360° Share of Wallet View

I have found this definition of Share of Wallet on Wikipedia:

Share of Wallet is the percentage (“share”) of a customer’s expenses (“of wallet”) for a product that goes to the firm selling the product. Different firms fight over the share they have of a customer’s wallet, all trying to get as much as possible. Typically, these different firms don’t sell the same but rather ancillary or complementary product.

Measuring your share of given wallets – and your performance in increasing it – is a multi-domain master data management exercise as you have to master both a 360° view of customers and a 360° view of products.

With customer master data you are forced to handle uniqueness (consolidate duplicates) of customers and handle hierarchies of customers, which is further explained in the post 360° Business Partner View.

With product master data you are not only forced to categorize your own products and handle hierarchies  within, but you also need to adapt to external categorizations in order to getting access to external data available for spending probably on a high level for a segment of customers but sometimes even possible down to the single customer.

Location master data may be important here for geographical segmentations and identification.

My educated guess is that companies will increasing rely on having better data quality and master data management processes and infrastructure in order to measure precise shares of wallets and thereby gain advantages in a stiff competition rather than relying on gut feelings and best guesses.

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4 thoughts on “360° Share of Wallet View

  1. Jim Harris 26th August 2010 / 16:54

    So, basically what you’re saying is that better data quality and master data management will help organizations become better at customer pickpocketing 🙂

    (Sorry, but as usual, I just couldn’t help myself.)

  2. Henrik Liliendahl Sørensen 26th August 2010 / 19:18

    My friend Jim, indeed, however I think business insight is a more appropriate term than pickpocketing.

  3. Ian Stahl 26th August 2010 / 19:39

    Very insightful post. (And I’m not just saying that because I represent a vendor and am looking for ways to pickpocket customers. @Jim 😉

    I’ve seen another way in which the term “wallet share” is used, more specifically in the data services arena, primarily B2B, for firmographics and hierarchy enrichment. Data service providers use the term “wallet share” to express a revenue or margin percentage acquired from the segment of the customer’s base defined by a given firmographic dimension, like industry, employee count or geography, and attributable to customers in that segment matched in the provider’s data.

    The idea was the customer could use “wallet share” as a basis for establishing a business case to expand their data subscription, say to cover a given territory (e.g. “Asia-Pac”) or market (e.g. “small business”). They can also use “wallet share” to evaluate the provider’s reference data against their expanded target (e.g. “They only cover 30% of the customers in APAC, but cover 95% of the revenue base, or ‘wallet share’.”) This kind of off-the-cuff analysis is predicated on the idea (a kind of Pareto dynamic common in B2B) that most of your revenue comes from a small sub-set of repeat customers, so the focus of your infrastructure investment should be on them, or those like them.

    I’d be interested to know if you’d seen the term used similarly in the past, since I was more familiar with the way Wikipedia (and conventional market segmentation) applied the term. I did a write-up about this usage of the phrase in my blog here:
    http://blog.initiate.com/index.php/2010/05/03/using-wallet-share-for-business-priorities/

    Thanks, Henrik.

  4. Henrik Liliendahl Sørensen 26th August 2010 / 20:19

    Thanks Ian. Loved reading your posts on wallet share – Initiate got so many fantastic bloggers so it’s hard to gain 100 % share of blog reading :-).

    As with everything data quality most things aren’t black or white; we have a lot grey zones. I think “Share of Wallet” is basically meant as being applied to a single entity opposite to “Market Share” as being meant to be applied to a market segment as combinations of geography and industry verticals. “Wallet Share” may be somewhere in between, or….

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