If buying customers is the biggest expense, then continually buying new customers (buying market share) is the most expensive way to do business.
Market share or a focus on new customers comes with an assumption that you are in the business of buying products or services and selling them to customers. If, however, you swap to the idea of buying customers, you are no longer chasing market share, you’re chasing wallet share. The issue becomes, how much, how many and for how long can you sell to each customer you buy?
It is important to know that if money has been invested in buying a customer, then it makes total sense to make sure you get a full return on that customer (your investment). Chasing wallet share is as simple as remembering that you’ve got a loyal customer base. There should be sustained focus on maximizing returns from the current customer. Some tips to ensure a good wallet share are discussed below:
- Customers should be fully aware of all the products and services on offer.
- Focus on all needs of a customer. In case you cannot provide the service yourself, align with another company that can do so.
- Set up a regular form of communication, this could be a newsletter, a direct mail piece or as simple as a monthly call.
Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.