What Is Share Of Wallet (SOW)?

Share of Wallet (SOW): The amount of money that an average consumer consistently spends on a particular brand instead of rival brands in the same product category is known as a share of wallet (SOW). By offering a variety of goods and services, businesses aim to increase the share of the wallet of their current clientele to optimize income per customer. For instance, the declared objective of a marketing effort can be to increase the brand’s wallet share among a specific client base at the cost of rivals.

Understanding Share of Wallet

While firms constantly pursue new business via sales efforts, optimizing income from each current customer is just as crucial. A share of the wallet aims to increase the money a company’s loyal consumers spend with that brand instead of a rival. Businesses may rank their most devoted clients according to how many things they utilize or how much money they bring in. Upselling a customer on more services is beneficial since people who purchase many products will think well of the business. Also, loyal consumers can be the first to get new items, increasing sales and strengthening brand loyalty.

Beyond raising income, increasing a customer’s share of the wallet has many other advantages, such as enhancing customer happiness and retention and developing a devoted base of prospective customers from which to launch new products.

Comparing Wallet Share to Market Share

Increasing wallet share instead of total market share is a more cost-effective, efficient, and successful method for increasing revenue. Understanding that market share and wallet share are two distinct ideas is critical.

A company’s proportion of overall sales in a specific category or geographical area is called its “market share.” For instance, bank executives would research the current market to determine how many companies were in that area if they wanted to bring in new business customers. The management might then ascertain what proportion of all the clients in the area bank with them. Therefore, the bank’s market share for that region would be 10% if it had 1,000 clients and 10,000 companies. Market share calculations assist businesses in estimating the scope of an opportunity in a particular area. One may apply the same approach to a particular product or service.

Growth in client revenue is the primary goal of both market share and wallet share. Growing market share, however, is primarily concerned with drawing in new customers from other businesses. Conversely, the share of wallet concentrates on increasing income from current customers by increasing the number of items used—which competitors may also grab.

Using Target Marketing to Increase Wallet Share

The goal of a campaign to boost a brand’s share of wallets is to outcompete rivals and win over some of their customers. An effort to pinpoint precisely what a consumer discovers at a rival might be the first step in such a campaign. It could be a general problem with convenience, affordability, and quality. A rival supermarket could offer better-quality fresh products or a wider variety of vegan options. It could offer free shipping or a speedier checkout.

Taking the most fantastic ideas from competitors may be necessary to increase the share of the wallet. It may also include locating products or services that make sense to add to the company’s offerings and have the potential to overtake competitors and boost its market share. The Wegmans supermarket chain carries all the typical food goods, but its vast ready-to-eat area may be its lifelike share-of-wallet extender. Its offerings compete with every takeaway restaurant between its shop and the customer’s house.

Gaining market share entails growing a brand’s overall sales within its category, while gaining a share of the wallet entails getting more money from current clients.

Samples of Wallet Shares

For instance, suppose McDonald’s introduced a breakfast menu, causing some consumers to visit McDonald’s locations instead of Dunkin’ Donuts in the morning. McDonald’s has gained some new consumers in addition to a small portion of the fast food spending of its current clientele. In response, Dunkin’ Donuts may add egg sandwiches to its breakfast menu to win back some early-morning patrons.

The banking sector is another one where the share of wallets is now increasing. Senior management of a bank may increase cross-selling initiatives, which include pitching more goods and services to current customers. When a wealth management client wants to buy a new property, they may be routed to an in-house mortgage agent. The bank may urge a client with a checking account to apply for a vehicle loan. Using this strategy, the bank is expanding its wallet share among existing clients rather than acquiring new ones.

Rather than cash being spent at a rival, both cases saw increases in revenue and expenditure from their existing consumer base.

Conclusion

• The amount a current client spends on a particular brand instead of purchasing from other brands is known as a share of the wallet.
• Businesses increase their wallet share by offering a variety of goods and services to maximize income from each client.
• Increasing the purchasing power of current clients might be the primary goal of a marketing effort instead of growing the product’s total market share.
• Increasing a client’s share of the wallet may lead to higher profits and better customer satisfaction, brand loyalty, and client retention.