Business Analytics for Sales and Marketing Managers: How to Compete in the Information Age

COMPETING ON WALLET SHARE

If you used the decision tree in the beginning of this chapter (see Exhibit 5.1), you were directed to this section because you have knowledge about what your customer purchases over time and you are operating in an industry where many of your customers often use more than one supplier. The characteristics of your industry could therefore be that it is commoditized, there are many suppliers, or there are low switching costs or low costs associated with a multisourcing strategy for customers. This could be in the retail industry, where consumers often use more than one supermarket or outlet, or the air travel industry, where transactional customers often compare offers from several companies before deciding which one to accept.

Wallet Share Estimation Based on External Data Sources

The purpose of this analysis is to estimate the actual wallet share per customer (the percentage of a customer’s total spending within your business area that is awarded to your business) and then, based on the results, try to capture the remaining wallet share from your competitors. This is often an easy way of increasing your market volume since you already have a relationship with the customers that you will be focusing your campaign on. The ultimate goal is, of course, to become the sole vendor to each of your customers, even if doing so requires some discount, simply because the competition might be working on the same type of campaign—so you had better be first.

This section ...