures in the total market.
SOC measures how much of a customer's total market is served by your business. It is calculated by dividing a customer's revenue by the total market revenue.
Market share (MS) is the percentage of a market controlled by your company. It measures how large your total slice is.
MS is calculated by dividing your organization's revenue by the total revenue of the market it serves.
The difference between SOC and MS is that the former measures a customer's share in a specific market, while the latter evaluates your company's share in that same market.
In other words, if an institution has 100% market share, it means they control the entire market.
However, if a single customer has 100% SOC, it represents the entire market for that specific company.
Below are some companies that utilize SOC effectively:
- Apple
- Coca Cola
- Amazon
- Starbucks
These companies excel in creating strong, long-lasting bonds with their customers, resulting in a larger share of customer.
4 Tips on How to Increase Your Company's SOC
There are some good Share of Customer practices that can help your institution retain customers and encourage them to purchase your products more frequently.
- Create unique experiences
One way to build customer loyalty is to create personalized experiences for each individual.
This includes sending personalized gifts on people's birthdays to providing unique in-store service.
- Offer exclusive discounts to loyal customers
One of the most effective ways to increase SOC is to offer exclusive discounts to customers who purchase from you the most.
This will make them feel valued and recognized.
- Build a customer database
Knowing who your customers are is another crucial step.
This will enable you to create campaigns and offers tailored to your target audience, thereby increasing chances of customer retention.
- Be transparent and honest
Lastly, but equally important, to maintain customer loyalty to your brand, you need to be transparent in pricing and the information you provide.
This prevents issues from arising in the future, thereby maintaining customer trust.
How Implanta Can Help You Improve Your SOC
Behavior analysis and market trends can be approached in various ways.
However, data intelligence stands out for providing valuable insights into customer behavior in a personalized and highly detailed manner.
Data intelligence tools like those offered by Implanta, which capture data from your sales channels and customers, can quickly measure the percentage of SOC your company holds with each client. In other words, Implanta can provide clear and daily insights into the percentage of your products' sales compared to your client's total sales.
This capability allows for the development of personalized marketing strategies for each client, significantly increasing your share of their purchases with minimal marketing investment.
Want to learn more? Contact one of our specialists today.
