Share of Wallet, Wealth, and the Multi-Modality of Individuals
Author: Prag Shah
Companies spend a lot of time and money trying to manage customer satisfaction. However, increased satisfaction doesn’t necessarily mean that customers are less inclined to spend on other brands. Although customers may be satisfied with your brand, if they like your competitors just as much, you’re losing sales. The question is: how will customers divide their money among your brand and others? And how do you hold their attention? Let’s explore the concept of share of wallet and how you can leverage wealth insights to engage your consumers.
What is Share of Wallet?
Nonprofits and for-profits alike benefit from a core concept in consumer marketing: share of wallet. In its simplest form, this is how much of an individual’s (or household’s) spend goes to one particular firm, company, or brand versus to others. Does the individual spend more with Company A or Company B? And if I am the head of marketing at Company A, how do I continue to garner more and more spend with my company? However, customer satisfaction or loyalty does not necessarily mean an increase in share of wallet.
Because share of wallet is anchored to the individual [or household], it is essential to think through the various modes that the one individual is operating within their daily life. Think about your own week or month. In one moment, you may focus on saving for a down payment on a house; your 401k; working with your financial advisor; or, like me as a father of a high schooler, your child’s college fund; and so on.
In another part of your life, you may be buying a new car; a costly but dream vacation; a high-end luxury watch as an anniversary gift; and so on. And in another moment, you may focus on giving by donating to a cause that is near & dear to you; giving to your college alma mater; deciding where to grant funds from the family foundation your grandparents set up (as is often the case for families with cross-generational transfer of wealth); and so on.
This dynamic of saving-buying-giving is ever-present. This dynamic is apparent with different degrees of spend across the three arenas, depending on complex financial, lifestyle & personality attributes. All of it then drives your wallet and how and where you’ll distribute your dollars.
Engaging Customers Based on Their Spending Habits
The job of a wealth advisor is to tap and grow the wallet in saving mode. This can then cross into giving and spending mode depending on your goals. The job of a CMO at a luxury retailer or automotive company is to tap your wallet in buying mode. The job of the VP of Advancement at your alma mater or the VP of Development at ‘yourcause.org’, is to tap your wallet for more and continued giving of charitable donations.
So, whether you’re a luxury or nonprofit marketer, it’s important to engage your prospects or consumers effectively to tap into their share of wallet. Ask yourself: based on what you know about their purchasing or giving history, how best are you engaging them? Remember: marketing visibility is key. Each person’s attention will gravitate toward what has caught their attention.To bring in new prospects, it’s necessary to understand your existing consumers or donors as much as you possibly can. This all starts with using consumer data to deepen your understanding of your base.
3 Ways to Leverage Wealth Insights when Competing for Share of Wallet
Given the multi-modality of individuals, wealth intelligence can sharpen the prospecting and outreach of those nonprofits seeking the individual in giving mode, of those wealth advisory firms seeking the individual in saving mode, and of those luxury retailers, luxury service providers, and luxury real estate brokers of those individuals in buying mode. You can capture your consumer’s share of wallet using wealth insights such as:
By conducting a wealth screening, you can see which consumers have the greatest propensity and capacity to spend. Not only can you segment your audience based on basic demographic information such as age, but you can also append your database with wealth attributes. So, you can easily understand an individual’s giving or spending history (what/how much they’ve spent in the past) and estimated giving capacity (what/how much they’re likely to spend in the future). This will help you understand which consumers specifically, spend on your brand’s products. So, in terms of share of wallet, a screening will help provide you with insights on how to appeal to your consumers best and reach individuals just like them.
Once you’ve gained a clearer impression of the commonalities among your consumers, you have a clearer impression of who to target. For example, you may find that consumers who spend substantially on your brand’s products are men over the age of 40 who have cats. These are what your best customers look like. So, what if you want to reach prospective customers who will be just as likely as your existing customers to spend? Using predictive modeling, WealthEngine data scientists can use WealthEngine data, along with yours, to create a custom algorithm. With this algorithm, we can predict who’s most likely to purchase your products. More specifically, you can find potential customers who look most like your existing ones that spend exclusively or significantly on your brand’s products.
Customer segmentation will help you divide and evaluate your customers into categories based on their interests. Essentially, this type of analysis will help you find macro patterns in your database. So, you’ll be able to more easily understand what makes your customer base unique. These macro segments can be made based on geography, age-range, wealth scores, and other attributes. Demographic details about your base, in that sense, allow you to understand what makes your consumers unique. So, customer segmentation allows your business to reach a consumer based on their specific wants and needs, making it easier for you to compete for your customer’s share of wallet.
With money and life always on the move, modern technology platforms enable this data-driven outreach in powerful and efficient ways. These rich data sets and insights feed across platforms via standard API integrations. Custom predictive models can be built & enabled to feed the CRM & marketing platforms for CMOs & VPs of Advancement/Development. This allows CMOs and VPs to quickly activate and reach individuals in streamlined, targeted, and measurable ways.
A Closer Look at Millennial Wealth
Download WealthEngine and Coldwell Banker’s A Look at Wealth 2019 to understand the motivations, behaviors, and trends of millennial millionaires.
Ultimately all roads lead to the individual. In this case to his or her wallet and your firm’s ability to tap a disproportionate share of it, continuously.