Blog · Wallet share and penetration
The difference between share of wallet and market share, when each is the right measure, why a company can grow market share while losing wallet share at its largest customers, how each is computed and what each needs, and the one situation in which they converge.
A commercial team reports rising market share and a sales director cannot understand why the largest customers are ordering less. Both are true. Market share and share of wallet are different measures of different things, and the second is the one that names the customers. This guide sets out the difference, when to use each, and how each is computed.
| Market share | Share of wallet | |
|---|---|---|
| Formula | company sales ÷ market sales | sales to a customer ÷ that customer's category spend |
| Unit | one number for the company or segment | one number per customer |
| Denominator source | market research, industry bodies | the customer, or a norm from your own base |
| Rolls up | no; it is already the top | yes: customer → rep → region → company |
| Names a customer | never | always |
| Owner | marketing, the board | sales, account management |
A company with 100 customers at a 40 percent share of wallet each adds 50 new customers at 10 percent. Market share rises, because total sales rose. Share of wallet across the base fell from 40 to 30 percent, and at the original 100 customers it may have fallen too, unnoticed. The market share slide says growth; the wallet share table says the base is leaking.
| Last year | This year | |
|---|---|---|
| Market size | $1.0bn | $1.0bn |
| Company sales | $80m | $92m |
| Market share | 8.0% | 9.2% |
| Customers | 100 | 150 |
| Wallet share, original 100 | 40% | 34% |
| Wallet share, all customers | 40% | 30% |
Market share up by more than a point. Wallet share at the original customers down six points, which is about $12m of spend that moved to competitors while the company was winning new logos. The market share figure cannot see it.
Market share needs a market total, from research or an industry body, at a segment definition that matches the company's. It is usually annual, lagged and approximate.
Share of wallet needs the customer's category spend, per customer. Stated by the customer where possible; otherwise estimated from the norm across the company's own similar customers, which is timely, consistent and owned.
| Question | Measure |
|---|---|
| Are we winning against competitors overall? | Market share |
| Which customers are we losing to competitors? | Share of wallet |
| Is the market growing or are we? | Market share |
| Where should the rep go on Monday? | Share of wallet |
| Are we the leader in the segment? | Market share |
| Is our largest customer moving away from us? | Share of wallet |
Wallet share reported as an average of percentages. A two-site customer weighs the same as a nine-site one. Weight by wallet.
Market share used to reassure. Rising share with a leaking base.
Wallet estimates unstated. The share is then unverifiable. Put the method on each line.
The two confused in a deck. "Our share is 30 percent" with no noun after share.
Market share comes from outside. Share of wallet comes from the company's own ledger and its own customers, per customer, every month, and rolls up. Covirage builds the second from the exports as they are. The share of wallet calculation guide covers the formula and the three wallet methods, and the share of wallet term has the short definition.
Share of wallet, because it produces a list per rep. Market share is a board and marketing figure that no rep can act on. Both are useful; only one of them names an account.
Yes. The denominator is the customer's spend, estimated from the customer, from a norm across the company's own similar customers, or from a public figure scaled to the customer's size. No market total is needed.
When the customer is the market: a single-buyer situation, or a segment of one. A supplier to one utility has a share of wallet at that utility that is also its market share in that segment. Otherwise they differ, and they can move in opposite directions.