Figuring out what your market share is can be difficult. But it doesn’t have to be. In this 3-part series of posts, I’m going to give you some practical ways that you can figure out your share of the market. These articles are also featured in a white paper which features these two methods of calculatingmarket share that you can download at BizCompare.
You’re the CEO of as growing B2B business. While things have been going great, you don’t really know the true potential for your company. Specifically:
What is the size of the market that you play in?
What is your current market share?
The answers to these two questions are the foundation for your Marketing planning and the challenge is how to answer these questions and have confidence in the numbers.
In this series of 3 articles, I will present two scenarios that any CEO or marketing/sales leader of a small business can employ to determine market size and/or market share numbers.
Today’s article and our first scenario is what I call the cheap and cheerful? solution that costs nothing but a bit of time. It answers the question:
- What are all the general industries to which your customers belong?
- Approximately, what is the size of your market?
The second scenario is more involved (and will be covered over two article publications) but will give you much more detailed information such as:
What are all the specific industries to which your customers belong?
- More specifically, what is the size of your market?
- What are the predominant “firmographics” for your customers (i.e. sales, employees, etc.)
- What is the profile of your best customers?
- How many prospects match that profile?
Let’s get started!
Determining Industries and Market Size The Cheap and Cheerful Method
Here’s a 4 step process that won?t take you longer than a few hours to complete. When you are done, you’ll know approximately what industries you play in and the market size. Here goes:
- Generate a short list of some of your CURRENT customers.
This needs to be a list that is manageable but also large enough for some commonalities to emerge (more on that later). I recommend you get a list of 20-25 of your largest customers and another 20-25 of your fastest growing customers*. You need their company name, street address, city, state, zip and phone. Presumably, you would like to have dozens more just like them. Put all this information in a spreadsheet.
* While I suggest a total of 40-50 customers, if possible I would advise trying to use more customers in your analysis. This will just increase the sample size, ergo the accuracy level.
- Indentify the industry to which your customers belong.
This next step will take a few hours because you need to do some high level research on each of your customers. However, this is an easy task so if you have an assistant, a sales administrator or any person with some smarts and eye for detail, so you can delegate the task. Objective: You want to indentify the NAICS code for each customer.
One customer at a time, cut & paste the customer’s name and address into Google. Here’s an example for a fictitious company: Sample Company 1234 Anywhere Ave Sacramento, California 95838. A Google search would show a result as follows:
Look for search results for your customer in business directories (as highlighted above) like BizCompare, Manta, AllBusiness or others.
Next, click on one (or more) of the business directory links and look for the company’s NAICS code. Example:
The number ?561499? is the official NAICS numeric code. The words All Other Business Support Services? is the official NAICS description. Record the number and description in separate columns in the spreadsheet beside each customer name. Repeat for all customers. You now have 40-50 of your best customers all in one spreadsheet ready for analysis.
- Now, indentify the DOMINANT industries by looking for industry patterns.
Go to the NAICS description column and apply a ?sort? or filter function. Both actions will deliver the same result which is to cluster companies by NAICS description. Now, perhaps for the first time, you are looking at objective information telling you the specific industries to which your best customers belong. What is the data telling you? How many unique industries are there? What are the industries with the most occurrences? Starting with the ones that occur the most you now have your target industries to help fuel your growth.
- Look for the total number of companies in your target industries.
Now that you have your top NAICS industry description, you want to find out how many companies are in those same industries. You have a couple of approaches to choose from:
- You can do a Google search using the industry phrase (?5614999 – All Other Business Support Services?) and, again, look for sites like BizCompare, Manta, AllBusiness or a government site like the U.S Census Bureau. Or
- You can simply go directly to these sites and search/browse for your target industry.
Either way, in short order, you will be presented with the number of companies for that industry. Example:
Note: When looking for number of companies in a specific industry, there are bound to be some variations between sites and database. So I suggest that you look at 3 or more sites to the see the number of companies on each site, take an average or select a number you’re most comfortable with.
Complete! You now have:
- Your dominant industry classifications
- Your approximate market size
If you are looking for sales leads or for a marketing list, you are now equipped to go to any business list provider and request a quote for a list of qualified companies. By providing them with the NAICS industry classifications you just researched, you are significantly narrowing the field of targets, probably saving yourself money along the way by not targeting un qualified prospects.
Tomorrow and the next day, I will discuss a methodology to do this same analysis but with more precision providing greater insight.
To see the entire text of these three articles RIGHT NOW, click on the following link: