CalculationShare of wallet is based on your total revenue from a customer for a period of time. Calculation also requires estimates of the customer's total spend on similar products and services. Total spend is often defined broadly as customer spending on an industry such as information technology spending.share of wallet = (total revenue / total spend) x 100Total spend can be collected by customer surveys or estimated from data sources such as financial statements.
ValueExpanding share of wallet is a common marketing and sales strategy. Firms that have a small share of wallet enjoy a opportunity to develop and sell new products to existing customers. Share of wallet is a particularly common sales metric for industries that sell to large firms with significant budgets.
ExampleA data center company that offers colocation services finds that it has a share of wallet of less than 1% for its corporate customers. The firm invests in developing new products and establishes a sales goal to achieve a 5% share of wallet.
|Overview: Wallet Share|
|Type||Sales MetricMarketing Metric|
|Definition||The percentage of a customer's total spend that is captured by a business.|
|Related Concepts||Market ShareMarket PenetrationCustomer Lifetime ValueCustomer ProfitabilitySales MetricMarketing Metric|