Publications detailing the review of business processes, technology and people towards competitive advantage attainment in Nigeria.

1. ...advancing business
Enterprations
Weekly
Strategy
Market Share Isn’t
Enough
Grow Your Share of
Customer Spending
www.enterprations.com

2. 2 March 2017 Enterprations Weekly Strategy
Keiningham, LerzanAksoy,ustomer Satisfaction
Alexander Buoye, and Bruce Cooiland Net Promoter
after their seminal study of rankingScore studies areC of a number of brands byusually conducted by
customers. SOW as a marketing concept denotes amountcompanies with a view of determining their responsiveness
of the customer's total spending that a business captures into the customers' needs and how they are being positioned.
the products and services that it offers. SOW is specificallyThese studies are yearly activities in most companies
used by companies in the financial sector to understandtowards superior market share attainment. However,
share-of-customer.Acompany with an increasing share-of-experts and scholars have discovered that the two
customer represents an increasing in customer lifetimemeasurements are not enough for corporate profitability
value. In other words, growing the share of a customer'srealization. This has been premised on the fact that they
spending is the simplest way of increasing revenue insteadonly help organisations in establishing their superiority
ofincreasingmarketshare.qualitatively rather than quantitatively. The lapse leads to
the formulation of Share of Wallet (SOW), an offshoot of
Wallet Allocation Rule (WAR) developed by Timothy L.
Why it should be used?
This tool should be used by established and emerging ones because it helps in understanding that a strong relationship
exists between overall satisfaction and share of wallet. In addition, the total amount of money a customer can spend on a
certainproductcategoryisavitalpieceofinformationforplanningandmanagingsalesandmarketingefforts.
Applying Wallet Allocation Rule
To calculate your share of customer wallet using the Wallet
AllocationRule,theauthorsrecommendfollowingthesethreesteps:
1. Establish the number of brands or firms, a customer uses for
theproductcategoryyouwish toanalyse.
2. Survey the customer to obtain your rank are you the
customer's 1st preference, 2nd, 3rd, etc. In the case of a tie, take the
average. For instance, if 2 companies tie for 1st preference, each is
assignedarankof1.5.
3. To arrive at a brand's share of wallet for a given customer,
plug the brand's rank and the number of brands into the Wallet
Allocation Rule formula: Mathematically, the formula we use
estimateshareofwalletis:
Where rank is the relative position that a customer assigns to a brand
in comparison to other brands also used by the customer in the
category and number of brands is the total number of brands used in
thecategorybythecustomer.
...it helps in understanding that a
strong relationship exists between
overall satisfaction and share of
wallet.

3. 3 March 2017 Enterprations Weekly Strategy
Lagos Metropolis sevenC l o s i n g C a s e :
questions to generate the
needed data. However,
emphasis was on their
ranking of the providers
they are using and total
amount they are spending
per month for the voice call
anddataservices.
On the brand
preference, sampled
customers ranked theIn this section, we applied
providers differently. ItWallet Allocation Rule
was discovered that(WAR) to determine how
c u s t o m e r 1 ' s f i r s tmuch Nigerian main
preference is MTN whiletelecommunication service
the Glo is preferredproviders are getting from
second. Airtel is the first preference of customer 2 whiletheir customers. Suffice to note that only four users of the
MTN and Glo are the second and third preferencevoice call and data services of the providers were sampled
respectively. Customer 3 considered Airtel as the firstfor the hypothetical study. Some of these providers rely on
choice while Glo and Etisalat were tied on secondmarket share as a good indicator of business performance
preference.According to this customer, MTN remains thirdattained through net promoter score and customer
preference. For customer 4, MTN and Glo are both the firstsatisfaction measurements rather than capturing customers'
choice when it is about benefiting voice call and datashare of spending. According to National Bureau of
services. Our analysis further established that customer 1 isStatistics' quarterly report on telecommunications service
spending N1, 000 for voice call service every month usingproviders' subscribers, in March 2016, MTN had 39%
MTN while no amount is being spent on Glo. However,while Glo, Airtel, and Etisalat had 23%, 23%, and 15%
below N2, 000 is being expended for data services on therespectively. “The difference in trends that began inAugust
two network providers. DespiteAirtel being the first choice2015, between MTN and Etisalat on the one hand and
of customer 2, a diminutive amount is being spent on voiceGlobacom and Airtel on the other, continued into the first
call and nothing on data service per month. Specifically, thequarter of 2016. Despite a slight recovery for both
customer is spending between N201 and N500 for the voiceproviders in March, Etisalat and MTN nevertheless saw
call whereas N1, 000 is being expended for the sametheir subscriber numbers fall, from 22,161,290 in
service using MTN. On the data service, between N2, 501December to 21,877,542 in March for Etisalat (a drop of
and 3,000 is being expended. Customer 3 is spending the1.28%) and from 61,252,387 in December to 57,045,721 in
same amount across the services voice call and data in spiteMarch for MTN (a drop of 6.87%). Each provider also
of the difference in choice of the providers. One thousandrecorded a year on year decline, of 1.61% and 6.71%
naira (N1, 000) is being spent on voice call on MTN andrespectively,”thereportnoted.
Airtel while between N2, 000 and 2,500 is being exhaustedThe report further states that “Airtel and Globacom
on data services on both brands. Suffice to note that thecontinued their uninterrupted upward trend in subscriber
customer is not spending any amount for voice call and datanumbers; Airtel recorded monthly increases of 2.75%,
services on Etisalat despite preferred it second. Customer 41.33% and 0.81% in January, February and March 2016,
is spending below N2, 000 for voice call and data servicesand Globacom recorded increases of 0.59%, 2.75%, and
respectively on MTN while no amount is being spent on1.78%. As a result, Airtel had 33,866,798 subscribers in
Glo,despitebeingthesecondpreferredprovider.March 2016, which is an increase of 18.08% relative to
March 2015. Globacom had 34,608,793 subscribers, which
is an increase of 17.01% over the same period. Airtel's and From the analysed case, it has been established that being
Globacom's respective shares of the total number of GSM the first or second choice does not necessarily translate to
subscribers in March 2016 were 22.98% and 23.48%, having large spending from the customers. In other words,
higher than in any previous month over the last two years brand preference is not absolutely linked to large share of
but nevertheless still significantly lower than MTN's share wallets. Sampled brands need to apply the Wallet
of 38.70%. Etisalat accounted for the smallest share as in Allocation Rule (WAR) and Share of Wallet (SOW) to a
previousquarters,with14.84%ofsubscribers.” large group of customers to substantiate our findings and
From the analysis, it could be deduced that the understand underlying factors responsible for the low share
providers are employing customer satisfaction strategies ofwalletfortheirproductsandservices.
through bespoke products and services. Having understood
this, SOW was applied to know customers' share of
spending.This becomes imperative because majority of the
subscribers have more than one service providers for voice
call and data services. We asked four customers residing in
N i g e r i a n
Telecommunicatio
n S e r v i c e
Providers' Share of
Users Spending on
Voice Call and
Data Usage
StrategicInsights
Contact
F15, Lagos City Mall, Onikan, Lagos State
www.enterprations.com
info@enterprations.com