Share of wallet is a metric which allows a company or brand to measure a customer’s spending within a particular category related to competitors. It’s important to note that a company with many brands and product lines may measure their share of wallet for each brand or product line. For example, if your company has completed customer satisfaction research and knows that your customers are very satisfied with product X but experienced a stagnant or declining sales quarter, measuring your share of wallet for product X will help identify how customers divide their spending among you and your competitors. Alternatively, a company which is the top choice for consumers for product X among existing competitors can benefit from continual monitoring of share of wallet to ensure the company remains the primary option.
Why Is Share of Wallet Important?
A satisfied customer and a loyal customer are not synonymous. This is why reliance on your company’s Net Promoter Score and other satisfaction metrics is not enough. Although your customers may be satisfied with your company and even recommend it to family and friends, that doesn’t mean they won’t do the same for a competitor for a brand or product of interest. The key is being able to identify how your customers allocate their spending among your company and competitors for that brand or product.
Let’s say your company has four known competitors. You know you want to be the first choice for a customer, but may not realize the financial impact of being second place. Even if you tie your top competitor in terms of share of wallet that means for every dollar a customer could spend at your company you lose at least $0.50 to the competitor.
How to Determine Your Brand’s Share of Wallet
First and foremost – do not focus solely on customer satisfaction metrics. Measure your company’s rank and associated drivers for a brand or product. A competitive assessment survey will allow you to gather customer feedback on similar brands they purchase for a particular product category (and why) to help determine areas of opportunity that will help boost your company’s competitive rank. When searching for a market research vendor, ask them how they intend to help your company improve your rank. A knowledgeable market research firm will construct a survey tool with the items necessary to identify satisfaction and loyalty scores for competitors in order to determine your company’s share of wallet. Next steps and recommendations will be a crucial component that should be included among the reported findings to provide insight on how you may improve or maintain your ranking if necessary.
RMS is a full-service market research firm located in Syracuse, NY. If you are interested in learning more about our services, please contact Sandy Baker, our Senior Director of Business Development & Corporate Strategy at SandyB@RMSresults.com or by calling 1-866-567-5422. Visit our website at www.RMSresults.com.