The Wallet Allocation Rule. Aksoy Lerzan

it does not represent a valid test of the relationship between the ACSI or NPS and business growth. That requires a rigorous scientific investigation, which looks at firms in numerous industries over time.

      Fortunately, as noted earlier, that has already been done – several times – by leading academic researchers and reported in some of the best peer-reviewed scientific journals. The results from all of these studies find the same poor relationship to growth. To quote professors Van Doorn, Leeflang, and Tijs, “We find that all metrics perform…equally poor for predicting future sales growth and gross margins as well as current and future net cash flows The predictive capability of customer metrics, such as NPS, for future company growth rates is limited.”42

      Now we explain why this is so.

      Satisfaction ≠ Market Share

      The empirical association between a firm's market share and the (mean) satisfaction of its customers is not positive Not a single company with a market share above 30 percent could be said to have high customer satisfaction. All firms with higher levels of satisfaction also had lower market shares.43

– Professor Claes Fornell regarding his examination of the Swedish Customer Satisfaction Index

      Most managers believe that higher satisfaction and NPS levels are associated with higher market share levels. CEOs and boards of directors are so convinced of this that it has become quite common to base employees' compensation in part on achieving targeted customer satisfaction levels.

      1

      Brown, John Seely. “Research That Reinvents the Corporation.” Harvard Business Review 69, no. 1 (January/February 1991): 102–111. Quote on page 109.

      2

      Keiningham, Timothy L., Terry G. Vavra, Lerzan Aksoy, and Henri Wallard. Loyalty Myths: Hyped Strategies That Will Put You Out of Business. Hoboken, NJ: John Wiley & Sons, 2005.

1

Brown, John Seely. “Research That Reinvents the Corporation.” Harvard Business Review 69, no. 1 (January/February 1991): 102–111. Quote on page 109.

2

Keiningham, Timothy L., Terry G. Vavra, Lerzan Aksoy, and Henri Wallard. Loyalty Myths: Hyped Strategies That Will Put You Out of Business. Hoboken, NJ: John Wiley & Sons, 2005.

3

Rust, Roland T., Anthony J. Zahorik, and Timothy L. Keiningham. Return on Quality: Measuring the Financial Impact of Your Company's Quest for Quality. Burr Ridge, IL: Irwin Professional Publishing, 1994.

4

Keiningham, Timothy L., and Terry G. Vavra. The Customer Delight Principle: Exceeding Customers' Expectations for Bottom-line Success. New York, NY: McGraw-Hill/American Marketing Association, 2001.

5

Keiningham, Timothy, Lerzan Aksoy, and Luke Williams. Why Loyalty Matters. Dallas, TX: BenBella Books, 2009.

6

Keiningham, Timothy L., Lerzan Aksoy, Alexander Buoye, and Bruce Cooil. “Customer Loyalty Isn't Enough. Grow Your Share of Wallet,” Harvard Business Review 89 (2011, October): 29–31.

7

“Ipsos Allocated Its Share at Market Research Innovation Awards,” Ipsos Press Release, November 9, 2011, accessed September 27, 2013, http://www.ipsos-na.com/news-polls/pressrelease.aspx?id=5402.

8

Examples include Aksoy, Lerzan. “Linking Satisfaction to Share of Deposits: An Application of the Wallet Allocation Rule.” International Journal of Bank Marketing 32, no. 1 (2013): 28–42; and Keiningham, Timothy L., Bruce Cooil, Edward C. Malthouse, Alexander Buoye, Lerzan Aksoy, Arne De Keyser, and Bart Larivière. “Perceptions Are Relative: An Examination of the Relationship between Relative Satisfaction Metrics and Share of Wallet.” Journal of Service Management, 26, no. 1 (2015), forthcoming.

9

Davidow, William H. Marketing High Technology. New York, NY: The Free Press, 1986, p. 7.

10

Klaus, Phil, Bo Edvardsson, Timothy L. Keiningham, and Thorsten Gruber. “Getting in with the ‘In’ Crowd: How to Put Marketing Back on the CEO's Agenda.” Journal of Service Management 25, no. 2 (2014): 195–212.

11

Ibid.

12

Keiningham, Timothy L., Lerzan Aksoy, Phil Klaus, Bo Edvardsson, and Thorsten Gruber. “From Marketing Myopia to Marketing Dystopia.” Fordham University Working Paper. New York, NY, 2014.

13

Kranik, Pete. “CMO Impact on Customer Experience.” A Joint Survey by The CMO Club and Neolane (June), 2013, www.neolane.com/usa/resources/CMO-Survey-Report/cmo-club-survey-results.

14

Klaus, Edvardsson, Keiningham, and Gruber, “Getting in with the ‘In’ Crowd: How to Put Marketing Back on the CEO's Agenda.”

15

Ibid.

16

Sisodia, Rajendra S. “Marketing's Reputation with Consumers and Business Professionals.” Proceedings of Symposium Does Marketing Need Reform? Bentley College, Boston, MA, August 2004, http://atc3.bentley.edu/mkseminar/reformsisodia/msh.htm.

17

Drucker, Peter F. The Practice of Management. New York: Harper & Brothers, 1954, pp. 37–38.

18

Allen, James, Frederick F. Reichheld, and Barney Hamilton. “Tuning In to the Voice of Your Customer.” Harvard Management Update (2005, October 1), http://hbr.org/product/tuning-into-the-voice-of-your-customer/an/U051 °C-PDF-ENG.

19

Temkin, Bruce. “The State of Customer Experience Management, 2014.” Waban, MA: Temkin Group, 2014.

20

McGrath, Rita Gunther. “How the Growth Outliers Do It.” Harvard Business Review 90 (January–February 2012): 110–116.

21

Olson, Matthew S., Derek van Bever, and Seth Verry. “When Growth Stalls.” Harvard Business Review 86 (March 2008): 50–61.

22

Farris, Paul W., Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein. Marketing Metrics: 50+ Metrics Every Executive Should Master. Upper Saddle River, NJ: Wharton School Publishing, 2006, p. 27.

23

Ibid., p. 26

42

Van Doorn, Leeflang, and Tijs, “Satisfaction as a Predictor,” p. 314.

43

Fornell, Claes. “The Quality of Economic Output: Empirical Generalizations about Its Distribution and Relationship to Market Share.” Marketing Science 14, no. 3 (supplement, 1995): G203–G211.