Your IT firm’s sales figures for 2014 were pretty respectable; profits were up and you don’t appear to be leaking client numbers. All of this bodes well for 2015. Or does it?
Sales figures, of course, do not tell the whole story. Taken in isolation, they do not indicate how well your business is performing relative to your competitors – so while you might consider yourself to be ticking along nicely, unbeknownst to you, there may be other firms out there who are ready and able to eat into your customer base.
Tim Cook doesn’t care about market share. Why should I?
To answer this, let’s make some assumptions. We’ll take it that you have the capacity for further growth and the desire to take your business to the next level. We’ll also assume that you’ve already defined a market niche and if necessary, you’ve carried out a cull of customers and areas of work that are unprofitable.
In this atmosphere, loss of market share is a major threat to the future of your business. It’s an indicator that you are losing authority; that you’re failing to establish yourself as go-to-guys in your field. You may not be feeling it yet, but at some point in the not too distant future, this is going to impact upon your bottom line. What’s more, with figures showing investment in early stage UK tech industry in the last quarter of 2014 at double that of a year ago (and up 70% for 2014 compared to 2013), the suggestion is the number of newcomers biting at your heals is only going to increase this year.
Here are a few key warning signs to look out for…
Inexplicably low levels of client satisfaction
Another assumption here: that you actually measure client satisfaction. If there’s a sudden downturn without you having committed any major faux pas, this may be down to competitors appearing to offer a better alternative. The service offered by competitor(s) may be no better or worse than your product, it’s just that they are leveraging their brand more effectively. The solution lies in positioning your brand in such a way as to make it clear that your business is best placed to meet the need states of your target niche. Appearances matter…
Falling client retention rates
Why care about retention if new conversions mean that your customer base is actually on the up? If you really need an answer to this, just take a quick glance at your cost of customer acquisition figure (COCA). You may have adapted a SaaS rolling contract model to survive – but you may not yet have adapted your marketing strategy accordingly to nurture and engage with existing names on your list. A downward spike in retention rates can be a pretty strong indicator that competitors are becoming stronger and are getting ever better at poaching your converted leads.
Increased cost of customer acquisition
Spiralling COCA combined with the retention point rate above can present something of a market share-related ‘weather bomb’ for your IT business if left unchecked. If you’re having to work increasingly harder to get noticed and to build trust, 2015 is the time for a marketing overhaul.
You’re getting nowhere with brand awareness
Even if you don’t yet have a full digital marketing strategy in place, you should at least be tracking engagement and impressions. If these efforts demonstrate a downward trend, this is a strong indicator of an ever-more crowded marketplace, with your business failing to get its voice heard.
You’re no longer considered worth engaging with
You may be getting traffic to your site. You may even get the odd social share. On it’s own, this isn’t engagement; it’s mere window-shopping. This is why certain metrics such as social media shares can sometimes be misleading when taken in isolation. Potential leads may be interested in what you say (interested enough to share it, perhaps). This, though, is not the same as a path to sales conversion. You may be providing your potential customers with something nice to read, but are they going elsewhere when the time comes to part with their cash?