What Factors are Driving Your Market Share

Most asset management firms have some form of measurement process to assess the performance of their sales teams, but one aspect of performance measurement that often goes overlooked is sales performance attribution. Where is the success of your sales team coming from? What is it driven by? Performance attribution allows a distribution organization to understand the true effectiveness of the sales team (and sales strategy) and to pivot to capitalize on opportunities as they arise.

When looking at sales results, firms too often focus on gross sales growth or decline. A more absolute measure is to look at changes in market share, which eliminates the effects of the movements in the overall market. Market share can then be broken down to identify what factors contributed to, or detracted from, the firm's success.

Firms will approach this differently according to their size/breadth of their offering. For example, a firm with a focus on a particular asset class-let's say an international equity player-can assess how much of their gain in market share was due to the growth of the foreign equity products as a proportion of the market as a whole versus how much of it was due to the performance of their salespeople. Are they gaining market share in the categories in which they have a product? In this scenario, they could be losing market share in the categories, but still be gaining overall market share due to the market composition. Conversely, a firm can gain market share in their core categories, but those categories may be out of favor and declining as a proportion of overall industry sales. In both of these scenarios, it is important to isolate the performance stemming from product and sales performance (market share within categories) from the performance attributed to the strategic positioning and offerings of the firm as a whole. Both of these aspects need to be addressed, but by different stakeholders within a firm. The former is addressed by the product team (product performance) and the distribution organization (sales and marketing activities). The latter is determined by firm leadership when deciding the company's focus areas, products, partnerships and brand positioning. This second aspect is more structural, and therefore, significantly more difficult and time-consuming to shift, so a distribution organization is usually working within the confines of the firm's products and positioning.

While the market share of small and mid-sized firms with limited product offering, or a larger firm that is focused on a niche segment of the market, can often be at the mercy of the market favoring their areas of focus, a large asset manager with products across many categories faces a different set of challenges. Because they operate at a wider scale, they must use performance attribution to gauge which areas they will be best-served focusing on. Similar to a product manager selecting individual securities for a portfolio, they have to assess the mix of products that will have the greatest impact on overall market share.

In the previous examples, we looked at asset classes and underlying categories. The same approach can be taken with a firm's distribution partners. Who are your key partners? Is their share of the market declining? Similar to the example above, an asset manager can be gaining market share at a key distributor, while losing market share overall, and vice versa.

A performance attribution framework should be comprehensive enough that it provides insight into what is driving market share performance without being over-engineered to the point that the messaging gets lost. By focusing on attribution of product mix, market performance and key relationships to market share, a distribution organization can make informed decisions to maximize the impact of the sales and marketing teams. Implementing a robust top-down attribution framework involves comprehensive data collection, regular analysis and the integration of both quantitative and qualitative insights. This approach ultimately leads to a more effective and motivated sales team, capable of achieving sustained success.

For more about how SS&C can help distribution organization optimize their sales team, learn about our Distribution Solutions team.