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The Wallet Allocation Rule
book

The Wallet Allocation Rule

by Timothy L. Keiningham, Lerzan Aksoy, Luke Williams, Alexander J. Buoye
February 2015
Intermediate to advanced content levelIntermediate to advanced
240 pages
6h 13m
English
Wiley
Content preview from The Wallet Allocation Rule

Appendix A

Quick Start Guide

To achieve greatness, start where you are, use what you have, do what you can.1

Arthur Ashe, former American world number 1 ranked professional tennis player and the only black man ever to win the singles title at Wimbledon, the U.S. Open, and the Australian Open

What Is the Wallet Allocation Rule?

At its core, the Wallet Allocation Rule stipulates that a customer's share of wallet is expected to equal 1 minus the inverse of a customer's rank of the firm/brand relative to the competitors the customer uses.

This simple formula would be all we need if all customers used exactly two firms/brands in a category. But because many customers use one or more than two, we need to weight this based on the number of firms/brands used to make them comparable. This weight equals 2 divided by the number of firms/brands used by a customer.

Mathematically, the formula we use to do this is as follows:

equation

where:

Rank = the relative position that a customer assigns to a brand in comparison to other brands also used by the customer in the category
Number of brands = the total number of brands used in the category by the customer

To use the Wallet Allocation Rule to predict share of wallet, follow these steps:

  1. Establish the firms/brands in a product category that customers use.
  2. Ask an overall satisfaction/loyalty question to gauge performance for each firm/brand ...
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Publisher Resources

ISBN: 9781119037316Purchase book