Tracking share-of-wallet is a revenue-based measurement that gauges the depth of customer relationship. It is a part of your profitability measurement system. In simplest terms, “share-of-wallet” relates to your portion of the money spent by your customers on your products and services compared to the total they spent on all products and services in your category. Your portion is your share.
There are some experts, us included, that believe share of wallet is more important than market share. Market share is about how many customers in a market are buying your products/services/solutions. Customer share is about how much your customers are investing in your products/services/solutions. It is very strong indicator of brand preference. Customer share reflects the depth of loyalty. It has implications to how quickly your new products will gain traction in the market place and your organizations overall customer lifetime value.
Therefore share-of-wallet is a powerful metric. It serves both as a leading indicator as well as an indicator of performance relative to the competition. If your share-of-wallet is increasing conversely, what customers are spending with competitors is by definition decreasing.
Share of Wallet (SOW) is the most focused measure of strategic progress. The long-term profitability of a customer relationship will always move in parallel with changes in share-of-wallet. The focus of customer share is to increase revenues from existing customers.
Your long-term business growth depends on retaining customers and growing the value of your customers. Growing share requires more than a demand generation program; it requires customer engagement strategy. Your engagement strategy reflects how well youunderstand your customers, how well you know how to connect and reach them, and how well you can create trust and a superior customer experience, even they they are not buying.
Any customer engagement strategy should seek to capture the maximum amount of profitable business from the customers being serviced.
In addition to measuring loyalty and advocacy (referrals), your Marketing performance measurement system should include some type of customer share measure or metrics. You will want to track this measure over time, and if possible your competitors share among your customers. This type of data entails significant cross-functional coordination between Marketing, Finance, and Product management to develop a meaningful share-of-wallet measurement. As you track and monitor share of wallet along with referral rate and product adoption rate, you will be able to develop insights into the relationship of each of these and their impact on your growth and profitability.
Let’s talk about developing your share of wallet metrics or creating your engagement strategy.
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FAQs
Share of Wallet (SOW) is a sales metric indicating how much (on average) a consumer spends on a company's product or service as compared to how much they spend on competing products or services.
What is the main advantage of using share of wallet surveys in competitor analysis? ›
Insights for marketing and product development: Understanding share of wallet provides valuable insights into customer preferences, behaviors and spending patterns. It enables companies to tailor their marketing strategies and product offerings more effectively.
How to do share of wallet analysis? ›
How is share of wallet calculated? Share of wallet is the percentage of customers' spending within a category on a specific product or company. To get a share of the wallet, divide the amount of money spent on a specific product or company by the total money spent by the customer within a category.
What is the wallet share strategy? ›
Strategies aimed at gaining wallet share include trying to increase the average amount that a customer spends per visit, encouraging more frequent visits, and fostering customer loyalty and customer retention.
What is the difference between customer share and share of wallet? ›
Market share is the percentage of a market that a single company controls by revenue or number of customers. Share of wallet is how much a specific customer spends on a brand relative to its competitors. Acquiring new customers boosts market share while getting existing customers to spend more improves share of wallet.
What is the difference between share of wallet and TAM? ›
Calculating market share may require you to work out the total addressable market (TAM) for your product. By contrast, share of wallet tracks the amount that a specific customer spends on a brand relative to the amount they spend on competitors.
What are three 3 possible benefits of a competitor analysis? ›
The primary goals of a competitor analysis include the following: To identify the strongest competitors. To determine the competitors' strategies. To anticipate their actions.
What does sow mean in banking? ›
Source of Wealth (SOW) SOF refers to the origin of the funds used for a specific transaction or business relationship. SOW identifies the overall source of the client's wealth or asset base.
What are the advantages of using market share to measure business size? ›
Why Is Market Share Important? Simply put, market share is a key indicator of a company's competitiveness. A growing market share can translate into greater profitability due to economies of scale, while a shrinking share can have the opposite effect.
What is wallet analysis? ›
Share of Wallet Analysis is a unique solution that provides insights into your current client base and shows lost revenue vs. your competitors. This can help you better understand why customers have business with more than one credit provider.
There are a few aspects to consider when you wish to determine whether a share is worth investing in. The company's fundamentals: Research the company's performance in the last five years, including figures like earnings per share, price to book ratio, price to earnings ratio, dividend, return on equity, etc.
What is a shared wallet? ›
What is a multisig or shared wallet? A multisig wallet (also known as multisignature wallet or shared wallet) is a cryptocurrency wallet that requires two or more signatures to confirm and send a transaction.
What is the trust wallet technique? ›
Trust Wallet is a secure self-custody crypto wallet where you can buy, sell, store, swap, and manage their cryptocurrencies, meme coins, NFTs, and more. Whether through its robust mobile application or convenient browser extension, Trust Wallet empowers you to buy, deposit, and withdraw cryptocurrencies with ease.
What is sow in digital marketing? ›
In the fast-paced world of digital marketing, having a clear and concise statement of work (SOW) is essential for success.
What does sow mean in sales? ›
A statement of work (SOW) is an important document that outlines the scope, timeline, and cost of a project between two parties – usually a customer and a supplier. Its purpose is to ensure all parties have a shared understanding of the expectations and responsibilities associated with the project.
What is share of wallet size? ›
Share of wallet is the amount an existing customer spends regularly on a particular brand rather than buying from competing brands. Companies grow wallet share by introducing multiple products and services to generate as much revenue as possible from each customer.
What is share of shelf metrics? ›
Share of Shelf (SOS) is a metric used in retail management to quantify the portion or percentage of available shelf space that a specific brand or product occupies within a retail environment. It is a key performance indicator that reflects a brand's visibility and presence on store shelves.
What is the patient share of wallet? ›
In simplest terms, Share of Wallet relates to the portion of money spent by customers on an organization's products and services compared to the total they spent on all products and services in the same category. An organization's portion is their Share of Wallet.
What are per share metrics? ›
EPS is a financial metric used to measure a company's profitability on a per-share basis. It is calculated by dividing the company's net income (after taxes and preferred dividends) by the number of outstanding shares of common stock.
