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 you understand 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.