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How to Calculate Your Bank's or Credit Union's Share of Wallet

Chris Kappen

If you've ever picked up a finance trade magazine or attended a bankers' conference or stopped by a credit union marketing speaking engagement, the term "share of wallet" or "wallet share" has been bounced around time and again. You know it's important. You know it's vital to your cross-sell strategy.

But how is a bank or credit union supposed to approach gathering this important data? Well, there are levels to how in-depth you can go. Try these on for size when you're developing your wallet-share growth strategy.

The Basics

If you're less inclined to get into the nitty-gritty details of calculating wallet share, there's one basic, simple way to gather some valuable data—go strictly by number of products or services. Aggregate your customers and segment how you speak to them based on how many of your products and services they have at the basest level. They have a mortgage? Give them a point. They signed up for online bill pay? Toss them a point. They registered for a safety deposit box? Throw them a point. You can rank your customers' wallet share in a very accessible, basic way.

The Next Level

If you want to gain a little more insight into how your customers are shopping for your banking services, the next level of wallet-share calculation is weighting. Consider the examples in the previous section—you wouldn't necessarily assign the same amount of weight to a mortgage that you would signing up for a basic service such as bill pay, right? Implement a weighted average system in which you assign more points to your most desired, most business-beneficial services, such as commercial lending, retirement planning or auto loans, and fewer points to your important but less-business-beneficial services, such as paperless statement signups and checking account direct deposits.

The Heavy Math

How deep do you want to dive into the math portion of this calculation? If you want to get into the truly scientific area of calculating share of wallet, look no further than an equation developed by the Harvard Business Review for determining brand loyalty by way of wallet share. This formula takes into account how you rank against your competitors in the marketplace for a given customer or member and how many financial brands he or she engages with to give you not only a wallet-share score, but also an idea of how much each consumer is spending with each brand, on average. The kicker here is gaining insight into brand loyalty to both you and your competitors—a survey might be your best option in getting the ball rolling if you want to take this more in-depth route.

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