Web & Social Analytics

What is your share of wallet in the market?

Understanding consumer behaviour is imperative for businesses in a rapidly changing market. Organisations spend considerable efforts and resources to attract and convert new customers to increase their market share in today’s competitive environment. However, one more aspect of marketing that businesses should actively pursue to tap account growth is the share of wallet. With online and offline retail and services opening up, consumers are increasingly engaging in ‘loyalty shakeups. This necessitates brands and companies to employ strategies to retain and grow their existing consumer base by understanding their share of wallet.

What is share of wallet?

Share of wallet is a sales metric that quantifies the average amount a consumer allocates and spends on a particular brand compared with its competitors (or the market). In other words, it shows how consumers engage with a brand and how well the brand is performing against its competitors in the marketplace. Tracking share of wallet is a revenue-based metric that indicates the depth of a client relationship. Share of wallet displays the percentage of money spent by your consumers on your products and services compared with the value they spend on all other products and services by other brands in the same category. Thus, it is also an indicator of your brand’s ‘rank’ among the competition in the marketplace.

Share of wallet versus market share

In simplest terms, market share refers to the number of consumers in the marketplace who buy your products or avail your services. It is the percentage of the market your business controls based on sales or customers. Increasing market share involves expanding the reach of your products or services to new consumers. However, the cost of such acquisition is higher than the cost involved in increasing the wallet share among existing consumers.

Additionally, a comparison of market share versus share of wallet reveals that market share alone does not indicate business growth. Using share-of-wallet metrics helps understand what percentage of your consumers’ money goes to the competition. Such perspectives can help in strategising product development, customer experience, and engagement to stop your customers from shifting to the competition. However, share of wallet and market share are complementary in nature. The higher the market share, the more opportunity your business has to increase account growth by focusing on share of wallet.

How does share of wallet affect your business?

Retaining and growing share of wallet among existing consumers is critical to growth of a brand today. According to a recent survey of US consumers, McKinsey found that though the pandemic had changed buying patterns, post-pandemic buying choices continue to evolve. Omnichannel shopping is becoming the norm, with 75% of customers using both online and offline channels. Moreover, 45% said that social media influenced their buying choices. However, what’s even more interesting is that there has been a shift in brand loyalties. More consumers have recently switched brands, and 90% said they would continue to do so. Share of wallet is a powerful metric that indicates brand loyalty. At the same time, calculating this metric requires your business to understand how your competitors are performing. Armed with these facts, companies can lend themselves to better strategic and customer-centric innovation. By increasing the customers’ share of wallet, businesses can increase revenue and build a loyal marketplace where new products can be offered in the future.

How to grow share of wallet?

The first step to increasing share of wallet is to accurately measure it using data analytics and predictive models based on organisational data, transactional data, and statistical modelling, among other things. Once you have arrived at the share of wallet, there are several ways to engage with existing consumers to invest more in your products or services.

• Know your customers better through surveys to understand what drives their choices.
• Offer complementary products or services so that existing customers can extend their trust toward new products.
• Improve customer experience, increase satisfaction, and deepen customer engagement to strengthen brand loyalty.

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How can Infosys BPM help?

With the help of deep domain experience, Infosys BPM uses web and social media analytics to solve business-critical questions and provide insights into consumer behaviours. The share of wallet solution by Infosys BPM offers predictive analytics to reveal untapped opportunities that can drive growth. With a mix of AI, ML, and hyper-automation, Infosys BPM helps your business to have deeper insights into customer behaviour, engagement, and growth potential.