Blog · Wallet share and penetration
The complete share of wallet calculation on ten customers small enough to check by hand: the ledger revenue, the size measure, the three main-supplier customers the norm is drawn from, the norm per site, the wallet per customer with its source, the share, the gap, the ceiling, the roll-up weighted by wallet against the average of shares, and the identity, so a reader can reproduce every figure and then run it on their own export.
Share of wallet needs a denominator the ledger does not hold, and the norm method estimates it from the customers where the company already has most of the business. On ten customers the whole method fits on a page. This page works it: the norm, the wallets with their sources, the shares, the gaps, the roll-up two ways, and the identity.
| Customer | Sites | Revenue | Wallet stated? | Main supplier? |
|---|---|---|---|---|
| A | 4 | $310,000 | $380,000, tender | |
| B | 6 | $140,000 | ||
| C | 2 | $160,000 | $190,000, review | |
| D | 9 | $90,000 | ||
| E | 3 | $270,000 | Yes | |
| F | 5 | $450,000 | Yes | |
| G | 2 | $200,000 | Yes | |
| H | 1 | $30,000 | ||
| I | 7 | $210,000 | ||
| J | 3 | $95,000 | ||
| Total | 42 | $1,955,000 |
Main-supplier customers' spend per site: E $90,000; F $90,000; G $100,000. Median $90,000... check: E 270/3 = 90; F 450/5 = 90; G 200/2 = 100. Median of (90, 90, 100) = $90,000 per site. Their own share, by their own account, is about 90 percent, which is the ceiling.
Norm = $90,000 per site. Ceiling = 90%.
| Customer | Wallet | Source |
|---|---|---|
| A | $380,000 | Stated |
| B | 6 × 90,000 = $540,000 | Norm |
| C | $190,000 | Stated |
| D | 9 × 90,000 = $810,000 | Norm |
| E | 270,000 ÷ 0.9 = $300,000 | Main supplier at ceiling |
| F | $500,000 | Main supplier at ceiling |
| G | $222,000 | Main supplier at ceiling |
| H | 1 × 90,000 = $90,000 | Norm |
| I | 7 × 90,000 = $630,000 | Norm |
| J | 3 × 90,000 = $270,000 | Norm |
| Total | $3,932,000 |
| Customer | Share | Gap to ceiling |
|---|---|---|
| A | 82% | $32,000 |
| B | 26% | $346,000 |
| C | 84% | $11,000 |
| D | 11% | $639,000 |
| E | 90% | 0 |
| F | 90% | 0 |
| G | 90% | 0 |
| H | 33% | $51,000 |
| I | 33% | $357,000 |
| J | 35% | $148,000 |
Gap to ceiling = wallet × 90% − revenue, floored at zero. D first, then I, then B.
Segment share, weighted = 1,955,000 ÷ 3,932,000 = 50% Average of the ten shares = (82+26+84+11+90+90+90+33+33+35) ÷ 10 = 57%
Seven points apart. The weighted figure is the one; the average flatters because the small, full customers count as much as the large, empty ones.
Σ revenue = $1,955,000 = the ledger's segment total
Norm as a mean. One odd main-supplier customer moves it.
Stated wallets ignored. A and C measured against the norm when they told us.
Average of shares. 57 instead of 50.
Gap against 100. D's gap reads $720,000; nobody has ever held 100 percent.
The same columns per customer, the norm per segment cell with its count, the roll-up weighted by wallet. Covirage runs this on the ledger and the customer master every month with the source on every line. The share of wallet calculation guide covers the method, and the norm guide covers the norm at scale.
Because they show what a customer of this kind spends in the category when the company holds most of it. Their spend per site is the best available statement of a full wallet per site, and applying it to a customer's site count is the norm method. Where the customer states a wallet, the stated figure wins.
Because it weights a one-site customer the same as a nine-site one. The segment share is the total revenue over the total wallets, which is what the company holds of what the segment spends. On these ten the average is nine points too high.
The main-supplier customers' own shares, around 90 percent, say how high a share can reasonably go in this category. A customer at 84 percent is nearly done; one at 25 has room. The gap is measured against the ceiling, not against 100.