The portion of a customer's total spend on a category that you hold. Your revenue from the customer divided by everything they spend on what you sell.
Share of wallet = your revenue from the customer ÷ the customer's total spend on the category
The numerator is in your systems to the penny. The denominator, the wallet, never is. It comes from a benchmark provider, the customer's own disclosures, public data, or an estimate from similar customers or from the customer's size and a typical spend ratio. Record which source was used and grade it per customer.
Share of wallet is most useful per product line: a customer at 60 percent in one line and 5 percent in another has a specific opportunity in the second. A single blended share hides it.
Sum revenue and sum wallet across customers before dividing. Never average the customers' shares; a small customer at 80 percent and a large one at 5 percent is not 42 percent.
Penetration is share of wallet's cousin for products rather than money: of the products a customer could buy, how many do they buy. Whitespace is the gap expressed as a list of products and a value. Hit ratio is the trading desk's version, counted in requests won rather than revenue.
Market share is a different measure, about the company not the customer: see share of wallet vs market share and market share.
A customer spends about $500,000 a year on the category and buys $110,000 from you: 22 percent. Similar customers give you a median of 45 percent. The gap to the norm is $115,000.
A denominator nobody states. Share is quoted with no indication of where the customer's total came from or when.