Grow Your Wallet Share…Grow Your Business
You’ve most likely seen the commercials asking consumers, “What’s in your wallet?” Yet, from a business perspective, finding out what you have in your wallet isn’t nearly as important as finding out what you’re missing. That missing link is known as wallet share; and understanding what’s NOT in your wallet can lead to tremendous opportunities in terms of your business’ ability to generate profitable growth.
Wallet Share vs. Market Share
Wallet share (also called Share of Wallet/SOW) looks at your existing book of business, and asks: “customer by customer, how much business am I getting and who is getting the rest?” This highlights the opportunities you’re missing out on with the customers you already have. In contrast, market share looks at your place in the total market.
Why is Wallet Share Important?
Simply put: it costs more to sell to a new customer than it does an existing one — some statistics say as much as five times more. It’s also 70% easier to sell to an existing customer than it is a new one. The key to maximizing your business with your existing customers is understanding your wallet share. Wallet share provides clarity on what the customer finds valuable from your business — other than your product.
Wallet share uncovers opportunities and gives you insights you can act on to drive share and increase profitability with existing customers. You’ll be able to:
- Refine your value proposition for each customer, based on their key interests.
- Develop customer-specific strategies to replace key competitors.
- Leverage price and programs to position aggressive customer offerings.
- Focus on driving growth in high-margin products/customers.
- More intelligently target sales strategies and programs.
Three Critical Factors for a Successful Wallet Share Study:
- Ask the right questions
One of the main reasons companies don’t use wallet share is that it can be difficult to obtain. Without the right collection tools and strategy, it can be a daunting task.The Number 1 goal is to get the right information from the people who have it; this differs from client to client. That’s why the wallet share study model we’ve developed —from data collection to wallet allocation rule to analytical tools — is very flexible. One of the key components is to create a data collection method that defines a customer’s buying behaviors and spending habits.Our data collection is beyond any “customer satisfaction survey” you may already conduct or anecdotal feedback you get from your sales team. Instead it gives you a deeper and tangible understanding of what’s happening with your customers.
- Ask objectively
You don’t know what you don’t ask — but you also need to conduct the “ask” in the right way. Questions need to be (1) high level, (2) targeted to the right customers and (3) independent from your business. Having a third party conduct data collection helps customers willingly share more information. There are also programs we can put in place to incentivize responses.
- Ask early
There is no wrong time to get wallet share information, but the best is time is early in your pricing journey. This is when wallet share helps fuel strategies and gives you the tools needed to create an actionable roadmap. You can also use wallet share when launching a new product or to understand why you might be underperforming in a segment or region. For example, we worked with a large manufacturer that wanted a better understanding of why a new product launch wasn’t meeting sales expectations. We conducted a wallet share study that looked at the product in relation to competitive suppliers. We uncovered that the benefits the manufacturer promoted in marketing and sales channels were not valuable to the customer. The new product had merit, but the manufacturer needed to promote it in a different way. Wallet share data helped develop an actionable plan that communicated the right attributes to the right people.
The Bottom Line
From a business perspective, conducting wallet share research doesn’t require months of study — yet it can lead to customer insight that drives so many areas of your business: pricing, product positioning, sales strategy and more. You’ll understand: what each customer is missing from you; looking for from you; as well as why they’re not buying from you. Wallet share’s fully actionable data makes you more educated about your customers before you even walk into a meeting or sales call, so your team will know they’re leveraging the price and programs your customers want and the value proposition they’re after.
Ready to find out what’s not in your wallet? Contact us to develop a customized wallet share study that gives you a deeper understanding of what your customers care about.