Strategies for improving Wallet Share and Market Share are a key objective for any company seeking to grow and dominate its market. To achieve this goal, it is essential to implement effective strategies that boost both market share and customer spending share.
Below are some proven methods that can help accomplish this:
Strategies for Wallet Share
Market Share Strategies
Business Case: DataBoost
To illustrate how these strategies are applied in practice in B2B SAAS, let’s consider the case of “DataBoost,” a cloud accounting software company.
Strategies for Wallet Share
DataBoost has a loyalty program that rewards loyal customers for their loyalty with discounts and special benefits to encourage them to spend more on the platform. This is achieved through reward points for continued software usage and referrals to other potential customers.
Market Share Strategies
The company launches a digital marketing campaign to reach small businesses and freelancers, aiming to increase its visibility in the market and attract new potential customers. Additionally, they have developed new features based on market needs and received direct feedback from customers to continuously improve their product and stay competitive.
Methods for discovering and quantifying Wallet Share and Market Share
In the competitive business world, understanding and quantifying market share is essential for success. Wallet Share and Market Share are key indicators that reveal a company’s position in relation to its competitors and its market penetration.
Here are some effective methods for discovering and quantifying these metrics:
Transactional Data Analysis
Transactional data analysis provides deep insight into customer transactions, allowing you to identify how much they are spending at a particular company compared to other options available in the market. This can be done through sales tracking systems and data analysis tools.
Customer Satisfaction and Preference Surveys
Conducting customer surveys can provide valuable information about customer preferences, loyalty and buying habits. Specific questions about the frequency and amount of spending on the company’s products or services can reveal the brand’s Wallet Share.
Competitive Analysis and Benchmarking
Competitive analysis helps to contextualize the company’s position in the market. Comparing sales, revenue and market share figures with key competitors can help quantify the company’s Market Share and Wallet Share.
Market Share Tracking
Using market tracking tools and market research data can provide an overview of the company’s market share in your industry. This data can be useful in evaluating the effectiveness of marketing and sales strategies.
Customer Retention Analysis
Customer retention analysis examines the rate at which the company retains its customers over time. High customer retention can indicate a strong Wallet Share, as customers continue to purchase products or services from the company on a regular basis.
Approaches using TAM, SAM, SOM in Market Share
The following tools are useful for understanding and addressing Market Share:
TAM (Total Addressable Market): Represents the total size of the available market for a product or service. For example, the TAM for a B2B project management software could be the total of all revenues generated by the companies that could benefit from that solution.
SAM (Serviceable Available Market): This is the portion of the TAM that a company can achieve with its current offer. For example, if a B2B project management software targets only companies of a certain size, then the SAM would be the TAM restricted to that market segment.
SOM (Serviceable Obtainable Market): This is the portion of the MAR that a company can actually capture. For example, if only a fraction of the target companies choose to purchase B2B project management software, then that will be the SOM.
Alternative in Wallet Share
Instead of calculating Wallet Share, which focuses on a customer’s share of a specific company, an alternative may be to calculate the percentage of a customer’s total spend in a specific category compared to the market’s total spend in that category. This provides a different view of the customer’s market share.
Formulas and Steps for Calculation
Formula for Wallet Share
Example: Suppose a B2B SAAS company called “TechSolutions” offers human resources management software. If a specific customer, “Company XYZ,” spends $5,000 at TechSolutions and $20,000 in total in human resource management software, then your Wallet Share would be: ($5,000 / $20,000) x 100 = 25%. This means that the 25% of Company XYZ’s total spending in that specific category goes to TechSolutions.
Formula for Market Share
Example: Continuing with the “TechSolutions” example, let’s assume that its annual sales are $1,000,000 and the total sales of all human resource management software companies in the market are $10,000,000. Then, the TechSolutions Market Share would be: ($1,000,000 / $10,000,000) x 100 = 10%. This means that TechSolutions has 10% share in the human resources management software market.
Conclusion
In conclusion, Wallet Share and Market Share are crucial indicators of performance and competitiveness in the B2B SAAS market. Understanding the differences between them, as well as strategies to improve and quantify them, is essential for business success. Companies can increase their market share by focusing on customer satisfaction, expanding the market, and continuing to innovate. This allows them to maintain a lasting competitive advantage.
