This week we’ll focus on a metric critical to major, global or key account managers. For those of you with broad territories and dozens to hundreds of customers, this metric is probably of secondary importance.
The term ” wallet share” comes from the banking industry. Typically it meant, how many of the bank’s product lines were you consuming. For example, did you have checking, savings, credit cart, mortgage, loans, credit lines, and so forth. Today, the term wallet share generally refers to the share of the customer’s purchases in your category you are obtaining. For example if the customer is spending $1 million a year buying products for which you have solutions, and you are getting $400K of that spending, you would have 40% wallet share–with an opportunity to gain more of their spending.
Sometimes we use “share of customer” or account penetration as other terms for the same metric.
I’ve always been aggressive in looking at wallet share. I’ve thought, “It’s my goal to achieve 100% wallet share!” Realistically, that may be very difficult, but we want to grow our penetration and importance to the account. In accounts where you are a component part supplier, there may be a policy two have second sources–the theory being, if one vendor can’t deliver the parts, another can. It’s also used as a negotiating tactic for both vendors. In these cases, you want to get yourself into the lead vendor position and seek to minimize the second sourcing.
In capital equipment, software, or major services agreements, it may be possible to attain 100% wallet share, becoming major strategic vendors or partners to the customer. For example, companies outsourcing all their IT operations to another company are giving that supplier 100% wallet share. In these cases, there is a high degree of interdependency, trust, and very close relationships between the customer and vendor.
“Wallet Share” is a trailing goal, that is it’s an objective that you may set for the year, for example you want to increase wallet share by 15% over the next 12 months. To achieve this goal, you have to put together specific activities (and measures) that enable you to reach this goal.
So once we’ve determined a goal for “wallet share,” how do we go about achieving our goal? The key to this is developing and executing very strong account plans. When you wash away all the fluff surrounding an account plan, the key objective of the account plan is to systematically identify all the areas in which you can compete–that is offer solutions—and then to develop strategies to win that business.
The account plan is really a sort of focused prospecting plan. Typically you look at an overall organization chart–map the divisions, business units or functions that have a need for the products and services you offer, map where you currently have business, identify areas where you can gain new business. You then develop action plans, build relationships with the customers in the target business units, identify, prospect, and qualify new opportunities—just like you would in a general territory, but within a single account. Once you’ve qualified an opportunity, you need to develop and execute your opportunity strategies.
Your account plan should include marketing programs–things that you will do to build visibility, awareness, and demand. It should also include account nurturing programs. While certain areas may not have a need to buy this year, they will some time–you want to be there when they have that need.
Your account plan should include very strong cross sell and upsell plans. You should have plans to go into the current divisions you work with, finding ways to upsell or to sell a wider variety of products.
Many people confuse an account plan with opportunity plans—they have very different objectives. The account plan’s goal is to identify new opportunities. The opportunity plan’s goal is to win the deal. Make sure you don’t confuse them.
Good account plans also look at nurturing the customer, maintaining strong and valued relationships, keeping high levels of satisfaction, and retaining and growing the business. These are all good things to have and improve your ability to compete for new opportunities, but be clear—the account plan is a structured prospecting plan focused on finding new deals to compete for.
When you are developing your account plan, don’t forget, your competitor is developing their plan for the same account–they may also have a goal for 100% wallet share!
The account plan should be a living document. It should have specific, measurable actions, and time frames. You will want to track your progress against these actions and time frames. You will want to adjust your account plan based on what you learn in executing the plan, as well as changes happening within the account itself. These activities are the critical interim metrics that will help you stay on track to meet your wallet share goal.
Managers, coach your teams in developing their account plans. Make sure they have profiled the account deeply, that they have plans to reach all parts of the account, not just the divisions they are currently in. Make sure they align their plans with the customer’s strategies and priorities, creating greater value in the relationship. Track them against the execution of the plans they have established.