I love looking at market share numbers. To me, it’s the most important sales indicator — since it is the true barometer of a firm’s performance in its industry. It is the one measure that disregards all economic factors and influences from the company’s performance and serves as the scoreboard to my favorite sport — the game of making, and selling, cars.
Every month, auto makers hit the limelight in releasing their latest sales figures to investors, analysts, and industry pundits. We report on these at GM Authority in our By The Numbers segment. In GM’s case, you’ll see Kurt McNeil on CNBC at the beginning of the month discussing the sales results of GM’s various brands, along with the growth and conquest sales. What you don’t hear much about, though, is GM’s market share or retention numbers. That’s because despite all the new products and marketing strategies that The General employs, as well as the billions of dollars it spends in attracting new customers, GM has been losing market share. Despite all of its efforts, General Motors’ share of the market has been declining — not increasing — in the U.S.
Year to date, GM holds an 18 percent market share compared to 20 percent through the same time period (third quarter) of 2011.
Numbers In Context
When GM reports increases in unit sales, those can usually be attributed to an expanding economy. As the economy expands, it stands to reason that any company’s sales will grow accordingly — regardless of what sales or marketing strategies are in place.
Increases in unit sales have traditionally been used by many companies to show that a company’s health is improving. Some might be convinced that things are on the upswing, but the danger in relying on unit sales alone lies in the management’s satisfaction in the sales increases — even in the face of the possibility that competitors are slowly grabbing existing customers and/or the undecided who are in the market for a new vehicle.
How Does One Increase Market Share?
In the automotive industry, increasing market share is so much more than having a good promotional strategy for a widely desired product. It is also about meeting industry attributes such as unit pricing, service quality, communication, and real retention programs. I am still bewildered about how little focus is placed on customer retention around the industry.
For its part, General Motors has created a VP position to manage customer retention. It has been a year now and we have seen very little from that initiative. Don’t agree? Simply walk on in to any GM dealership and tell me what is dramatically different in how you are treated now compared to three years ago, or even one year ago.
Have there been any change to the CSI (Customer Satisfaction Index) program since GM went bankrupt? That program is so rife with GM’s old ways, including bullshit reporting to management, and unfair rewards/penalties to dealerships and their employees, that it should be eradicated and rebuilt from scratch.
All of this is to point out how important it is to plug the hole at the bottom of the water bucket (customers defecting to other brands) while spending billions of dollars in marketing to fill the bucket in the first place (attracting new/conquest customers). Despite spending a significant amount of money, the water level in the bucket is not rising, and eventually, the company will pay for it when the market contracts.
Improved Product Doesn’t Mean A Thing
And while GM has made several high-profile changes throughout the organization, could it be that the arrogance at General Motors is still alive and well in the lower ranks? At the least, you may say, GM’s product has substantially improved… but truth is, everyone is delivering great product these days.
If General Motors really wants to demonstrate its health in relation to its competitors, it has to improve and/or increase its retention efforts to ensure that existing customers return. Keeping existing customers while conquesting new ones is the name of the game… otherwise, conquest sales don’t mean a thing, and more money is being wasted to attract new customers rather than retaining existing ones.