In b2b sales, share of wallet should be king for measuring success. Why then is it an absent king?
It seems most sales reps think they only have one offering; their core. They complete that sale and they’re “Hasta la vista, baby,” and on to the next.
But share of wallet (the percent of a customer’s spend on your’s and other related offerings) looks like it’s the really big cheese. Here’s why:
- Share of wallet = true metric of success
- Share of wallet = potential easy, new sales
- Increased share of wallet builds exit barriers & deepens relationships
Share of wallet = true metric of success
Think about it, success metrics like customer satisfaction, preference and loyalty really measure “attitudes” or “feelings.” And those are important measurements, but not the king.
Isn’t it customers’ behavior more than attitude that counts – counts as sales?
And your sales and profit per customer only show what you are selling them – not what you could be selling them.
If one of your sales goals is to maximize revenue and profit per customer, then share of wallet should be your measure.
Share of wallet = potential easy, new sales
Your customers have already proven they’ll you give you money in return for your offering. Why not leverage the insights you already have into them and build on that?
Don’t you already know their:
- Business situation – their goals, strategies & culture?
- Departmental objectives – their structure, protocols & obstacles?
- Personal contacts – their ambitions, fears, hopes & dreams?
And you might even like your customers as people too – what a wonderful bonus 😉
When looking for easy, new sales nothing looks better than an existing customer. What’s not to like?
Increased share of wallet builds exit barriers & deepens relationships
Sell a customer one item from your offering – and you’ve got a sale. Sell them three or four items – and you’ve got a new relation.
When a customer buys almost everything you have to offer, they’ve not only spent their money but their emotional capital too. Didn’t they have to overcome the “don’t put all your eggs in one basket” truism?
Why not use that emotional capital to bring more value to the relationship – help them buy more of what you can sell. Because the more they buy, the higher they build their own emotional exit barrier,and the less likely they’ll leave you for someone else.
Don’t limit the sales mindset
If your firm has multiple items to sell customers, do it – do it for the wallet’s sake.
However, many sales reps feel they only have a core offering, and their firm lacks anything else to sell after that.
If that’s truly the case, sales reps are still not out of the game. Here’s what they can sell to get deeper into the wallet: knowledge.
Consider selling the knowledge of how to get more value from the customer’s spend on your’s and other related offerings.
Yes, in some instances this is part of your core offering. But there may be opportunities to sell your knowledge (and/or your firm’s subject matter experts’ knowledge) regarding:
- Benchmark reports
- Research & development
- Re-engineering your offering across other related ones
These knowledge sales don’t need all the marketing bells and whistles. Sell knowledge on an informal level: use self-made marketing materials or define the bare minimum in an email proposal; scope, deliverables, schedule and fees.
Calculating share of wallet
Lastly, you’ll want to calculate what share of wallet you have, so you know where you’d like to get to.
Here’s my overly simplistic, unscientific method. For each customer:
- Brainstorm a list of things you can sell: think cross-sell, up-sell, consulting sales
- Rough estimate the potential sales dollars for that list
- Divide your actual sales by the potential dollars
- Voila – that’s your simplistic share of wallet for that customer
So you want a scientific calculation?
Here’s one from a Harvard Business Review article titled “Customer Loyalty Isn’t Enough. Grow Share of Wallet.“
Go to the “Using the Wallet Allocation Rule” section and calculate through the step labeled “brand’s share of wallet for a given customer.”
Heads Up: From the limited information in the article, I think there are some areas you’ll need to massage if you want to use this calculation of share of wallet.
First, the article focuses on brand rather than sales, which you may consider an easy swap.
Second, the baseline for determining a brand’s rank is taken from a customer satisfaction or preference survey. Which means if you aren’t doing customer sat survey’s you’ll need to start, and it’d be easy to add a ranking question or two to your survey.
Share of wallet should be king for sales success measurement. Go deeper into the customer’s wallet, measure your share, and reap the rewards of more, easier sales and stronger customer relationships.