What is Share Of Wallet ?

1665 reads · Last updated: December 5, 2024

Share of wallet (SOW) is the dollar amount an average customer regularly devotes to a particular brand rather than to competing brands in the same product category. Companies try to maximize an existing customer's share of wallet by introducing multiple products and services to generate as much revenue as possible from each customer. A marketing campaign, for example, may have a stated goal of increasing the brand's wallet share for specific customers at the expense of its competitors.

Definition

Share of Wallet (SOW) refers to the average amount of money a customer regularly spends on a specific brand rather than on competing brands within the same product category. Companies aim to maximize the share of wallet from existing customers by introducing a variety of products and services to capture as much revenue as possible from each customer.

Origin

The concept of share of wallet originated in the field of marketing. As competition among businesses intensified and customer loyalty became increasingly important, this concept gained widespread application. It helps companies better understand customer spending behavior and develop more effective marketing strategies.

Categories and Features

Share of wallet can be categorized based on different product categories and customer segments. Its features include: 1. Increasing brand loyalty by expanding product and service offerings; 2. Identifying growth opportunities through analysis of customer spending patterns; 3. Requiring ongoing market research and customer feedback to maintain a competitive edge.

Case Studies

Case Study 1: Amazon increased its share of wallet through its Prime membership service. By offering fast delivery, exclusive discounts, and streaming services, Amazon successfully attracted more customer spending. Case Study 2: Starbucks increased customer spending frequency and amount through its rewards program and mobile app, thereby enhancing its share of wallet.

Common Issues

Common issues include: 1. How to accurately measure share of wallet? This is typically achieved through customer surveys and purchase data analysis. 2. What are the main challenges in increasing share of wallet? The main challenges are maintaining customer loyalty and responding to competitors' market strategies.

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