Definition of Wallet Share

Wallet share (also known as “share of wallet”) is the percentage of a consumer’s budget for a basket of goods (or product category) that goes to a particular company selling the product(s) in question. Companies will competitively fight over the customer’s wallet share, all trying to capture as much as possible in an effort to maximize revenue.

Example: A woman spends $100 per week on grocery items but only $50 is spent at “Grocer A”, resulting in a 50% wallet share for Grocer A. In this example, the other 50% is spent at a variety of other retailers. Perhaps she buys her bread from a local bakery and her personal care items from a pharmacy. Grocer A must capture some of these competitor purchases to successfully increase wallet share and to increase revenue.

Companies can increase their share of wallet by influencing consumer purchase behaviors. Higher wallet share can be gained by targeting any of the following strategies:

•  Increasing the average purchase amount
•  Increasing purchase frequency
•  Converting customers to other parts of the store (or to other business units)
•  Increasing customer retention – this actually prevents loss of wallet share
•  Improving customer satisfaction (the root of customer loyalty)

Remember that tactics used on one group of customers may not work on another, so proper research is required to understand customer motivations and to develop your customer strategy.

The 5 KPIs of Wallet Share

BehaviorWorx targets 5 KPIs (Key Performance Indicators) to increase wallet share and to influence consumer spending. Research has linked the following indicators directly to spending behavior. The impact of each KPI on wallet share depends on the company and their customers.

5 KPIs of Wallet Share:
•  Customer satisfaction
•  Purchase frequency
•  Customer retention
•  Purchase amount
•  Customer conversion