Share of wallet (SOW) is a marketing metric used to calculate the percentage of a customer's spending for a type of product or service that goes to a particular company. For example, if a customer spends $60 a month at fast food restaurants, and $30 of that amount is spent at McDonald's, McDonald's has a 50% SOW for that customer. The term is sometimes expressed as wallet share.
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Share of wallet vs. market share
Wallet share and market share are two distinct terms. As described above, wallet share refers to how much of a customer's expenses for a category of product or service goes to a particular company. For example, a value-added reseller may have a 60% wallet share of a customer's spending on storage products.
Market share, meanwhile, refers to the percentage of what a company earns of the overall spending in an industry or product market. If the total price of all-flash array (AFA) systems sold worldwide is $800 million, and a particular vendor sells $200 million worth of AFA systems, then that vendor's market share for AFA systems would be 25%.
Strategies for increasing customers' wallet share
Increasing wallet share is often easier than increasing market share. Strategies aimed at gaining wallet share include trying to increase the average amount that a customer spends per visit, encouraging more frequent visits and fostering customer loyalty and customer retention.