Share Of Wallet
Share of wallet (SOW) is the dollar amount an average customer regularly devotes to a particular brand rather than to competing brands in the same product category. Companies try to maximize an existing customer's share of wallet by introducing multiple products and services to generate as much revenue as possible from each customer. A marketing campaign, for example, may have a stated goal of increasing the brand's wallet share for specific customers at the expense of its competitors.
Definition: Share of Wallet (SOW) refers to the proportion of a customer's total spending within a specific product category that is spent on a particular brand. In other words, it measures the amount of money a customer spends on a brand relative to their total spending in that category. Companies aim to maximize the share of wallet from existing customers by introducing a variety of products and services, thereby extracting as much revenue as possible from each customer.
Origin: The concept of share of wallet originated in the fields of marketing and customer relationship management. As market competition intensified, companies realized that it might be more cost-effective to increase revenue by enhancing the spending of existing customers rather than acquiring new ones. Thus, share of wallet became an important metric for measuring customer loyalty and brand competitiveness.
Categories and Characteristics: Share of wallet can be categorized based on different product categories and service types. For example, in the banking industry, share of wallet can refer to the proportion of a customer's deposits, loans, and investments held with a particular bank relative to their total financial assets. In the retail industry, it can refer to the proportion of a customer's spending on a particular brand relative to their total shopping expenditure. Characteristics of share of wallet include: 1. Reflecting customer loyalty; 2. Helping companies formulate precise marketing strategies; 3. Can be increased through cross-selling and upselling.
Specific Cases: Case 1: A bank increases its share of wallet by offering a variety of financial products (such as credit cards, loans, and investment products). Through targeted marketing campaigns, the bank successfully attracts customers to transfer more of their financial assets to the bank, thereby increasing its share of wallet. Case 2: A retail brand uses a membership system and rewards program to encourage customers to spend more on its brand. Results show that member customers have a significantly higher share of wallet compared to non-member customers.
Common Questions: 1. How to accurately measure share of wallet? Companies can measure share of wallet through customer surveys, spending record analysis, and other methods. 2. What are the best strategies to increase share of wallet? Companies can increase share of wallet through cross-selling, upselling, personalized services, and loyalty programs. 3. How is share of wallet different from market share? Share of wallet focuses on the proportion of a single customer's spending on a brand, while market share focuses on a brand's overall market presence.
