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

Journal of Service Management, Volume 26, Issue 1, March 2015.
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 (1) weak relationships between satisfaction and share of wallet in the literature, and (2) challenges by managers as to whether satisfaction is a useful predictor of customer behavior and business outcomes. This study explores 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, Zipf–AE, and Zipf–PM, truncated geometric model, generalization of the Wallet Allocation Rule 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 Our 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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