• November 30, 2021
  • By Linda Pophal, business journalist and content marketer

Tips for Building Wallet Share to Gain Market Share

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Companies talk a lot about market share and engage in a wide range of activities designed to build or increase it. But there’s another important “share” on which they should also be focused—wallet share or share of wallet (SOW). It can be a leading indicator of market share and can be a metric to identify opportunities to impact customer satisfaction, but it has important relevance of its own.


Blake Roberts, senior research manager at Fuel Cycle, providers of a continuous research platform solution, defines wallet share as a measure of how consumers would allocate their spending across brands in the future based on their preferences. It’s correlated, he says, with in-market sales performance. “When launching new products or understanding the existing landscape, share of wallet helps companies understand who their main competitors are and what percentage of the market they own,” Roberts says.

Wallet share “is an indicator of consumer trust and liking for a brand,” says Ruben Gamez, founder and CEO of Signwell, an e-signature technology provider. It is a measure of “the amount a customer allocates and spends on a specific brand, despite having multiple choices,” he says.

And unlike market share, which Gamez says is usually hard to increase as it involves attracting new customers, wallet share costs less as it focuses on increasing sales from existing customers. Customer loyalty programs are one way to do that, he says.

The distinction is important, adds Tim Absalikov, cofounder and CEO of Lasting Trend, a digital marketing agency. “Both market share and wallet share are driven by customer revenue growth,” he says. “However, growing market share is aimed at attracting new customers from among competitors. On the other hand, wallet share is aimed at increasing income from existing customers by increasing the number of products used.”


Wallet share is a metric used by marketers who understand the value of existing customers. Too often companies focus their efforts more on attracting new customers than on seeking to satisfy and provide value to existing customers so they not only continue to do business with them, but also spend more money with them over time.

Wallet share is more customer-centric than market share, Roberts says, and it places a greater emphasis on existing customers. “When companies look at the share of wallet, they are much more inclined to ask themselves: ‘Why does the customer differentiate? How do they make their decision?’” he says.

The answers to these questions provide actionable insights, Roberts says. “When a brand can get into the habit of asking customers direct questions about their attitudes, behaviors, and preferences on a regular basis, it becomes a best practice that lends itself to greater strategic cohesion and customer-centered innovation across an organization.” Ultimately, gaining these insights can help to increase wallet share.

In short, a simple way to think about the distinction between market share and wallet share is that market share is a measure of potential customers and wallet share is a measure of existing customers, explains Jared Stern, a CRM expert and founder and CEO of Uplift Legal Funding, a small business agency that provides lawsuit loan experiences for its customers.

“Market share can be increased by attracting new customers. In contrast, wallet share can be increased by boosting sales of existing customers,” Stern says. That can occur by taking business away from your competitors or by increasing the amount of money customers spend with you as they buy more of the same, or additional, products.

“Offering value-added services to increase sales can be fruitful, as customers buying multiple products are more likely to have a positive opinion of the company,” Absalikov says. “Wallet share is a metric that helps you understand how loyal your customer is. The benefits of increasing customer wallet share go well beyond increasing revenue and include improving customer retention and customer satisfaction and creating a loyal embedded marketplace where new products can be offered in the future.”

However, customer satisfaction is not a proxy for wallet share—or vice versa—as Walmart found out some years ago. In 2008, the retailer reportedly launched Project Impact, a warehouse store remodeling initiative that removed unsightly stacks of pallets from the aisles, trimmed endcap displays, and thinned out overstuffed shelves. As expected, customer satisfaction scores rose, but same-store sales declined precipitously.

The problem was that satisfaction doesn’t necessarily lead to a growth in wallet share. Unlike satisfaction, wallet share is a measure of actual customer behavior based on the purchases they’ve made from you compared to the purchases they’ve made from your competitors.


Wallet share can be challenging to calculate, as it requires knowing not only your level of sales for specific products and services but also the level of sales for those same products and services among your competitors.

Michael Knight, cofounder and head of marketing at Incorporation Insight, a company that helps customers incorporate their businesses, and a seasoned entrepreneur who has assisted startups and small businesses in developing effective scaling strategies, explains it this way: “Wallet share can be calculated by defining how much in total a consumer spends for a specific product/service compared to other brands of the same good. If customer X spends a total of $100 on fast food and spends $50 on Wendy’s products, Wendy’s gets a 50 percent wallet share for that customer. This is crucial, as it can be used to predict the likelihood of a consumer choosing one brand over the other. It allows businesses a more accurate prediction of their customers’ needs, which is critical for maintaining customer relationships.”

Of course, it’s not always possible to get those specific numbers. Fortunately, there are some other ways of getting at some approximation of wallet share.

Marketers can also get at some sense of wallet share by surveying customers, asking them to indicate how they’re spending their money across a particular product category.


The “wallet allocation rule” is a formula that helps marketers measure wallet share by considering two things: the brands available for a particular product or service; and how customers rank their preference for these brands. The formula is as follows:

Roberts explains how it works:

  • Step 1: Ask customers to indicate, or select, which brands they would consider buying for their next purchase. Here, Roberts says, “it’s important to limit analysis to only brands they would consider—there is no point in asking respondents to assess brands they would not consider.”
  • Step 2: Ask customers to rank the brands in their consideration sets based on their most-preferred to least-preferred brands. This, Roberts says, “is closer to a shopping experience— shoppers buy their favorites in implicit rank order.”
  • Step 3: Translate these rankings into wallet share. “The higher a brand is ranked in a person’s consideration set, the greater share of that person’s wallet that brand receives,” Roberts says. “Brands that are not in a person’s consideration set are assigned a zero for that person’s wallet share.”
  • Step 4: Average each individual’s brand wallet share across the total sample to calculate an aggregate wallet share.

What constitutes a “good” share of wallet? That depends. One easy way to think of this is to consider the number of alternative brands available to your customers. The more alternatives customers have, the more challenging it might be to increase your share of wallet. So:

  • If there is only one other alternative to your product, having a wallet share of more than 50 percent is likely to be your target.
  • If there are 10 other alternatives, having a wallet share of more than 10 percent would be your baseline threshold.

You would want to grow that baseline beyond just an equitable share—e.g., from 50 percent to 55 percent, to 60 percent, etc.

This data yields important information to help marketers adjust their marketing strategies—from product and service attributes to marketing communication efforts.


Wallet share can be an important metric for identifying the need to shift marketing efforts, Gamez says. For example, customers might prefer another supermarket to yours. To bring their purchasing power to you, he says, it’s important to identify what leads customers to your competitor. “Is it a better store experience? Is it better prices? Are there better products?”

Considering these issues, he continues, can help identify changes that you might need to make to regain lost customers.

While wallet share isn’t a proxy for customer satisfaction, it can be used as a tool to identify potential issues related to customer satisfaction that the company might need to address or improve, Stern says.

“An eatery may send out a survey asking customers to rank its service. If customers give an 8 out of 10 score, the business must reflect on how it can better its rank. Is the competitor rolling out interesting new products? The eatery must adopt the best ideas to ensure customers choose them over their competitors.”

Keep in mind that wallet share is a very dynamic measure that changes over time, Gamez says. “Any result is only applicable for a short window of time,” he says.

So a company can’t really rest on its laurels, confident in the knowledge that, today, it commands the greater share of wallet for a certain product category. Conversely, companies shouldn’t be too discouraged if their share of wallet is lower than they’d like. Efforts over time can help grow these numbers. After all, wallet share is a metric that needs to be measured continuously. Technology can help.


Calculating wallet share requires data analytics, tools like Microsoft Power BI, for instance. “Collecting data based on customers’ previous purchases and order history is vital,” Stern says. “This, coupled with an understanding of customer demographics, will help profile customers.”

Then, once customer profiles have been created, organizations can categorize their customers to help identify strategies to use with different segments.

Shopify POS is another such tool; it gathers point-of-sale data based on in-store and online retail sales, helping marketers understand consumer spending in real time.

But ultimately, when looking at both wallet share and market share, your current customers matter—a lot! Keeping close tabs on wallet share is an important way to ensure that your marketing efforts are keeping customers engaged and loyal to your company and your brand. Even if you’re not able to track down the specific external data to help you calculate wallet share, having a proxy based on available information can still provide value.

Whichever process you use, monitoring trends over time can help you stay attuned to shifts in customers’ preferences and spending and the potential for losing share of wallet and market share. 

Linda Pophal is a freelance business journalist and content marketer who writes for various business and trade publications. Pophal does content marketing for Fortune 500 companies, small businesses, and individuals on a wide range of subjects, from human resource management and employee relations to marketing, technology, healthcare industry trends, and more.

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