All you want for your business is to attract more customers and orders as compared to your competitors. Right? And so, increasing the market share – it is one of the crucial determining factors for the success of your business. Gaining market share is all about making informed marketing decisions that improve sales and customer retention. Increased market share also means enjoying improved profit margins.
This is the age of digital innovation. One of the fastest ways to transform your business is by adopting digital transformation. Employing digital technologies like Artificial intelligence, Robotics, Augmented Reality, and digital payment systems will affect your market share and profit margins.
What is market share?
In simple terms, market share is the percentage of sales a company has in the overall market. For example, a company has INR 1 Crore in annual sales whereas the total sales in its industry are INR 100 Crore. Therefore, the company’s market share now is 1%, i.e., (1 Crore/100 Crore) *100. It can also be calculated in terms of the number of units sold by the company against the total number of units sold by the industry.
The formula to calculate market share is: (Your company’s total sales / Industry’s total sales) x 100.
What is the profit margin?
The profit margin is the percentage of sales that is turned into profits. In other words, it is a ratio between a company’s profit (sales minus expenses) and its revenue, measured in terms of the percentage. For example, a company had INR 10 Crore in revenue and expenses (including taxes) of INR 5 Crore. Therefore, the company’s profit margin would be 50%. That means the company has a net income of INR 0.5 for each Rupee of sales generated.
The formula to calculate profit margin is: ((Sales – Total Expenses) ÷ Revenue) x 100
3 Ways to Gain Market Share
It needs an increased effort and investment in the right direction to have more market share. Increased market share means having more sales, more bargaining, and negotiating power. Here are 3 ways in which you can boost your market share.
- Innovate
Innovation is one of the methods by which a company can increase its market share. When a firm brings out a new technology ahead of its competitors, customers will be willing to buy that from that company even if they did business with a competitor.
In today’s world, digital innovation is crucial to gain success. One of the key elements in digital innovation is the online payment system. Having a hassle-free online payment solution like the one provided by Zaakpay payment gateway will help your company reach new heights and offer customers different ways of experiencing your brand.
- Find your niche audience
It may seem counterintuitive to stick to a niche and not spread out across other segments. But when a company targets a particular niche with each product, customers tend to set you apart from your competition. This type of approach will help your company find real customers.
For example, the success of a coffee shop can be attributed to its niche marketing. If the cafe provides its customers with an environment where they can sit and surf the internet while enjoying their coffee, it could add a USP to their business and attract more customers.
- Engaging with your customers
Customers play a crucial role in any business. When you engage with your customers, their sense of trust increases, and they will stay loyal to your brand. One of the best ways to understand what a customer needs is by sending them a carefully crafted survey with questions about your product’s design, updates, and features.
You can also leverage social media to put up polls, questions, and votes to understand your customers better. This increases your reach among your customers, thereby increasing your market share.
3 Ways to Improve Profit Margin
The profit margin of a company is an important metric that should always be on the radar. It is a direct measure of how much money your business makes during a particular period. Here are 3 ways to improve your company’s profit margin.
- Audit your strategies to improve efficiency
To truly understand how to increase profit margins for your business, you should understand the key points that are holding you back. So, take a thorough audit of your accounts and look at how you are spending money, how you are pricing your product or service, etc. This could help you in:
- Finding any unnecessary expense
- Finding gaps in your sales process
- Evaluating your marketing strategies
- Finding out how your peers are faring
- Reduce operating expenses with strategic cuts and automation
Most companies often focus on pricing strategies to increase their profit margins and miss out on streamlining operating expenses. Every rupee saved is a rupee earned. Go through all your expenses and make sure there aren’t a bunch of little expenses adding up to a whole lot.
You can consider Zaakpay, one of the leading online payments service providers, which provides a dashboard with all transaction details. This online payment solution helps you analyze all your transactions to draw inferences necessary to business decisions.
Ditch fancy office spaces if your team can work remotely. Instead, pay your suppliers as early as possible to get more discounts. Automate specific tasks which are consistently carried out.
- Raise prices strategically
To increase prices means increasing your revenue. It is difficult for businesses to raise the prices and it is easier said than done. But if you conduct thorough research, you can find out the strategic ways to increase prices.
No one strategy works for all the companies, and it varies from business to business based on factors like industry, market position, economic circumstances, etc.
Conclusion
Having discussed the above strategies, you don’t always have to make drastic changes to see significant improvement in your business. Sometimes, a simple tweak like digital transformation can pave the way for drastic gains. One of the essential areas you can focus on is the online payment system. For any business, converting potential buyers into patrons is the key to its success.
The use of digital payment systems has increased exponentially, even in a cash-based country like India. As a result, many online payment service providers like Zaakpay payment gateway have gained a lot of popularity. Hence, adopting the right technology can significantly improve your business’s functions and how customers engage with it.
Follow Us on:
