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1 – 10 of 322Lerzan Aksoy, Timothy L. Keiningham, Alexander Buoye and Joan Ball
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…
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.
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Despite the fact that customer satisfaction is among the most widely used metrics by managers, the link with share of deposits tends to be weak. Using a recent innovative approach…
Abstract
Purpose
Despite the fact that customer satisfaction is among the most widely used metrics by managers, the link with share of deposits tends to be weak. Using a recent innovative approach termed the “Wallet Allocation Rule (WAR)” this research investigates whether measuring satisfaction relative to other competitors used exhibits a stronger correlation to share of deposits compared to measuring absolute satisfaction with the focal firm/product.
Design/methodology/approach
A survey approach was used with a sample of 4,712 banking customers across the USA. Using the WAR, each respondent's satisfaction ratings were transformed into relative rankings and used to estimate their share of deposits.
Findings
The results confirmed that at both the individual and the aggregate level examining relative ranked satisfaction correlates strongly with customers’ share of deposits. At the individual level relative satisfaction explains 55 percent of the variance in share of deposits, as opposed to only 9 percent for absolute satisfaction.
Practical implications
The findings indicate that managers need to rethink their current approach to satisfaction measurement and consider measuring their customers’ satisfaction relative to competitors used. Furthermore, using aggregate level absolute satisfaction in managerial decision making can be misleading.
Originality/value
This research provides a significant contribution to both the banking literature and the scientific literature in general by examining the robustness of a relative metrics approach within the retail banking and credit union market.
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Timothy Lee Keiningham, Bruce Cooil, Edward C Malthouse, Bart Lariviere, Alexander Buoye, Lerzan Aksoy and Arne De Keyser
There is general agreement among researchers and practitioners that satisfaction is relative to competitive alternatives. Nonetheless, researchers and managers have not treated…
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.
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Absolute satisfaction ratings are widely used, but demonstrate a poor link to share of wallet, in part because this relationship is mediated and/or moderated by customer…
Abstract
Purpose
Absolute satisfaction ratings are widely used, but demonstrate a poor link to share of wallet, in part because this relationship is mediated and/or moderated by customer characteristics (including total spend in the category) and heterogeneity of scale usage. Relative satisfaction metrics, such as the Wallet Allocation Rule, have been shown to produce a much stronger link to share of wallet than absolute monadic ratings. This study compares absolute and relative satisfaction models after controlling for these mediating and moderating factors and re-examines the impact of these factors when using relative, rather than absolute metrics.
Design/methodology/approach
3,793 satisfaction ratings by 1,172 unique grocery customers across 5 countries (US, Brazil, Chile, France & Germany) are used to evaluate the mediating and moderating impacts of scale usage and customer characteristics on the relationship between satisfaction and share of wallet.
Findings
Relative metrics continue to significantly outperform absolute metrics after controlling for these factors. With the exception of the moderating influence of income, effects of customer characteristics and country differences are insignificant when linking relative satisfaction to share of wallet.
Practical implications
Managers need to re-evaluate their satisfaction measurement strategy in order to establish a strong link to actual behavior. While calculating relative satisfaction requires managers to collect data on competitors as well as the focal brand, this need for additional information is mitigated by a trade-off in terms of mediating and moderating information that is essential to properly model absolute metrics, but is not needed when using relative measures.
Originality/value
Provides a significant contribution to both retail literature and scientific literature in general by examining the robustness of a relative metrics approach within the grocery retail sector across a disparate collection of countries.
Alexander Buoye, Yuliya Komarova Loureiro, Sertan Kabadayi, Mohammad G. Nejad, Timothy L. Keiningham, Lerzan Aksoy and Jason Allsopp
The satisfaction and loyalty research argues that customer satisfaction is an antecedent to share of wallet (SOW). The double jeopardy view, however, argues that satisfaction and…
Abstract
Purpose
The satisfaction and loyalty research argues that customer satisfaction is an antecedent to share of wallet (SOW). The double jeopardy view, however, argues that satisfaction and SOW levels are driven exclusively by penetration levels. Customer satisfaction and penetration, however, are not always positively related. The purpose of this paper is to explore the relevance and validity of these two divergent perspectives to creating growth in customer share of spending.
Design/methodology/approach
The authors examine a series of models evaluating the impact of both the relative penetration of a brand, and the satisfaction ratings of its customers on SOW using data covering 11 industry sectors, 188 brands, and 4,263 customers.
Findings
The authors find that part of the problem in reconciling these two views has been in how satisfaction is measured and analyzed. When using absolute satisfaction ratings of the firm/brand, the explanatory power of satisfaction on SOW is very weak at both the individual and firm level. When using satisfaction metrics relative to other competing brands, however, satisfaction is a strong predictor of customers’ share of category spending.
Research limitations/implications
As predicted by double jeopardy, penetration is a strong predictor of firm-level SOW, but has almost no explanatory power at the individual level.
Practical implications
Managers need to focus on both improving penetration/reach and becoming the preferred brand in a customer’s usage set.
Originality/value
The research examines if (and if yes, how) satisfaction and penetration contribute to customers’ SOW allocations both at the individual and brand level.
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Timothy Lee Keiningham, Roland T. Rust, Bart Lariviere, Lerzan Aksoy and Luke Williams
Managers seeking to manage customer word-of-mouth (WOM) behavior need to understand how different attitudinal drivers (e.g. satisfaction, positive and negative emotion…
Abstract
Purpose
Managers seeking to manage customer word-of-mouth (WOM) behavior need to understand how different attitudinal drivers (e.g. satisfaction, positive and negative emotion, commitment, and self-brand connection) relate to a range of WOM behaviors. They also need to know how the effects of these drivers are moderated by customer characteristics (e.g. gender, age, income, country). The paper aims to discuss these issues.
Design/methodology/approach
To investigate these issues a built a large-scale multi-national database was created that includes attitudinal drivers, customer characteristics, and a full range of WOM behaviors, involving both the sending and receiving of both positive and negative WOM, with both strong and weak ties. The combination of sending-receiving, positive-negative and strong ties-weak ties results in a typology of eight distinct WOM behaviors. The investigation explores the drivers of those behaviors, and their moderators, using a hierarchical Bayes model in which all WOM behaviors are simultaneously modeled.
Findings
Among the many important findings uncovered are: the most effective way to drive all positive WOM behaviors is through maximizing affective commitment and positive emotions; minimizing negative emotions and ensuring that customers are satisfied lowers all negative WOM behaviors; all other attitudinal drivers have lower or even mixed effects on the different WOM behaviors; and customer characteristics can have a surprisingly large impact on how attitudes affect different WOM behaviors.
Practical implications
These findings have important managerial implications for promotion (which attitudes should be stimulated to produce the desired WOM behavior) and segmentation (how should marketing efforts change, based on segments defined by customer characteristics).
Originality/value
This research points to the myriad of factors that enhance positive and reduce negative word-of-mouth, and the importance of accounting for customer heterogeneity in assessing the likely impact of attitudinal drivers on word-of-mouth behaviors.
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Lerzan Aksoy, Jens Hogreve, Bart Lariviere, Andrea Ordanini and Chiara Orsingher
The purpose of this paper is to introduce an alternative novel approach to measurement of customer perceptions of the service experience that links closely with customer loyalty…
Abstract
Purpose
The purpose of this paper is to introduce an alternative novel approach to measurement of customer perceptions of the service experience that links closely with customer loyalty outcomes.
Design/methodology/approach
This conceptual paper draws upon prior theory and empirical research to investigate the relevance of using relative metrics compared to absolute metrics in service research.
Findings
The findings upon which this paper draws upon show that measuring customer satisfaction, likelihood to recommend, brand preference using absolute metrics explain a very small per cent of the variance in key customer outcome measures such as share of wallet. Instead, a relative approach to these and other measures in service research is proposed.
Practical implications
Although business practice has embraced relative measurement much more extensively than has scientific research, the vast majority of customer experience measurement programs today continue to employ absolute measures resulting in suboptimal allocation of firm resources. This paper is a call to rethink these current measurement practices.
Originality/value
It is one of the first papers to argue for changing the widely employed use of absolute metrics in theory and practice in favor of relative metrics. Application to other service research theories is discussed.
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Timothy L. Keiningham, Lerzan Aksoy, Edward C. Malthouse, Bart Lariviere and Alexander Buoye
The purpose of this paper is to propose a theoretical model for how consumers aggregate satisfaction with individual service encounters to form a summary evaluation of…
Abstract
Purpose
The purpose of this paper is to propose a theoretical model for how consumers aggregate satisfaction with individual service encounters to form a summary evaluation of satisfaction, and further examines its effect on customers’ share of category spending (share of wallet (SOW)).
Design/methodology/approach
The data used consist of 10,983 completed surveys from 1,448 customers whose transaction-specific satisfaction with a retailer and their subsequent purchase behaviors in the category were tracked for more than four transactions. Mixed effects models were employed to test the relationship between the cumulative effect of satisfaction with multiple service encounters on SOW.
Findings
Cumulative satisfaction is a weighted average of satisfaction with specific encounters, with weights decaying geometrically so that more recent encounters receive more weight. More recent transaction-specific satisfaction levels tend to have greater influence on customers’ next purchase SOW allocations; this, however, is only the case for customers who are less than highly satisfied, with a rating of 8 or lower on a ten-point scale. Additionally, the impact of transaction-specific satisfaction on SOW is not linear. Highly positive transaction-specific satisfaction levels have a greater impact on SOW than negative levels.
Practical implications
Many companies monitor satisfaction across multiple service encounters. This study shows how one can aggregate these measures to arrive at a cumulative effect, and highlights the importance to discriminate between first, more and less recent encounters and second, low vs high levels of satisfaction to better understand customers’ spending among different providers.
Originality/value
Using a longitudinal data set with real customers, this paper identifies a new measure for taking into account the cumulative satisfaction, identifies the positivity bias, and shows how recency affects the relationship between satisfaction and SOW.
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Bodo Steiner and Moritz Brandhoff
This paper aims to explore the role of configurations of relationship quality dimensions for explaining sources of behavioral outcomes in the globalized manufacturing industry.
Abstract
Purpose
This paper aims to explore the role of configurations of relationship quality dimensions for explaining sources of behavioral outcomes in the globalized manufacturing industry.
Design/methodology/approach
A joint analysis of behavioral and objective performance data from globalized manufacturing links perceptual customer metrics that relate to dimensions of relationship quality (i.e. attitudinal loyalty, perceived customer orientation, customers’ perceived innovativeness of the supplier and perceived customer influence on supplier innovation) with behavioral outcomes (i.e. share of wallet (SOW) and customer account profitability). Using data from a global business-to-business (B2B) customer survey together with archival performance data from a multinational mechanical engineering firm, a fuzzy set qualitative comparative analysis (fsQCA) is performed.
Findings
The fsQCA results suggest that perceptual customer metrics related to innovation can be relevant aspects of relationship quality, in line with Anderson and Mittal’s (2000) satisfaction-repurchase-profitability chain framework and its adaptation to SOW. However, the underlying complexities in the different combinations of attributes in the recipe are such that they are not equifinal in leading to higher SOW or higher profitability. This paper finds indications for non-linearities between perceptual measures investigated and profitability of customer accounts, with particular relevance for the role of perceived customer orientation, perceived product innovativeness of the supplier and attitudinal loyalty.
Research limitations/implications
The analysis faces a number of limitations, starting with its reliance on cross-sectional survey data, which does not enable us to account for feedback mechanisms, for example, arising from customer perceptions regarding innovation aspects. The lack of a multidimensional conceptionalization of the perceptual customer constructs may have limited the analysis, considering also recent evidence from retail companies in the furniture sector in Spain, suggesting that the multidimensional conceptualization of relationship value explained satisfaction and loyalty levels to a greater extent than the one-dimensional conceptualization (Ruiz-Martínez et al., 2019).
Practical implications
In terms of managerial implication, the results suggest that customers perceive limited value in participating in the focal firm’s innovation value chain funnel, hence customer loyalty cannot be bought using simple incentive strategies. The results with regard to customer account profitability suggest that B2B customers investigated here may distinguish when interacting with their globalized supplier in the innovation funnel: they may see a positive customer value when the innovation is a product, and thus, relation-specific, whereas they may see limited customer value when innovation is considered in more generic terms (customers’ perceived influence on supplier innovation in general).
Originality/value
This paper starts from the premise that perceptual customer metrics can matter for supplier performance, as the customer relationship and customer value management research has shown. However, there is limited empirical evidence from globalized manufacturing sectors incorporating perceptual constructs in behavioral outcomes, and limited evidence assessing customer-perceived value in such sectors through alternate approaches to main-effects focused analyzes. We employ qualitative comparative analysis using fuzzy sets (Russo et al., 2019) to address these gaps, focusing on two key behavioral outcomes, namely, customer account profitability and SOW.
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Julia A. Fehrer, Sabine Benoit, Lerzan Aksoy, Thomas L. Baker, Simon J. Bell, Roderick J. Brodie and Malliga Marimuthu
The collaborative economy (CE), and within it, collaborative consumption (CC) has become a central element of the global economy and has substantially disrupted service markets…
Abstract
Purpose
The collaborative economy (CE), and within it, collaborative consumption (CC) has become a central element of the global economy and has substantially disrupted service markets (e.g. accommodation and individual transportation). The purpose of this paper is to explore the trends and develop future scenarios for market structures in the CE. This allows service providers and public policy makers to better prepare for potential future disruption.
Design/methodology/approach
Thought experiments – theoretically grounded in population ecology (PE) – are used to extrapolate future scenarios beyond the boundaries of existing observations.
Findings
The patterns suggested by PE forecast developmental trajectories of CE leading to one of the following three future scenarios of market structures: the centrally orchestrated CE, the social bubbles CE, and the decentralized autonomous CE.
Research limitations/implications
The purpose of this research was to create CE future scenarios in 2050 to stretch one’s consideration of possible futures. What unfolds in the next decade and beyond could be similar, a variation of or entirely different than those described.
Social implications
Public policy makers need to consider how regulations – often designed for a time when existing technologies were inconceivable – can remain relevant for the developing CE. This research reveals challenges including distribution of power, insularity, and social compensation mechanisms that need consideration across states and national borders.
Originality/value
This research tests the robustness of assumptions used today for significant, plausible market changes in the future. It provides considerable value in exploring challenges for public policy given the broad societal, economic, and political implications of the present market predictions.
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