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

Timothy Lee Keiningham (Ipsos Loyalty, Parsippany, New Jersey, USA)
Bruce Cooil (Graduate School of Management, Vanderbilt University, Nashville, Tennessee, USA)
Edward C Malthouse (Department of Integrated Marketing Communication, Northwestern University, Evanston, Illinois, USA)
Bart Lariviere (Center for Service Intelligence, Ghent University, Ghent, Belgium)
Alexander Buoye (Schools of Business, Fordham University, Bronx, New York, USA)
Lerzan Aksoy (Marketing Department, Fordham University, New York)
Arne De Keyser (Department of Management, Innovation and Entrepreneurship, Ghent University, Ghent, Belgium)

Journal of Service Management

ISSN: 1757-5818

Article publication date: 16 March 2015

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.

Keywords

Acknowledgements

Arne De Keyser and Bart Larivière acknowledge support from the Special Research Fund (BOF, Ghent University, project 01N04011) and the National Bank of Belgium. Bruce Cooil acknowledges support from the Dean’s Fund for Faculty Research, Owen Graduate School, Vanderbilt University.

Citation

Keiningham, T.L., Cooil, B., Malthouse, E.C., Lariviere, B., Buoye, A., Aksoy, L. and De Keyser, A. (2015), "Perceptions are relative: An examination of the relationship between relative satisfaction metrics and share of wallet", Journal of Service Management, Vol. 26 No. 1, pp. 2-43. https://doi.org/10.1108/JOSM-12-2013-0345

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited