The Wallet Allocation Rule

The Wallet Allocation Rule

by Timothy L. Keiningham, Lerzan Aksoy, Luke Williams, Alexander J. Buoye
Released February 2015
Publisher(s): Wiley
ISBN: 9781119037316

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Book description

Customer Loyalty Isn't Enough—Grow Your Share of Wallet

The Wallet Allocation Rule is a revolutionary, definitive guide for winning the battle for share of customers' hearts, minds, and wallets. Backed by rock-solid science published in the Harvard Business Review and MIT Sloan Management Review, this landmark book introduces a new and rigorously tested approach—the Wallet Allocation Rule—that is proven to link to the most important measure of customer loyalty: share of wallet.

Companies currently spend billions of dollars each year measuring and managing metrics like customer satisfaction and Net Promoter Score (NPS) to improve customer loyalty. These metrics, however, have almost no correlation to share of wallet. As a result, the returns on investments designed to improve the customer experience are frequently near zero, even negative.

With The Wallet Allocation Rule, managers finally have the missing link to business growth within their grasp—the ability to link their existing metrics to the share of spending that customers allocate to their brands.

  • Learn why improving satisfaction (or NPS) does not improve share.
  • Apply the Wallet Allocation Rule to discover what really drives customer spending.
  • Uncover new metrics that really matter to achieve growth.

By applying the Wallet Allocation Rule, managers get real insight into the money they currently get from their customers, the money available to be earned by them, and what it takes to get it. The Wallet Allocation Rule provides managers with a blueprint for sustainable long-term growth.

Table of contents

  1. Title Page
  2. Copyright
  3. Dedication
  4. Preface
    1. Notes
  5. Foreword
  6. 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.
    2. Growth Is Hard to Find
    3. Deconstructing Market Share
    4. Different Metric, Same Outcome
    5. Satisfaction ≠ Market Share
    6. Satisfaction ≠ Share of Wallet
    7. Always Wrong on Average
    8. A Cautionary Tale
    9. The Moral of the Story?
    10. Notes
  7. Chapter 2: Eureka! The Discovery of the Wallet Allocation Rule
    1. 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.
    2. Getting There
    3. Determining Your Rank
    4. The Wallet Allocation Rule and Share: The Evidence
    5. The “Best” Metric?
    6. Why Does the Wallet Allocation Rule Work?
    7. Using the Wallet Allocation Rule
    8. Wallet Allocation Rule Strategy
    9. How to Improve Your Rank
    10. The Rule in Practice
    11. Conclusion
    12. Notes
  8. Chapter 3: The Wallet Allocation Rule in Action
    1. 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.
    2. Grinding a New Set of Lenses
    3. Putting the Wallet Allocation Rule to Work
    4. Conclusion
    5. Notes
  9. Chapter 4: Customers as Assets
    1. 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.
    2. The Wallet Allocation Rule Is Not a Panacea
    3. Revenue ≠ Profits
    4. Short-Term Gain, Long-Term Pain
    5. Money-Losing Delighters
    6. Aligning Satisfaction, Share of Wallet, Revenue, and Profit
    7. Conclusion
    8. Notes
  10. Chapter 5: New Metrics That Matter for Growth
    1. 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)
    2. Glass Houses and Stones
    3. Must-Have Marketing Metrics
    4. Customer Satisfaction
    5. Key Drivers and Market Barriers
    6. Demand Evidence
    7. Notes
  11. Chapter 6: Making It Happen
    1. 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.
    2. Rule 1: Get the Data Right
    3. Rule 2: Set the Right Performance Standards
    4. The Next Disruption
    5. Notes
  12. Afterward: What's Next?
    1. Establish That You Need It
    2. Get Help
    3. Let's Talk
    4. Connect with Us
    5. Visit www.walletrule.com
    6. Notes
  13. Appendix A: Quick Start Guide
    1. What Is the Wallet Allocation Rule?
    2. Wallet Allocation Rule Strategy
    3. Identifying Opportunities for Improving Share of Wallet
    4. An Example in the Credit Union Industry
    5. Conclusion
    6. Notes
  14. Appendix B: Frequently Asked Questions
    1. When Is It Appropriate to Use the Wallet Allocation Rule?
    2. Does the Wallet Allocation Rule Work with All Satisfaction Metrics?
    3. Is There a Preferred Metric We Should Use to Determine a Brand's Rank?
    4. How Do I Ensure That All Relevant Competitors Are Ranked?
    5. What Metrics Should Be on My “Dashboard” Related to the Wallet Allocation Rule?
    6. Why Does the Wallet Allocation Rule Work?
    7. Will Relative Net Promoter Score Work?
    8. Isn't Share of Wallet Just a Function of a Brand's Reach (i.e., Penetration)?
    9. Visit www.walletrule.com
    10. Notes
  15. Acknowledgments
    1. Principal Contributors
    2. Notes
  16. About the Authors
    1. Timothy Keiningham, PhD
    2. Lerzan Aksoy, PhD
    3. Luke Williams
    4. Alexander Buoye, PhD
  17. Index
  18. End User License Agreement

Product information

  • Title: The Wallet Allocation Rule
  • Author(s): Timothy L. Keiningham, Lerzan Aksoy, Luke Williams, Alexander J. Buoye
  • Release date: February 2015
  • Publisher(s): Wiley
  • ISBN: 9781119037316