Perceptions are relative: An examination of the relationship between relative satisfaction metrics and share of wallet

Timothy Lee Keiningham*, Bruce Cooil, Edward Carl Malthouse, Alexander Buoye, Lerzan Aksoy, Arne De Keyser, Bart Larivière

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

29 Scopus citations

Abstract

Purpose: There is general agreement among researchers and practitioners that satisfaction is relative to competitive alternatives. Nonetheless, researchers and managers have not treated satisfaction as a relative construct. The result has been weak relationships between satisfaction and share of wallet in the literature, and challenges by managers as to whether satisfaction is a useful predictor of customer behavior and business outcomes. The purpose of this paper is to explore the best approach for linking satisfaction to share of wallet. Design/methodology/approach: Using data from 79,543 consumers who provided 258,743 observations regarding the brands that they use (over 650 brands) covering 20 industries from 15 countries, various models such as the Wallet Allocation Rule (WAR), Zipf-AE, and Zipf-PM, truncated geometric model, generalization of the WAR and hierarchical regression models are compared to each other. Findings: The results indicate that the relationship between satisfaction and share of wallet is primarily driven by the relative fulfillment customers perceive from the various brands that they use (as gauged by their relative ranked satisfaction level), and not the absolute level of satisfaction. Practical implications: The findings provide practical insight into several easy-to-use approaches that researchers and managers can apply to improve the strength of the relationship between satisfaction and share of wallet. Originality/value: This research provides support to the small number of studies that point to the superiority of using relative metrics, and encourages the adoption of relative satisfaction metrics by the academic community.

Original languageEnglish (US)
Pages (from-to)2-43
Number of pages42
JournalJournal of Service Management
Volume26
Issue number1
DOIs
StatePublished - Mar 16 2015

Keywords

  • Consumer satisfaction
  • Customer behaviour

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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