## What is 'Share Of Wallet (SOW)'

A share of wallet (SOW), also known as wallet share, is a marketing tool used to calculate how much of a customer's cost for a product or service goes to a specific company. Increasing wallet share is a more natural, less expensive, and more efficient way to boost revenue than expanding the market share would be.

Next Up

## BREAKING DOWN 'Share Of Wallet (SOW)'

The share of wallet (SOW) is used by analyst use to reference market share and competition. A business with a high share of wallet has a higher percentage of the customer's wallet. But what exactly does this mean? First, it is relevant to understand the wallet referenced is the customer's wallet. It refers to the number or dollar amount of sales the company is taking from the customer's wallet.

More broadly SOW is used to describe a company's position in the marketplace, which is often confused with market share. Increasing wallet share can be a profitable strategy. For example, a bank might refer a wealth management client to a mortgage representative to fulfill other needs. By cross-selling, the within the bank structure, they can increase their share of the customer's wallet.  Market leaders try to capture both market share and share of wallet. However, there is a difference between the two terms.

## Calculation of Market Share

Market share is often confused and used interchangeably with the share of wallet. This confusion is because both describe a company's positioning within the marketplace. Market share is determined by dividing company sales by sales in the entire market or industry. For example, assume company Alpha sells \$1 million in widgets to company Beta. The total of all sales in that market is \$10 million. Company Alpha has 10% of the total market sales, or a 10% market share (\$1 million/\$10 million).

## Calculation of Share of Wallet

Calculation of share of wallet is by how much the customer spends with a particular company. To find this, you will divide the customer's purchases with the company, by what the customer spent in total for all purchases within the same product or service class.

This approach defines market share from an internal perspective. Instead of looking at the share of total expenditures in the market, which is going to be small for new or small businesses, the share of wallet narrows the universe. SOW focus is on customer expenditures. In other words, one term looks at the share of the market, while the other looks at the share of customer. For example, if a customer spends \$100 per month on fast food and \$20 of that total is spent at Burger Palace, then Burger Palace has a 20% wallet share (\$20/\$100=20%).

RELATED TERMS
1. ### Hot Wallet

Hot wallets are among the most popular ways of storing digital ...
2. ### Mobile Wallet

A mobile wallet is a virtual wallet that stores payment card ...
3. ### Paper Wallet

A paper wallet is an offline mechanism for storing Bitcoins. ...
4. ### Private Key

A private key is a sophisticated form of cryptography that allows ...
5. ### Dark Wallet

A digital wallet that enables data anonymization by obfuscating ...
6. ### Coinbase

Coinbase is a bitcoin broker that provides a platform for traders ...
Related Articles
1. Tech

### Protect Your Bitcoins Against Theft and Hacks

Because hacking methods change, vigilant investors have the best chance of avoiding trouble.
2. Personal Finance

### Top 3 Mobile Wallets of 2018

Why carry around a bulky, overstuffed wallet when you can go digital with these mobile apps?
3. Personal Finance

### Apple Pay vs Google Wallet: How They Work

Apple Pay and Google Wallet are mostly identical offerings. Apple may be to be easier to use, but Google has a more features.
4. Tech

It's one of the biggest buzzwords in the financial space, but many people don't know how to buy Bitcoin.
5. Tech

### What Is Cold Storage For Bitcoin And Why Does It Matter?

With increasing incidents of hacking in the world of digital currency, cold storage offers a safe place for the cryptocurrency owners.
6. Tech

### How Do You Pass on Your Bitcoin When You Die?

If all you have is a will, your bitcoin will disappear when you die... unless you take these precautions.
7. Tech

### Is It Safe to Send Money Through Gmail? (GOOG)

Learn why Google's safeguards minimize the risks of sending money via Gmail, but also realize how hackers' sophistication always renders the Internet less than 100% safe.
8. Personal Finance

### How Does Apple Pay Work? (AAPL)

Discover why more businesses and smartphone users are opting to participate in Apple Pay, a new, revolutionary mobile wallet program.
9. Personal Finance

### RFID Credit Cards: Is Your Identity Safe?

Smart cards may offer new ways for thieves to steal your identity.
10. Tech

### Beware of these Five Bitcoin Scams

We look at five bitcoin scams and how to protect yourself from fraud.
RELATED FAQS
1. ### What strategies do companies employ to increase market share?

A company's market share is the percentage it controls of the total market for its products and services. Learn about the ... Read Answer >>
2. ### How does a merger affect the customer?

Learn how a merger may affect customers of the industry. The effects of mergers may be positive or negative, but there's ... Read Answer >>
Hot Definitions
1. ### Economies of Scale

Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
2. ### Quick Ratio

The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
3. ### Leverage

Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
4. ### Financial Risk

Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
5. ### Enterprise Value (EV)

Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
6. ### Relative Strength Index - RSI

Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...