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The Wallet Allocation Rule. Winning the Battle for Share

  • ID: 2986047
  • Book
  • March 2015
  • 240 Pages
  • John Wiley and Sons Ltd
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"This is it! Finally, something definitive about what it takes to win the battle for share of customers' hearts, minds, and wallets. Backed by rock–solid science, The Wallet Allocation Rule is a definite must–read."
Peter Jueptner, Executive Vice President of Strategy and New Business Development, Esteé Lauder Inc.

"The authors expose Net Promoter as The Emperor's New Clothes and explain a superior metric that brings in the dimension of competition, providing managers with an effective way to drive beyond traditional customer satisfaction to achieve goals for profitability, market share, and growth. Groundbreaking work for marketing leaders and a must read. The Wallet Allocation Rule is the next big thing!"
Jim Welch, Director, PwC's PRTM Management Consulting

"If your goal is market share leadership, this book is a must–read!"
Mary Jo Bitner, Professor and Edward M. Carson Chair, Arizona State University Editor, Journal of Service Research

"Satisfaction from your customers means nothing if it doesn't increase your share of wallet! The Wallet Allocation Rule gives you the hard facts and fills the void in how to do exactly that. Not just stories but real strategies to grow your business, your brand, and wow your customers. Just read it!"
Chester Elton, New York Times Bestselling author of All In and What Motivates Me

"The authors bring data and analyses to demolish widely held but misplaced beliefs in the efficacy of the Net Promoter Score, customer satisfaction, customer loyalty and other popular measures in causing improvements in growth, market share, and profitability. They put the Wallet Allocation Rule to the test and it performs."
George Stalk, Senior Advisor, The Boston Consulting Group

"The Wallet Allocation Rule is an unabashed challenge to the current state of marketing within organizations. It eviscerates the navel–gazing customer satisfaction focus of most organizations seeking growth through customer experience management. But the book isn't just a critique of current practice. It provides a real, scientifically vetted solution to the problem something sorely lacking for the highly touted but soon discounted management buzzwords. This book is certain to be one of the most important business books of the decade."
Edward C. Malthouse, Theodore R. and Annie Laurie Sills, Professor of Integrated Marketing Communications, Northwestern University

"The Wallet Allocation Rule is that rare, valuable combination of being strategically insightful and empirically powerful. This creates a path forward for better, data–driven decisions on how to capture more share of wallet, while not getting caught in any of the classic pitfalls of satisfying customers without seeing impact."
James Mendelsohn, Chief Marketing Officer, CAN Capital

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Preface xvii

Foreword xix

Chapter 1

It s Oh My God! Bad 1

Key Takeaway: Customer satisfaction is the most widely used metric for measuring and managing customer loyalty. But our research finds that satisfaction does not link to what counts most: market share and share of wallet. Satisfaction is a strong negative predictor of market share. And satisfaction typically explains a miniscule 1 percent of customers share of spending in an industry category. This problem isn t just limited to customer satisfaction. All commonly used measures of customer loyalty such as the Net Promoter Score (NPS) or recommend intention perform equally badly. This contradicts the message of virtually all programs discussed in the business press regarding the 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 competitive positioning 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 Rule 27

Key Takeaway: Satisfied customers who recommend your brand are important. But all too often customers like your competitors just as much as they like your brand. The end result is that you are losing sales. To understand what drives share of wallet and ultimately market share, managers need to shift their focus from the drivers of satisfaction or NPS to the drivers of rank. Our research conclusively proves that the rank that customers assign to a brand relative to other brands they use predicts share of wallet using a simple, previously unknown formula, which we ve named the 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 always very different from the drivers of satisfaction or NPS. Wallet Allocation Rule analysis gets to the heart of what drives wallet share by identifying what drives customers preference for your brand vis–à–vis competition instead of simply determining what 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 their products away for as long as they remain in business! But the first duty of a business is to survive. Managers must never lose sight of the fact that the end goal is profits, not just revenues.

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 Profit 104

Conclusion 106

Chapter 5

New Metrics That Matter for Growth 109

Key Takeaway: The Wallet Allocation Rule makes it possible for managers 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 metrics to 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 a cheerleader s call to Go, Fight, Win! we instead want to focus on this all too important fact: Without proper execution, good ideas can and often do fail. The Wallet Allocation Rule is no exception. We end by identifying the most common 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


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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Timothy L. Keiningham
Lerzan Aksoy
Luke Williams
Alexander J. Buoye
Note: Product cover images may vary from those shown