It seems like common sense it's easier to sell something to an existing customer than to go out and find a new customer.
So why then is so much time and attention spent on the discussion of generating leads? I think it's because people don't understand the value of "share of wallet".
I can't take credit for the concept of share of wallet. The first place I heard it posited was in a book called The One to One Future by Peppers and Rogers circa 1997.
Peppers and Rogers suggested that in the future the Mass Marketing would no longer be an effective means of reaching our customers. It is their position that we as marketers would have to be much more personalized in our approach to the market and our customers.
In the 14+ years since, I think we have seen that to be true. Media has evolved into a much more fragmented marketplace. In the 1960s, all one had to do was to buy ad space on the three networks and they would have 100% reach.
Today, with TiVo, customized news, Facebook and twitter customers are much more able to tune their consumption to their interests. Herein lies the value of one to one marketing. By establishing that relationship with the customer, we are able to provide them with offers and information exactly consistent with their expressed needs.
As Peppers and Rogers expressed, we're in a world of fragmented media that comes not so much for reaching out for each new customer, but in maximizing those customers we already have. We as marketers become much more responsible for the final piece of the customer engagement cycle, retention also known as repurchase.
I'll give you one case study from my personal life. I have found that I am doing almost all of my grocery shopping at Whole Food Market. In the beginning it wasn't like this. We would go to the regular grocery store for the bulk of our needs, and we would save Whole Foods for those special items which wanted to be organic or all-natural that we felt we couldn't get at the regular grocery store.
It's now a special occasion when I shop for groceries anywhere else.
And here's the rub, once I'm doing all of my grocery shopping there it's amazing how many other things they sell. Water bottles, insulated bags, cutting boards, napkins, cooking utensils, you name it.
Now I'm stuck. It feels like the work involved to go to any other store would not be worth the difference in cost. Are the cooking utensils better at Whole Foods? What about the mac & cheese? Does it really need to be ancient grains organic mac & cheese?
I think we know the answer.
Now the real question is this: what do you have to do to communicate to your existing customers that there are more of their needs you can serve? And then, how do you make it worth to them?
I'd love to hear your thoughts on how to effectively communicate to your customers, or even cases where you found yourself giving a greater share of wallet without concern.
Please comment and let me know.
3 thoughts on “Learn Why Share of Wallet Beats Share of Market”
From one Whole Foods shopper to another, I like the analogy. I can think of two ways to show existing customers more of our offerings:
1) Like Whole Food’s circular, present them with a marketing plan/calendar of possibilities for a holistic campaign. They will spot disciplines in which they are not involved.
2) Show them where their competitors are engaging. Assuming they want to be competitive, they’ll want to know what it takes to win.
Guess it’s like giving them a tour down the other isles of the store. 🙂
Yes! Going to your clients on a regular (quarterly, semi-annually) basis and showing them some of the items from the other aisles is a great idea.
And of course, there’s no better salesperson than their own ego.
I work with financial institutions and we frequently refer to the term Share Of Wallet. Like Dana’s point about Whole Foods circular, if your customers don’t know what you are offering…how are they supposed to buy it!
Educating customers is often overlooked because a lot of focus is placed on creating slick sales pieces and techniques to sell, sell, sell. To effectively increase the share of wallet with any existing customer, they have to understand who you are, what you have to ‘sell’, and what are your intentions. Answer those questions and your share of wallet WILL increase!
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