BRAIN FOOD: It just might work - True path to profitability

BRAIN FOOD: It just might work - True path to profitability - If you're glorying in your market share, stop. The Myth of Market Share by Richard Miniter calls share 'fool's gold'. He cites 1997 research by Windermere Associates: for more than 70% of the time, firms with top share didn't have the highest returns. Should you shift your aim to customer loyalty? Alas for another myth: there's little correlation between loyalty and profitability. What's the solution? Concentrate on keeping customers whose business is profitable. If that sounds so simple as to be trite, do you really know which customers or clusters of customers make a contribution and, if so, how much? Don Peppers and Martha Rogers, customer loyalty gurus, find all too many 'below zeros' with 'negative lifetime value'. Throw out the BZ customers and myths stop being mythical.

by
Last Updated: 09 Oct 2013

If you're glorying in your market share, stop. The Myth of Market Share by Richard Miniter calls share 'fool's gold'. He cites 1997 research by Windermere Associates: for more than 70% of the time, firms with top share didn't have the highest returns. Should you shift your aim to customer loyalty? Alas for another myth: there's little correlation between loyalty and profitability. What's the solution? Concentrate on keeping customers whose business is profitable. If that sounds so simple as to be trite, do you really know which customers or clusters of customers make a contribution and, if so, how much? Don Peppers and Martha Rogers, customer loyalty gurus, find all too many 'below zeros' with 'negative lifetime value'. Throw out the BZ customers and myths stop being mythical.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today