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Linking satisfaction to credit card decisions: an application of the Wallet Allocation Rule

Lerzan Aksoy (Gabelli School of Business, Fordham University, Bronx, New York, USA)
Timothy L. Keiningham (Peter J. Tobin School of Business, St John’s University, Queens, New York, USA)
Alexander Buoye (Gabelli School of Business, Fordham University, New York, New York, USA)
Joan Ball (Peter J. Tobin School of Business, St John’s University, Queens, New York, USA)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 3 April 2017

597

Abstract

Purpose

The purpose of this paper is to identify the key drivers of share of wallet for credit cards issued by either a credit union (CU) or bank using a Wallet Allocation Rule (WAR) framework.

Design/methodology/approach

A survey approach engaging 1,649 current CU members at nine CUs regarding their use of 3,487 different credit cards is employed. Binary logistic regression is used to discriminate when CU issued vs bank issued credit cards are perceived to be “best” by their owners.

Findings

This research indicates the key drivers differ significantly when CU members prefer a CU-issued credit card vs a bank-issued credit card. For example, CU-issued credit cards are attractive to some CU members because of prior relationships with the CU and offering lower interest rates on revolving balances. By contrast, customers who choose a bank-issued credit card are much more likely to be driven by the rewards offered on the card.

Practical implications

Using the WAR key driver approach, managers can identify differentiating attributes that influence customers’ perceptions of their rank vis-à-vis competition and thereby grow share.

Originality/value

This research provides a significant contribution to both the banking literature and the scientific literature by examining the robustness of a relative metrics approach within the retail banking and CU market. It represents the first empirical analysis of a WAR key driver approach in the scientific literature.

Keywords

Acknowledgements

Lerzan Aksoy and Timothy Keiningham would like to thank the Filene Research Institute for supporting this research, and its commitment to the peer review process for the academic researchers with whom it works. This paper is based on a report entitled “Linking Member Satisfaction to Credit Card Decisions: A Wallet Allocation Rule Approach,” written by Lerzan Aksoy and Timothy Keiningham, available at: http://filene.org/research/reports. It presents a much abridged version of the report and has also been revised to provide a firm theoretical foundation and increased managerial relevance across financial sectors.

Citation

Aksoy, L., Keiningham, T.L., Buoye, A. and Ball, J. (2017), "Linking satisfaction to credit card decisions: an application of the Wallet Allocation Rule", International Journal of Bank Marketing, Vol. 35 No. 2, pp. 205-219. https://doi.org/10.1108/IJBM-02-2016-0019

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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