If you’ve been an equipment distributor for any length of time, you’ve probably already discovered that there are three routine sales activities that drive revenue:
- Average deal size
- The number of leads available to your sales reps
- Your win rate
Walletshare is the % of a customer’s annual equipment and aftermarket budget that they purchase from you. We regularly measure our client’s walletshare per customer. Overall, our client’s average walletshare is in the mid-50’s. The highest customer walletshare we’ve ever measured is 64%. And that is with that client’s most valuable (or Ideal) customers. Non-Ideal Customer walletshare is often in the mid 30’s.
When distributors focus on increasing leads they’re usually focused on equipment leads. Certainly, equipment leads are critical to the long-term growth of distributorships. But where is it written that you will have fewer equipment leads if also become proactive about growing walletshare? Increasing walletshare is the quickest and easiest way of gaining more sales leads.
It would make sense for distributors to avoid aftermarket if growing walletshare reduced the number of equipment leads available to them, but growing walletshare actually results in greater customer retention. And greater customer retention results in increased equipment sales.
More customers = More future equipment sales
A 5% increase in walletshare, assuming no change in average deal size or win rate, translates into a 5% increase in sales revenue. Based on last year’s sales revenue, what is that worth to you?
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