To weather economic downturns, companies implement a variety of measures across lines of business. One key focus in the sales area is increasing market share by focusing on valuable customers and increasing wallet share. Wallet share indicates the percentage of total demand for a given set of products and services that a selling company fulfills with their products and services.
Due to the strength of existing relationships, focusing on increasing wallet share is typically more efficient and expends less resources than the acquisition of net new customers. Development of a strategy to increase wallet share is recommended if there are many customers but only a few with high wallet share. Increasing wallet share can be accomplished by introducing new products or services that compliment existing purchases at current customers, or by cross-selling value added services within the same company. Of course, in theory, if the customers’ needs have already been met (100% wallet share), the situation demands new customer acquisition.
In industries where 3rd party market share sources are not available, measuring wallet share requires a bottom-up approach of analyzing share at an individual customer level, then aggregating within and across customer segments and geographies with the intent of identifying areas of opportunities and threats.
The following picture depicts a process for analyzing and planning Customer Market Share and developing sales strategies to address the results.
Performing such analysis of Customer market share data can help sales and marketing organizations answer questions as follows:
- Where is free market share that we could capture with our products?
- Where can I win back share from competitors in established customers?
- Which customers do I need to visit to grow share?
Results shall help to determine follow-up actions, develop growth strategies, set market-based quotas, etc.