The Wallet Allocation Rule: Winning the Battle for Share

The Wallet Allocation Rule: Winning the Battle for Share


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Product Details

ISBN-13: 9781119037316
Publisher: Wiley
Publication date: 02/09/2015
Pages: 240
Sales rank: 594,531
Product dimensions: 6.10(w) x 9.10(h) x 1.00(d)

About the Author

TIMOTHY KEININGHAM is Global Chief Strategy Officer atIpsos Loyalty, a professional services firm dedicated exclusivelyto customer experience, satisfaction, and loyalty.

LERZAN AKSOY is Professor of Marketing at FordhamUniversity Schools of Business.

LUKE WILLIAMS is Vice President at Ipsos Loyalty, wherehe leads the day-to-day activity of large-scale researchengagements.

ALEXANDER BUOYE is Assistant Professor of Marketing atFordham University Schools of Business.

Table of Contents

Preface xvii

Foreword xix

Chapter 1

It’s “Oh My God!” Bad 1

Key Takeaway: Customer satisfaction is the most widely usedmetric for measuring and managing customer loyalty. But ourresearch finds that satisfaction does not link to what counts most:market share and share of wallet. Satisfaction is a strong negativepredictor of market share. And satisfaction typically explains aminiscule 1 percent of customers’ share of spending in anindustry category. This problem isn’t just limited tocustomer satisfaction. All commonly used measures of customerloyalty—such as the Net Promoter Score (NPS) or recommendintention perform equally badly. This contradicts the message ofvirtually all programs discussed in the business press regardingthe relationship of satisfaction and NPS to business performance.The grim reality is that most of these efforts are doomed to fail.Moreover, they often run counter to a firm’s competitivepositioning and strategy.

Growth Is Hard to Find 3

Deconstructing Market Share 4

Different Metric, Same Outcome 8

Satisfaction ≠ Market Share 11

Satisfaction ≠ Share of Wallet 15

Always Wrong on Average 18

A Cautionary Tale 22

The Moral of the Story? 25

Chapter 2

Eureka! The Discovery of the Wallet Allocation Rule27

Key Takeaway: Satisfied customers who recommend your brand areimportant. But all too often customers like your competitors justas much as they like your brand. The end result is that you arelosing sales. To understand what drives share of wallet andultimately market share, managers need to shift their focus fromthe drivers of satisfaction or NPS to the drivers of rank. Ourresearch conclusively proves that the rank that customers assign toa brand relative to other brands they use predicts share of walletusing a simple, previously unknown formula, which we’ve namedthe Wallet Allocation Rule.

Getting There 29

Determining Your Rank 32

The Wallet Allocation Rule and Share: The Evidence 33

The “Best” Metric? 38

Why Does the Wallet Allocation Rule Work? 40

Using the Wallet Allocation Rule 41

Wallet Allocation Rule Strategy 43

How to Improve Your Rank 46

The Rule in Practice 47

Conclusion 49

Chapter 3

The Wallet Allocation Rule in Action 51

Key Takeaway: The drivers of share of wallet are almost alwaysvery different from the drivers of satisfaction or NPS. WalletAllocation Rule analysis gets to the heart of what drives walletshare by identifying what drives customers’ preference foryour brand vis-à-vis competition instead of simply determiningwhat makes customers happy.

Grinding a New Set of Lenses 52

Putting the Wallet Allocation Rule to Work 53

Conclusion 88

Chapter 4

Customers as Assets 89

Key Takeaway: Growth is easy for firms willing to give theirproducts away—for as long as they remain in business! But thefirst duty of a business is to survive. Managers must never losesight of the fact that the end goal is profits, not justrevenues.

The Wallet Allocation Rule Is Not a Panacea 91

Revenue ≠ Profits 98

Short-Term Gain, Long-Term Pain 99

Money-Losing Delighters 102

Aligning Satisfaction, Share of Wallet, Revenue, and Profit104

Conclusion 106

Chapter 5

New Metrics That Matter for Growth 109

Key Takeaway: The Wallet Allocation Rule makes it possible formanagers to easily link customer satisfaction to share of wallet.But because the rule is based upon a company’s relative rank,not its absolute satisfaction level, firms need to add new metricsto their list of Key Performance Indicators (KPIs).

Glass Houses and Stones 110

Must-Have Marketing Metrics 112

Customer Satisfaction 115

Key Drivers and Market Barriers 121

Demand Evidence 127

Chapter 6

Making It Happen 129

Key Takeaway: Rather than end this book with acheerleader’s call to “Go, Fight, Win!” weinstead want to focus on this all too important fact: Withoutproper execution, good ideas can and often do fail. The WalletAllocation Rule is no exception. We end by identifying the mostcommon failure points, and what you can do to avoid them.

Rule 1: Get the Data Right 131

Rule 2: Set the Right Performance Standards 135

The Next Disruption 136


What’s Next? 139

Establish That You Need It 139

Get Help 139

Let’s Talk 140

Connect with Us 140

Visit 140

Appendix A

Quick Start Guide 141

What Is the Wallet Allocation Rule? 141

Wallet Allocation Rule Strategy 143

Identifying Opportunities for Improving Share of Wallet 146

An Example in the Credit Union Industry 147

Conclusion 149

Appendix B

Frequently Asked Questions 151

When Is It Appropriate to Use the Wallet Allocation Rule51

Does the Wallet Allocation Rule Work with All SatisfactionMetrics? 152

Is There a Preferred Metric We Should Use to Determine aBrand’s Rank? 153

How Do I Ensure That All Relevant Competitors Are Ranked54

What Metrics Should Be on My “Dashboard” Related tothe Wallet Allocation Rule? 154

Why Does the Wallet Allocation Rule Work? 155

Will Relative Net Promoter Score Work? 155

Isn’t Share of Wallet Just a Function of a Brand’sReach (i.e., Penetration)? 156

Visit 157

Acknowledgments 159

Principal Contributors 159

About the Authors 187

Timothy Keiningham, PhD 187

Lerzan Aksoy, PhD 188

Luke Williams 189

Alexander Buoye, PhD 189

Notes 191

Index 211

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