Share of wallet (or SW) is a measure of customer loyalty and can be an important metric. While the individual share of wallet (or iSW) sheds light on how important the firm is for an individual customer in terms of his expenditures in the category, the aggregate share of wallet (or aSW) indicates how important (value wise) a specific firm is for its customer base in terms of their expenditures in the category.
Let’s look into an example.
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Please calculate the individual share of wallet (iSW) and fill in the blank in the sentence below.
If a consumer spends $400 monthly on groceries, and $300 of her purchases are with the supermarket Publix, then Publix’s iSW for that consumer is % in that month.
Please use the equation provided in the course notes (slide number 15) to compute the aggregate share of wallet (aSW).
If Publix’s sales (value) in period t would be $750,000 and the total grocery expenditures of Publix’s customers in the same period would be $1,250,000, the aggregate share of wallet would amount to: