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-a-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
Afterword
What's Next? 139
Establish That You Need It 139
Get Help 139
Let's Talk 140
Connect with Us 140
Visit www.walletrule.com 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 Rule? 151
Does the Wallet Allocation Rule Work with All Satisfaction Metrics? 152
Is There a Preferred Metric We Should Use to Determine a Brand's Rank? 153
How Do I Ensure That All Relevant Competitors Are Ranked? 154
What Metrics Should Be on My Dashboard Related to the 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's Reach (i.e., Penetration)? 156
Visit www.walletrule.com 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