Share of Wallet
The percentage of a customer’s total spending in a product category that is captured by a specific company.
Description
In the digital marketing industry, 'Share of Wallet' refers to the portion of a customer's overall spending on a specific category of products or services that is allocated to a particular brand or company. This metric helps businesses understand how much of a customer's total potential spending they are capturing. For digital marketers, increasing the Share of Wallet involves tactics such as personalized marketing campaigns, loyalty programs, and targeted promotions. By focusing on these strategies, companies aim to encourage existing customers to spend more within their brand, thereby increasing their revenue without the need to acquire new customers.
Examples
- A customer spends $100 monthly on streaming services. If $40 of that amount is spent on Netflix, then Netflix has a 40% Share of Wallet in that customer's streaming service expenditure.
- A fashion retailer notices that a customer spends $500 annually on clothing. If the customer spends $150 at this retailer, the store has captured a 30% Share of Wallet. By offering personalized discounts and exclusive access to new collections, the retailer aims to increase this share.
Additional Information
- Increasing Share of Wallet is often more cost-effective than acquiring new customers.
- Understanding Share of Wallet can help businesses tailor their marketing strategies to focus on customer retention and upselling.