The Wallet Allocation Rule: Winning the Battle for Share

314 Pages·2015·4.58 MB·English

by  Timothy L. Keiningham

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