Share Of Wallet – Marketing Metrics

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The share of wallet helps companies understand their share of the total customer purchases. For example, if you are a packaging products provider you would like to know how much of the customer packaging needs are satisfied from your company versus other packaging suppliers.

In most cases the policies of your customers won’t change and it is a fact that in some cases you are going to be only a fraction of their total business however there are some approaches you can take to increase your existing share of wallet.

In other words, maximizing the share of your customer wallet should be your goal and marketing priority.

You can increase your current share of your customer’s business by providing better products, better terms for larger purchase volumes, develop loyalty programs where you reward customers with frequent purchases and larger orders, you can learn more about your customer business and develop better customized offerings, you can also cross-sell and up-sell complementary products, etc.

Why share of wallet and the related marketing strategies are important for your business?

Here are three very important elements in planning business growth and marketing strategies:

1. Increasing share of wallet is easier than increasing market share

It is easier because of the fact that you already have a relationship with your customer, you have already established your company the reputation of a reliable supplier and you can easier engage your customer into offering better solutions.

2. Increasing share of wallet is cheaper than increasing market share

It is way cheaper and in most cases it is free to communicate with your existing customer and suggests improvements in your current way of doing business by creating value for both your customer and your business.

3. Increasing share of wallet is faster and less risky than increasing market share

You can grow your business faster and without taking any additional risks. Acquiring new customers is generally slower process – from lead generation, to engaging prospects, establishing your business… to the first purchase and converting them into regular customers takes time as well. In addition each of these steps has a certain amount of risk involved.

As a conclusion, when considering business growth strategies and sales growth tactics many organizations do not even think about the share of wallet as a marketing metric. However, this is one of the key marketing metrics and it should be used as a KPI in any growth-oriented organization.

Focusing on this KPI allows you to grow your business faster, cheaper and risk free. Start by surveying and talking to your customers and estimate your current wallet share. Based on the current facts develop marketing and product strategies to create better leverage for both – your bottomline and your customer’s bottomline.

Do your homework first and develop effective strategy before you ask for more business from your customers. Focus on developing win-win situations where you’ll generate additional value for the customer and increase your sales volume at the same time.

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