Account-based marketing (“ABM”) is a strategic B2B marketing approach that targets a single company, division, or individual within a company. As such, it deploys far more targeted tactics than general marketing, designing campaigns around names and emails, individualized value propositions, and highly specific personas.
“Share of wallet” is one of the most important measures for developing an account and cultivating a lasting relationship. But it too often gets short-shifted as an element of ABM. Our experience has been that sales and marketing teams promoting IT often group existing accounts by vertical or size to allow for the creation of base content that can be refurbished or quickly personalized for specific customers. The focus tends to be on ranking customers by up- or cross-sell potential. Once complete, content creation kicks into gear.
But share of wallet can be taken further. IT suppliers can, of course, use share of wallet to better assess the potential for up-sells and cross-sells. But it can – and should – also be used to identify which clients deserve five-star service and which clients may need to be cut loose to free resources for others.
Show Me the Money
This is where market data comes into play.
For instance, let’s say you work at an IT supplier with a suite of applications for data management. Let’s say you are assessing your customers in the United Kingdom. According to IDC data, in 2022, the retail space, Cazoo, Oasis Fashions, and Papa John’s International all spent around $1 million on data management software. In the transportation space, XPO Logistics and A.P. Moller-Maersk spent a bit less in the U.K.
Armed with that data, you can then find out how much they spent with you. It is a straightforward exercise to compare the total CRM spending of clients with the total you received. Simply create a table to compare the two and check your share of wallet.
Figure 1: Using Share of Wallet to Categorize Accounts
This allows you to do three critical things to improve your relationship and potential long-term revenue.
- Recognize “Golden accounts”. These are accounts where you have a high share of wallet. It is important to keep the level in context. The threshold for what defines a golden account will differ by country, sector, and technology. Once that threshold has been reached, it is unlikely to expand. Growth from the account will occur mainly through incremental service or product add-ons and expected price increases. In so doing, it is crucial to not “nickel and dime” these accounts. Rather, they should be targeted for extra attention, “reinforcement” or validation marketing, freemium advisory sessions, thank-you gifts (allowed by law and company policy), and your company swag. Basically, give them all the extra service and attention you can afford.
- Identify growth accounts. The range on this can be quite broad and will differ based on the market, technology, and supplier. There is a good chance you have already named a fair number of these if your revenue and up-and-cross-sell activity has been growing either quarter by quarter or year by year. Market data helps validate those accounts to analyze why clients buy your tech or services, how tech is used, and the perceived value, which tells you whether to pursue account-specific outreach and content or leverage off-the-shelf assets.
- Accounts to let go. It can be tough to admit a relationship isn’t working. It can be even tougher for a salesperson or their supervisor to let go of a stream of revenue. Share of wallet can help. As above, the share at which you choose to let an account go will vary. The key is to compare the share to what you are getting from other clients. If your share of wallet is averaging 30-40% and you have gone down around 5% and have barely budged in the past couple of years, it is probably time to evaluate whether the effort of maintaining them could be better spent on growth clients or acquiring new ones.
One final thought: If share of wallet is consistently low, there may be systemic issues at play that ramped-up ABM will not solve. The product itself could be cumbersome or the value proposition no longer unique. The sales and renewals processes could be overly complicated. Marketing and sales need to be more closely aligned. Or the competition has adopted a new approach that is proving successful.
In this respect, share of wallet can be multifunctional. All it takes is the right market data.
IDC Company Lens provided the data for this post.
Interested in learning more about ABM?: Watch IDC’s on-demand webinar “The Company is the Key: How Account-Level Intelligence Helps You Gain Share” here, or read more about orienting your ABM strategy with competitive data in our recent blog. You can also get started with your own ABM strategy by downloading IDC’s planning guide on the subject.