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2 Defining Corporate Health
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THE TRUTH: Healthy companies have many customers.
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The new bottom line for business is market share, or similarly, "wallet share". Both of these are indicators of a company’s performance, within the context of the marketplace. As such, they provide an indicator of a company’s strategic power — that is, the ability to create the future it wants. Market share is all about how many customers a company has, and wallet share describes how much of your customer’s business is yours to serve. If either of these indicators "goes up", then the strategic position of the company has improved, because there will be more customers and more of their customers money supporting their efforts. If a company loses customers or their customers take more of their business elsewhere, than its market and wallet share are shrinking, and the strategic position is getting worse as a result. |
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Often, the major factor eroding market share and wallet share is a company’s profit-focussed mind set. To succeed in this millennium, companies are going to have to focus on the needs and desires of customers, not on how much profit can be made from them. Companies that focus on profits do not do a good job of creating customer loyalty. They may cut corners, retreat to the basics, put off reinvestment and development, and deliver marginal quality or questionable value. Doing these things will increase profits (at least in the short-term), but it never pleases customers.(Symptomatic Solution to a Fundamental Problem) To please customers, companies must view profit as a spin-off benefit of customer satisfaction. |
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While it is true that market share and wallet share can be difficult to measure with the same precision as traditional accounting figures, the real issue is whether your company is gaining new customers and building deeper relationships with old customers — or not. By keeping an eye on their customers, a company becomes more attuned to their needs, and better able to respond to those needs once it can identify them. If a company can satisfy and delight a broad range of diverse customers, its future is strategically protected against market shifts of all kinds. This is in stark contrast to the profit-focussed company, which only knows for certain that its past has been good. |
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