Customer Loyalty Isn’t Enough. Grow Your Share of Wallet

A new tool—the Wallet Allocation Rule—shows the best way to pull ahead of competitors. by Timothy L. Keiningham, Lerzan Aksoy, Alexander Buoye, and Bruce Cooil

Concept

 share of wallet. This is the percentage of a customer’s spending within a category that’s captured by a given brand, or store or firm.

Issue

Companies spend a great deal of time and money trying to improve customer loyalty by measuring and managing metrics like satisfaction and Net Promoter Scores. But traditional gauges of loyalty correlate poorly with what matters most: share of wallet.

The rule in practice

1.To understand what drives changes in share of wallet, managers need to shift their focus from drivers of satisfaction to drivers of rank.

2.Companies should understand exactly why their customers use each of the brands they do. If you’re not number one, you should ask your customers why they prefer your competitor and use the insights you gain to move up the ranking ladder.