Perceptions are relative

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

Publication date: 16 March 2015



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.


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.


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.


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.



Timothy Lee Keiningham, Bruce Cooil, Edward C Malthouse, Bart Lariviere, Alexander Buoye, Lerzan Aksoy and Arne De Keyser (2015) "Perceptions are relative", Journal of Service Management, Vol. 26 No. 1, pp. 2-43

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